MODULE - 4

28th May 2021

REGIONALISM AND REGIONAL ORGANISATIONS

 Readings :-
- Economic Regionalism: International Relations - Britannica
- Regionalism, Globalism & complexity: a stimulus towards global IR? - Giovanni Barbieri
- Does Regionalism challenge Globalisation, or build on it? - Mareike Oldemeinen

WHAT IS THE CONCEPT OF REGIONALISM?

 In India, we often hear about regionalism in Indian context. We are told by the nationalist
that we all should be Indian, our culture should be Indian, our thinking should be Indian
because our Citizenship is of India. People who think in narrower terms with respect to
certain regions are called regionalists. India does not favour Regionalism much, even
though we have very strong regional cultures. There are people in India from all over the
states who speak their own language and love their regional language very dearly, which
they call as their mother tongue.
 When you are dealing with International relations, you are dealing with Economic
Regionalism. Economic Regionalism in International Relations is an Institutional
Regionalism. It is meant to promote trade within a region by integrating a particular region.
And once the trade is promoted within that region, it becomes a kind of a bloc and these
are the trading blocs which come together with economies integrative and they are in a
much better position to deal with the rest of the world.
 In international relations, Institutional Regionalism is meant to facilitate the free flow of
goods and services and to coordinate foreign economic policies between countries in the
same geographical region. Therefore, economic regionalism is a conscious attempt to
manage opportunities and constraints created by increased economic ties. When WW-II
occurred, it devastated Europe and that was one aspect. The other aspect was that Europe
got divided on ideological lines between East and West Europe and Europe also wanted to
revive. There were 2 super powers when Europe was divided, but Soviet Union was super
power primarily because of its military equipments, its economy was not that strong, it was
stronger than the rest of the European countries but not as strong as the USA. Now, USA
came up with a policy that they will only help the west-European countries which were
capitalists. The Soviet Union by force had to come to the rescue of Eastern Europe. So, this
is the time from where the economic regionalism in Europe starts growing. Western
Europe was asked to integrate with American Patronage. This all process started after
WW-II and it went up till 1990. From 1947 up to 1990 Europe was split into Western and
Eastern Europe. In 1990 when the cold war ended, there was an opportunity for
globalization that let the whole world economy be integrated. It did integrate also, but this
economic regionalism continued to exist. Today, we have European Union which is a
strong integrated community.

1
 In India we also created SAARC (South Asian Association for regional Cooperation). We
wanted to create here South Asian Preferential Trade Area and South Asian Free Trade
Area. But Pakistan has always been an agent of powers outside these areas (sometimes it is
a stooge of USA, sometimes it is a stooge of China and sometimes a stooge of Islamic
Fundamentalism). Pakistan in its short sightedness has completely ruptured these ideas in
south Asia because Pakistan was harping on its Islamic Character, although more Muslims
are living in India than in Pakistan. Due to this, India then has to look towards the east,
where a strong regionalist Organisation, ASEAN already existed and we also had good
cultural ties with them. South East Asian Nations also have a large-scale Muslim
Population in countries like Indonesia, Malaysia, etc. But Islamic Fundamentalism doesn’t
exist, so we found conducive grounds for moving close to these areas. Therefore,
economic regionalism basically means economic cooperation within a particular region
acting as a bloc and then accommodating outsiders in this area for trade.
 So, economic regionalism means :-
1. Creating Free Trade Areas - Free trade implies elimination or reduction of custom
duties between members. Custom Duties are those duties which are placed on goods
that cross the borders. So, Free trade area simply means no custom duty will be levied
on the goods of the member states.
2. Customs Unions – Custom’s Union is actually a greater integration through common
tariffs (tariff is a duty placed on goods which come from outside & in this case, goods
coming outside that area). Common tariffs means that all members of this association
would charge the same tariff from the non-members when their goods come inside. So,
we have free trade area that reduces the custom duties between members and we have
customs union where a common tariff is charged from the non-members.
3. Common Markets - Common market is where free movement of capital & labour
takes place between states of a particular region.
4. Economic Unions - Common currency like Euro exist in European union. This is
possible when high degree of political consensus occurs between member states. This
aims at full economic integration through;
a) Common economic policy – That Implies whatever economic planning is to be
done, the economic policy must be the same among all the member states of that
association.
b) A common currency, and
c) Elimination of tariffs and non-tariff barriers - Tariff barriers are the custom duties
which are imposed, non-tariff barriers are primarily certain rules and regulations that
facilitate this.
 There is something called ‘Open Regionalism’, which means that there are no elements
of exclusion or discrimination practiced against non-members of that regional association.
Also, there is ‘Tight Regionalism’, where a high degree of institutional integration exists
on the basis of shared norms, rules, decision-making procedures that limits the autonomy
of all individual members. In open regionalism, a regional structure exists but members of

2
 the regional structure can collaborate and interact economically with outsiders. In tight
regionalism this is not possible because individual members are not given the autonomy.
 This whole process started with integration of Europe after the WW-II. In 1952, European
Coal and steel community was created where they were integrating. Then it was upgraded
in 1957 to European Community which is generally called Common Market. In 1960, it
was European Free trade Association and there was much more integration in 1993 with
Common Currency of European union.
 After the cold war ended, many regional organisations developed like North American
Free Trade Area (Firstly it was North American Free trade Agreement and then North
American Free Trade Area), ASEAN was also strengthened and it had ASEAN Free
Trade Area.
So, this is how they moved to promote economics and once economics is promoted, that
whole area becomes strong and wars get eliminated. The idea is to build economy to
reduce political friction because only when economies are built, political frictions are
reduced.

3
29th May 2021

EUROPEAN UNION (EU)

 Readings :-
- European Union: Definition, Purpose, History - Britannica
- The history of the European union - European union
- The History of the European Union: A Cooperation/ Integration Process – EU Science
Diplomacy
- The EU in brief - European Union
- European Union, how it works, and its history - Kimberly Amadeo (the balance)
 European Union is one of the best organised Regional Organisation in the world. It is an
international organisation that has 27 members and these members are European Countries
that have common economic, social and security policies. Almost all the countries of
Europe are included, except for Russia (1/3rd of Russia is in Europe, while 2/3rd is in Asia,
but the central gravity of Russia is in Europe. Capital of Russia i.e., Moscow and the great
city i.e., St. Petersburg, both are in Europe).
 Originally the European Union countries were confined to western Europe, but in 21st
century the European Union has expanded to also include states of central and East Europe
after the cold war. As long as the cold war existed, the countries of Europe were largely
divided into East European countries that followed the leadership of Soviet Union, which
were communist in its orientation and West European Countries that followed the
leadership of USA, and they were capitalist in its orientation. However, with the ending of
cold war and the collapse of Soviet Union, this kind of division could not be sustained.
West Europe was much advanced than East Europe and thus, to accommodate eastern
European neighbours was difficult task for them, yet the Europeans got together and they
wanted to accomplish this through an integrated economy.
 Today there are 27 members of European Union which are; 1) Austria (a neutral country),
2) Belgium, 3) Bulgaria (East European Country), 4) Croatia, 5) Cyprus, 6) Czech
Republic, 7) Denmark, 8) Estonia, 9) Finland, 10) France, 11) Germany, 12) Greece,
13) Hungary, 14) Ireland, 15) Italy, 16) Latvia, 17) Lithuania, 18) Luxemburg, 19)
Malta, 20) Netherlands (Holland), 21) Poland, 22) Portugal, 23) Romania, 24)
Slovakia, 25) Slovenia, 26) Spain and 27) Sweden.
 The notable absentees are Russia and United Kingdom, which was one of the founder
members of the European Union but then left it recently in 2020. This policy of the
withdrawal of Britain from European Union is called Brexit.
 The European Union was established to ‘Maastricht Treaty’ that came into force on 1st
November, 1993. This treaty was meant to :-
a) Firstly, enhance the European Political and Economic integration by creating a single
currency that is called “Euro”,
b) Secondly, to promote a ‘Unified Foreign & Security Policy’ in Europe,

4
 c) Thirdly, to develop among the Europeans, ‘Common Citizenship Rights’, and
d) Lastly, it was meant to promote Cooperation among Europeans in the areas of
immigration (immigration means outsiders coming to your country), asylum (giving
protection to someone who comes from outside) and Judicial Affairs.
 The European Union was awarded with the “Nobel Peace Prize” in the year 2012 for
promoting peace and democracy in Europe.

HOW DID IT ORIGINATED?

 Europe had been devastated by war and due to this they wanted to rebuild Europe. So, one
of the ways in which the European leadership decided to build Europe was that in 1951 (six
years after the WW - II), leaders of 6 countries i.e., Belgium, France, Luxemburg (an
extremely small country), Netherlands (Holland), Italy and West Germany signed a treaty
at Paris to establish closer economic, social and political ties between them. The two
powers that had been defeated in the second world war included Germany, which is
represented by West Germany in West Europe, and Italy, which is the former defeated axis
power to achieve economic growth and military security. So, this was an experiment on a
smaller scale involving these countries like Netherlands, Belgium, Luxemburg, etc. France
along with Italy & Germany signed a treaty at Paris for closer economic, social and
political ties in order to achieve economic growth and military security. One of the most
important aim for signing this treaty was to make friendship possible between France and
Germany. There are historical reasons that why Germany and France were always at
loggerheads. Germany was created out of 30 odd German states by the “Great Plan of
Germany”. Bismarck, a German statesman used to say that Germany’s war with France is
in the logic of German History, because France had done a lot to keep Germany divided.
But this treaty was an effort to make them friends. The idea is that if this could happen in
Europe then why can’t it happen in case of India’s relation with China and Pakistan.
 Next year in 1952, they founded “European Coal and Steel Community (ECSC)”, and 5
years later, on 25th march 1957, the 6 countries of ECSC through two treaties signed at
Rome established the following :-
1. ‘European Economic Community’ - It was also called Common Market. Common
market was supposed to ensure free flow of capital and labour between the signatory/
member countries. So, at a smaller scale, European Integration began with 6 countries.
2. ‘European Atomic Energy Community’ – The Next thing which they established
through other treaty on 25th March 1957 was ‘Euratom’. We know that Uranium has
two isotopes, one is U235 which is used to manufacture bomb and the other is U238
which we get in the rocks. U238 is in plenty of amount, while U235 is very limited, so
they both are separated through a churning process. U238 is used to produce
electricity. Thus, Euratom is an atomic energy which produces electricity out of U238.
3. In this context, they also revised their national laws in order to reduce competition
among themselves and so, they formulated ‘Common Agricultural Policy (CAP)’
and ‘Common External trade Policy’ and this was implemented in 1962.

5
 The European Economic Community had a commission. It has a ministerial council, an
assembly and a court. The court was there to interpret treaties, whatever treaties were there.
 They also had Economic and social community to advise European Commission as well as
ministerial council, where the ministers sat.
 In 1965, through ‘Brussels Treaty’, the European Coal and Steel Community, the
European Economic Community (EEC) and the Euratom were combined under a higher
authority and this became one of the principal organs of the European Union.
 In 1979, they established European Parliament which was elected for 5 years and on 1st
July 1987, they enacted a “Single European Act (SEA)” to enlarge EEC’s scope.
 On 1st February, 1992, they signed the ‘Maastricht Treaty’. Then they held referendum
among the countries which had joined European Union, this referendum was held in June
1992 and a revised treaty was finally signed in May 1993.

MAIN PILLARS OF EUROPEAN UNION

1. European Communities - It looks after economic framework of law.
2. Common Foreign Policy - On any foreign policy issue, European Union takes a stand.
3. Enhanced Cooperation in home, that is in the domestic sector.

Explanation :-
 The authority of European Union had formal control of the community policies on
development, education, public health, consumer protection, environment protection,
technological research, social and economic cohesion. In all these areas the European
Union facilitates cooperation among the European countries that are members.
 They have changed the name of European Economic Communities to ‘European
communities (EC)’, before they became European Union. Now, they have a common
monetary currency ‘Euro’ and a ‘Commission of European Union’ that is accountable
to European parliament which is elected for 5 years.
 The ‘European Court of Justice’ can impose fines on the members of the European
Union that violates its norms.
 In banking, they have a ‘European Central Bank’ that monitors banking in Europe.
They also have ‘European monetary Institute’ to take care of their currency.
 They have ‘Regional Advisory Committee’ to look into the regional matters, including
sub-national matters (Sub-national are matters within the state) and to advise the
European commission.
 They even have a ‘Court of Auditors’ which had been established in 1970s to monitor
the revenue and expenditures of the European Union. It acts as a single entity.
 It has a common foreign policy and most importantly, they have achieved free movement
of people within European Union Borders.

6
  They have made it possible for European people that they can move freely within
European Union Borders. They also have a common policy, Central European Bank, etc.
All these things have been strengthened over the years.
 They even have European Union’s Charter of Fundamental freedoms. These fundamental
freedoms are supposed to be respected within Europe by members of European Union.

WHAT ARE THE EUROPEAN UNION VALUES?

It wants to promote human dignity. The dignity of every individual must be respected not as
members of a particular country but as members of Europe. They believe in freedom of the
individuals, to do whatever they want to. European Union stands to promote democracy in all
countries of Europe and even within the European Union. They want to promote the Rule of
law and the respect for human rights and equality among the citizens of Europe. European
Union is a role model community and it is something that other states of the world in
different areas should follow. Its main purpose is to enhance integrity, free movement of
labour and goods, doing away with tariff barriers and non-tariff barriers, act with one voice to
outsiders, pulling their strength and making their community strong.

7
31st May 2021

ARAB LEAGUE
 Readings :-
- Arab Spring: History, Revolution, Causes, Effects & facts - Britannica
- Arab League: History, Purpose, Members & Achievements - Britannica
 Arab League is also called as “The League of Arab States”. It is a Regional Organisation,
which is more of a political Organisation than economic in nature. It consists of countries
in the middle east and parts of Africa. Its headquarters is in Cairo i.e., the capital of Egypt.
 The Arab league was originally founded on March 22, 1945 by 7 states which were;
Egypt, Syria, Lebanon, Iraq, Trans Jordon (now called Jordan), Saudi Arabia and
Yemen. Later on, other states joined in like Libya in 1953, Sudan in 1956, Tunisia &
Morocco in 1958, Kuwait in 1961, Algeria in 1962, Bahrain, Oman, Qatar & UAE in
1971, Mauritania in 1973, Somalia in 1974, Palestine Liberation Organisation (PLO)
in 1976, Djibouti in 1977 and Comoros in 1993.
 From 1967 – 1991, Yemen had been divided between North Yemen and South Yemen, and
both of them were members of the Arab League during this period. However, from 1991
onwards, the United Yemen became a member of the organisation.
 Arab league has a council and its decisions are binding are on those countries which have
voted on an issue. If they don’t vote, then the decision of the council is not binding, but if
they vote, then its decision is binding upon them.
 AIMS OF THE ORGANISATION :-
i. The aims of the Arab League when it was founded in 1945, were to strengthen and
coordinate the political, cultural, economic and social programmes of its members and
also to mediate in disputes amongst them, and between them & 3rd parties.
Meaning - It could mediate in any dispute between members of the Arab League. If
any of the member country of the Arab League is having dispute with a country which
is not a member of Arab League i.e., the 3rd party, then also it can mediate between
them. (Here, 3rd parties are the Non-member countries).
ii. On 13th April 1950, an agreement was signed among the members of the Arab league
on “Joint Defence and Economic Cooperation” and,
iii. Since many of the Arab states are oil producing states, so in 1959, the Arab league
held its “1st Arab Petroleum Congress”.
iv. In 1964, the Arab league established “The Arab League Educational, Cultural and
Scientific Organisation (ALESCO)”.
 In 1964, there were objections by the members of the Arab League, especially by Jordon,
for granting ‘Observer Status’ to Palestine Liberation Organisation which was also an
organisation indulging in terrorist & militant activities, and therefore there were objections
by Jordon for giving the Observer Status to PLO, as the representatives of all Palestinians.

8
 Palestinians are in dispute with Israel. But in 1976, PLO was granted a full membership of
the Arab League. [Remember - 1973 is the year of ‘Arms Embargo’, when in the wake of
Arab-Israeli war (primarily between Egypt & Syria on one side and Israel on the other),
Egypt wanted to get back its land which Israel has captured in the war of 1967.] So, from
1972 – 1979, the political activity of the Arab League increased, but there were internal
dissensions on political issues especially on the question of giving recognition to Israel
because on 26th March 1979, Egypt signed a peace deed (to the mediation of USA) with
Israel. This deal was called “Camp David Accords”. Jimmy Carter was the president of
Unites States who had negotiated with these two countries. The idea was to get back
Egyptian lands from Israel, so that the Suez Canal which had been blocked by the two
hostile countries, could once again be opened. That was the main issue. But for doing this
the Egypt’s membership in Arab League was suspended and the headquarters, then moved
from Cairo to ‘Tunis’ in Tunisia.
 However, Egypt’s membership was reinstated in 1989 and the headquarters once again
moved to Cairo.
 In 1990, Iraq invaded Kuwait, which has borders with Iraq, captured it, annexed it and said
that it is one of its another province. USA pledged that it will help Kuwait to get its
independence because Kuwait is a very oil rich country which has the maximum per capita
oil in the Arab area, so USA along with some other Arab states launched an invasion of
Iraq and defeated it. But there was a rift in the Arab League because there were certain
Arab League members who objected the intervention of USA in Arab Affairs. But if USA
wouldn’t have involved, then it would have been difficult to liberate Kuwait from Iraq.
 Then came Arab’s spring in 2010 and early 2011. There were revolts starting from Tunisia
and these became very serious revolts in Libya. Libya & its liberated dictator, Mohammed
Gaddafi very violently and brutally suppressed these revolts, for which Libya was
suspended from Arab League’s membership in February 2011. However, later when the
government of Mohd. Gaddafi was overthrown in Libya, there established a temporary
Government called the “Transitional National Council” and because of this, Libya’s
membership of Arab League was reinstated.
 Similarly, the second area of a very violent conflict is Syria. The Arab league had come to
an agreement with Syrian Government in 2011 that it would end 10 months of repressions
which had been there, but when Syria refused to carry it out, it was also suspended from
the Arab League.

9
31st May 2021

SOUTH ASIAN ASSOCIATION OF REGIONAL COOPERATION

(SAARC)

 Readings :-
- South Asian Association for Regional Co-operation – Britannica
- South Asian Association for Regional Cooperation (SAARC): Treaties & Regimes – NTI
- South Asian Free Trade Area - LDC Portal UN
- Agreement on SAARC Preferential Trading Arrangement (SAPTA) – APEDA
- Agreement on South Asia Free Trade Area (SAFTA) - APEDA
- List of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) signed by
India - APEDA

 ‘SAARC’ stands for “South Asian Association of Regional Cooperation”. It was an area
which was not being successful in the Regional Organisation.
 There were efforts made that SAARC should be developed in an area of cooperation,
especially in economic cooperation i.e., an area where because of understanding, more
money can be spent on development than on armaments, but this area has been beleaguered
by Pakistan. In 1940s & early 1950s, Pakistan joined American military alliances. When
India received bashing at the hands of China in 1962, Pakistan became a great friend of
China and then it went on playing second fiddle to these countries i.e., USA & China, until
it was totally bifurcated in the war of Bangladesh. Ever since then Pakistan had become an
enemy, though it was an enemy even before that. But now and especially after India had
exploded nuclear device in 1974, Pakistan has been doing everything possible to puncture
any kind of Regional Organisation of South Asia. Yet in 1985, SAARC was founded
because this was the time when other areas were also establishing their regional
organisations. So ultimately, SAARC was founded in 1985 and it was dedicated to the idea
that all the members countries will cooperate with each other in the field of Economic,
Technological, Social & Cultural Development in order to move forward and develop.
 Its motto was “collective self-reliance”, meaning that this area will become Self-Reliant
by collectively cooperating with each other.
 It’s 7 founding members were :- Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan
and Sri Lanka. Afghanistan joined SAARC later in 2007.
 In SAARC, there is a tradition of holding annual meetings of the heads of the States/
Government, while meetings for the foreign secretaries are to be held twice in a year.
 Its headquarters is in “Kathmandu, Nepal”.
 The stated areas of cooperation are :- 1. Agriculture, 2. Education, 3. Health, 4. Population,
5. Child Welfare, 6. Environment Protection, 7. Meteorology, 8. Rural Development, 9.

10
 Science and Technology, 10. Tourism, 11. Transport, 12. Women Development, 13. Drug
Abuse, 14. Drug Trafficking, etc.
 The Charter of SAARC asked that all decisions of SAARC ought to be taken unanimously,
and Bilateral and contentious issues (issues in which there are disputes) are to be avoided.
 In 1985, the SAARC founding countries held their 1st meeting in ‘Dhaka’, where they met
from 7th - 8th December and adopted the Charter and, thus formally establishing SAARC.
 In 1986, in the 2nd SAARC summit in ‘Bangalore’, the SAARC members stood for
elimination of all nuclear weapons. Similarly, in 1987 at the 3rd summit in Kathmandu,
their most important issue was eliminating nuclear weapons and all nuclear weapons ought
to be destroyed and CTBT (Comprehensive Test Ban Treaty) should be signed.
 In 1988, in the 4th summit, CTBT and chemical weapons were still their main issues. In
1990, at the 5th Summit in Male, Maldives, their interest was again in Disarmament and
also on the talks which were taking place between USA & Soviet Union over disarmament.
 In 1991, at the 6th Summit, the issue was again Disarmament.
(So, for most of the summits, the main highlighted issue is disarmament and destruction
of these nuclear weapons. These things are the main agendas of SAARC discussions)
 At the 3rd Summit in 1987, Pakistan had held a proposal to make South Asia free of nuclear
weapons and India was not in favour of this, because at this time Pakistan did not have
nuclear weapons and it wanted India to get rid of those weapons too.
 SAARC also establishes “South Asia Preferential Trade Area (SAPTA)”, in which 4
rounds of discussions took place and this was in 1993 at 7th summit.
 Later on in 2006, SAPTA was superseded by “SAFTA (South Asia Free Trade Area)”,
in which customs union was spoken off and it was said that there was a need of special
differential treatment to the least developed countries. Least developed countries would be
charged lower tariffs and would also get special considerations for technical assistance and
association.
 All this basically did not materialize because relations between India and Pakistan were not
conducive. These became much more strained in 1998 when both these countries exploded
the nuclear devices. All Indian Efforts at conciliation with Pakistan resulted in a failure.
When PM Vajpayee took a bus for friendship from Delhi to Lahore, there was Kargil War
and the terrorism continued. India has refused to talk to Pakistan until and unless it
eliminates Terrorism. So, because of this, the entire project is in disarray and nothing
substantial came out. If there had been genuine co-operations, then this area could have
been a gateway to Central Asian republics which contains lots of oil, minerals and are on
the crossroads of Asia, or to trade with other areas including Russia and from there to
Europe. But all this has been a dismal failure primarily because of the bad intentions of
Pakistan.

11
1st June 2021

THE ASSOCIATION OF SOUTH EAST ASIAN NATIONS

(ASEAN)
 Readings :-
- ASEAN - Definition, History, & Facts - Britannica
- What is ASEAN? - World Economic Forum

BACKGROUND :-
 ASEAN has a very great success story of much importance in international relations. India
was so much impressed by their success that lately, Pakistan started creating trouble for
India and it tried to rope in (persuade) the West Asian Muslim world, especially the
fanatical groups there. India began a policy called “Look East Policy” to look towards the
area of South East Asia, which have a good old cultural Relations with India. This area is
quite prominent with its Muslim Population.
 This area of Southeast Asia has been visited in history by our ancestors and there is a lot of
Hindu or Indian culture which exists there. For example, Indonesia is a country which has
the largest Muslim population in world. But despite this, their national hero is Lord Rama
of Ramayana. When they are asked that why do you narrate the story of Lord Rama or
remember Lord Rama, their answer is that we changed our religion but we did not change
our ancestors. For them Rama may not be a God, but he is a national hero. So, this part of
Muslim world is much conducive to deal with and therefore, India started to build
relationship with them, and it was very fruitful.

ASEAN :-
 ASEAN is an international organisation established in 1967 by the governments of
Indonesia, Malaysia, Philippines, Singapore & Thailand. It was established to accelerate
economic growth, social progress, cultural development and to promote peace and security
in South East Asia in order to accelerate the overall economic development in this region.
Successfully, there has been a lot of economic development in this area after the formation
of ASEAN, something which India wanted to achieve through SAARC, SAPTA & SAFTA
but Pakistan didn’t allow us to do. Otherwise, we would have overtaken these areas
(mineral rich areas), which consist of a large amount of man power or labour. Both India
and Pakistan and also to a lesser extent Bangladesh, are very strategically placed in the
Indian ocean and have a dominant/commanding position in this area. They both were once
a part of India until they tried to separate and gave themselves an enmity status due to the
Islamic Fundamentalism, which exists in Pakistan and even in Bangladesh. So, ASEAN
was thus, established to accelerate economic growth, social progress and to promote peace
& security in South East Asia.
 The other countries that joined ASEAN were Brunei (a Muslim Majority Country) in 1984,
Vietnam in 1995, Laos and Myanmar in 1997, Cambodia (also called Kampuchea) in 1999.

12
 ASEAN region has a population of 600 million and its total area is 1.7 million sq. miles or
4.5 million sq. km.
 ASEAN is an international organisation which has been established in place of another
organisation called “The Association of South East Asia (ASA)”, which had been
founded by Philippines, Thailand and Federation of Malaya (Now a part of Malaysia) in
1961. So therefore, it can be said that the ASEAN had been in existence since 1961. (ASA
existed from 1961 - 1967 and in 1967, ASEAN was formed).
 The motto of ASEAN is “cooperative peace and shared prosperity”. We must remember
that this was also once an area of great violence at international level. In 1967, when
ASEAN was founded, there was a terrible war going on in Vietnam in which USA was
involved. Vietnam was divided into North Vietnam and South Vietnam, where North
Vietnam was communist and South Vietnam was capitalist supported by USA and earlier
France. Vietnam war was a very brutal war. Not even a single house was left in good
condition in South Vietnam because it was brutally attacked by North Vietnam, especially
when the US forces fled away from there. There have been lots of terrible losses in human
property and life, and unfortunately somehow this also spilled over into other countries like
Kampuchea and Laos. So, it became a very troubled area at this time, even much more
troubled area than that of Pakistan & India. So, that is why the motto of ASEAN was to
establish peace & cooperation, and also to share the dividends of prosperity, something
which India wasn’t able to make Pakistan understand.
 ASEAN projects is based on economic production and promotion of trade among ASEAN
countries, and between ASEAN countries & rest of the world. Once you develop good
relations amongst yourselves, you become a bloc, which will ultimately help to promote
your industrial production and as a bloc you will also feel more confident while negotiating
with the rest of the world.
 One message which ASEAN is giving to the world, a message which Indians can read very
clearly is that ‘peace brings prosperity within an area’. If analyzed deeply, we can see that
in order to trade, a country needs to transport the goods and services to the other distant
countries, which makes the products extremely costly. So, if somehow the transportation
costs can be reduced, then the price of the commodity you are trading in would also be less
as a result, which gives us the idea that why not to trade with the neighbour countries, as
this could be the best approach which would not only help establishing good relations, but
will also increase the trade simultaneously due to the less transportation cost and thus,
resulting in an overall reduced price of the trading goods. However, its success depends
upon the principle of reciprocity that ‘you do it for me and I do it for you’.
 There was also something called the “Gujral Doctrine” which was named after “Inder
Kumar Gujral”, who was the former PM of India for a very short span of time from 1997-
1998. Gujral Doctrine said that “We in India are the majority, we are the elder brothers in
this region and that’s why we will give our neighbours the concessions unilaterally”. But
even this thing was taken as an advantage by Pakistan. So, we are in a dismal situation in

13
 which we do not know what to do and what not to, because whenever India talks about
peace, Pakistan and its Islamic Fundamentalists take it as a sign of our weakness.
 One of the aims of ASEAN is also to do joint research and provide technical cooperation to
the governments of the member countries. But for this, the governments have to primarily
build trust amongst each other.
 ASEAN basically held its meetings together weekly in its early years and it achieved new
strength only after 1970s when the Vietnam War ended and resulted in disaster for USA,
which had come from such a long way to intervene in southeast Asian Nations. This
example of USA fighting war in Vietnam gave a message to all the countries in southeast
Asia that this is the power of USA, they have subdued Japan earlier through atom bombs
and if that was not enough, they were doing the same in Vietnam too. So, after USA was
defeated, the southeast Asian nations got confidence that if Vietnam can do, then we can
also do. Therefore, they then got together and worked in cooperation, and the results are in
front of everyone today.
 ASEAN nations got together and their strength gave a unified response to Vietnam’s
Invasion of Cambodia or Kampuchea in 1979. Vietnam, who got confidence of its strength
after getting united & after defeating USA in Vietnam war, now invaded Cambodia, one of
its neighbours. But the response of ASEAN was that this would not be allowed in this area.
 Earlier in 1976, the 1st summit of ASEAN was held at Bali in Indonesia. This Summit
had resulted in agreement on several industrial projects and signing of “Treaty of Amity
(goodwill) and Cooperation” and “Declarations of Concord”. Concord is an agreement
whereby you allow the people of your country to interact with the people of other
countries, may be for tourism, business or for studies. So, this was coming together of
southeast Asian peoples. (Peoples because it consists of people of different cultures). The
point is that if the Europeans could do it in Europe thinking that they are very advance,
here are also people like us (in India & Pakistan) who are doing it. Europeans are humans
and we are also humans, and if one set of humans could do it, then others can also do it.
This is the message which is coming from ASEAN, a great success story.
 The end of the cold war gave further confidence to the southeast Asian nations because
now Soviet Union was gone, which was a super power close to this region and this
situation allowed these nations to exercise greater independence in this region.
 During 1990s (after the cold war), ASEAN emerged as a leading voice on “Regional
Trade and Security Issues”. If you manage your own security and you have a healthy
trade within your own area, with your neighbours, then the dividends/ fruits are such that
you can with confidence deal with the outside world.
As Chanakya has said that neighbours can never be friends, but there are certain countries
which have made neighbours as friends and thus, have proved that the Chanakya’s
philosophy may not be absolutely right, although it may be right with reference to some
countries, like Pakistan & China in case of India.
 ASEAN adopted a declaration to resolve disputes in South China Sea and promoted
dialogue on regional security.

14
 In 1992, ASEAN members reduced tariffs and ease restrictions on foreign investments by
creating “ASEAN Free Trade Area”.
 “ASEAN Charter came in 2007”, which spoke about international diplomacy as an
instrument of foreign policy, human rights and democratic values. It was ratified (when
states give their final approval) by all the 10 members of ASEAN, and finally came into
force in 2008. It was mainly based on promotion of international diplomacy. This charter
also conferred a legal personality upon ASEAN, that it is a legal person in the eyes of law.
 After this charter, the ASEAN countries increased the frequency of ASEAN Summit
meetings, which were/are to be held semi-annually i.e., after every 6 months.
 ASEAN also established “ASEAN inter-governmental Commission on Human Rights”.
It is a common notion that the countries don’t want other countries to interfere in their
human rights affairs. But when you have inter-governmental commission where the
governments cooperate on the issues of human rights, we can see the amount of trust they
have in each other. With such progress, ASEAN’s relationship with the rest of the world
started to grow.
 ASEAN moved further. It entered into negotiations for trade, commerce and understanding
with the other countries, which were beyond the ASEAN members.
 We have a dialogue called “ASEAN + 3”, where ASEAN as a whole has annual meetings
with 3 non-member countries i.e., China, Korea & Japan. Here, they discuss about all the
things which could promote their prosperity with these 3 countries.
 Then, we also have another forum called “ASEAN + 6”. ASEAN + 6 means ‘ASEAN + 3
countries i.e., China, Korea & Japan + 3 more countries i.e., India, Australia & New
Zealand’. India is actively negotiating with ASEAN.
 Then, they had “East Asia Summit”, which means “ASEAN + 6 + USA & Russia”.
Therefore, we can see how ASEAN have grown. They have involved China, Korea,
especially South Korea which is economically prosperous, so as Japan, India (the rising
economic power), Australia, New Zealand and even USA & Russia as well. So, it signifies
that once you have an integrated cooperative Centre, what not you can do with it.
 Business for ASEAN is conducted by a ‘standing committee’, which consists of foreign
ministers of the host country + the foreign ministers & ambassadors from other countries.
They also have a ‘permanent secretariat at Jakarta in Indonesia’, which is headed by a
‘Secretary General’.
 A number of committees including technical committees on finance, agriculture, industry,
trade and transportation exists as advisory bodies. These committees are supplemented by
(strengthened by) ‘Working Groups’ headed by the experts in various private sector
organisations. So, the governmental efforts are strengthened by the voice of the experts and
also the voice of the private businesses.
 This is how ASEAN operates. It is a Role Model for various countries in Asia, and is
currently doing as good as the European union.

15
2nd June 2021

ORGANISATION OF AMERICAN STATES

(OAS)
 Readings :-
- Organization of American States (OAS) – Britannica
- OAS: Our History - oas.org
- Pan-American Union – Encyclopedia.com
- Pan-American Union: International Organisation + Pan-American Conferences (1826 –
1948) - Britannica

 Earlier, various states in USA were the colonies of British. There were 13 such colonies.
They (the states) had a fight with British because they said that if you want to collect taxes
from us then you must also give us representation in the British Parliament, but the
Britishers didn’t agreed upon this. So therefore, the 13 colonies fought jointly the war of
Independence which started from 19th April 1775 to 3rd September 1783. The American
colonies threw off British rule to establish the sovereign United States of America, which
was founded with the Declaration of Independence in 1776. Thus, they celebrated their
1st Independence Day on 4th July 1776. After they became independent, they also added
more territories, which later came together to be known as ‘United States of America’.
 This organisation of American states (OSA) is a very special and unique kind of
organisation. It represents almost all other states of the three continents of America. These
continents are; the North America, consisting of United States and Canada, the Central
America, starting from Mexico & Southern America, and lastly, the Central and South
America, which is generally called the ‘Latin America’, because of the languages spoken
there, which are mostly Portuguese, Spanish and to some extent French in different states.
 These all were once the colonies of the European powers. Over a period of time, USA
became independent and then the Central & South American States also came under the
protection of United States of America. So therefore, OAS consists of all the countries that
exists on American continents.
 OAS is an organisation which was formed to promote economic, military and cultural
cooperation among its members that include almost all the states of the western
hemisphere. Western hemisphere consists of the American Continents i.e., North America,
Central America and South America.
 The main goal of OAS is to prevent intervention from outside states in the western
hemisphere and to maintain peace amongst the various states there.
 An important event in the history of development of OAS is that, on 2nd December 1832,
the American president, James Monroe while delivering his annual message to Congress,
enunciated the Monroe Doctrine. This doctrine said that United States of America, which
by this time has emerged as a great power, will neither intervene in the affairs of Europe,

16
 nor let any European State intervene in the affairs of the American continent. This was a
kind of military threat that if you come here, we will go there. They made it very clear that
USA is strong enough to contain all these European Powers. So, OAS is an acceptance of
Monroe Doctrine by the countries of western hemisphere and they accept that an
attack on one American state by an outside power would be considered as an attack
on all. Therefore, OAS did continentalise (pertaining to a continent) the Monroe
Doctrine, without compromising the right of the United States to Self Defence.
 There was a policy of American Isolationism which means that ‘America will live in
isolation, away from the European Powers’. USA deliberately practiced this policy of
isolationism. Since USA was a single powerful state (later on becoming a Super Power),
the rest of the states in this area virtually became the protectorates of the United States of
America, even though outwardly USA has formed them into an organisation and associates
with them in a different way. But however, all this was a clear message to the European
Powers that do not come here.
 Even after this isolationism, USA did intervene in the WW - I but for that there are
different explanations that why did it intervened?
1. The first explanation is that the European Powers especially Britain wanted USA to
intervene in WW - I.
2. Another explanation is that the WW - I had become so violent that if USA would not
had intervened, then probably the world would have destroyed.
3. The third and the most plausible explanation is that USA wanted a balance of power
in Europe so that no European power could become strong enough to conquer the
whole of Europe, and then move towards USA to conquer it.
∴ So, that’s why USA intervened in the WW - I. After the WW - I, USA decided not to
become a member of the League of nations and once again it went back to its isolation. By
the WW - II, Soviet Union had become a super power (which can easily operate on all
parts of the globe) and it was spreading communism in the whole world. So, to stop this,
USA again had to permanently intervene in the affairs, not only of the Europe but also of
the whole world and ever since then, USA have ruled. It has also been very proactive even
in the post-cold war world. So, the days of American Isolationism are now gone. But the
Monroe Doctrine still exists in the form of OAS, asserting itself in the way of organisation
of American States.
 As far as history is concerned, the OAS grew out of an earlier US sponsored International
Organisation in the Western Hemisphere. This organisation was basically the result of Pan
American Conferences from 1889-1890, and then to 1948. Pan means ‘Whole’. The
name of this organisation was the “Pan-American Union”, and it is the only power that
militarily matters to the USA and therefore, this was nothing but the domination of the
USA in the whole of the American Continent. After the WW - II, it was challenging the
other super power, the Soviet Union during the cold war and contending with it for mastery
almost over whole of the world. The Soviet Union was defeated and the world became a
unipolar world for some time, which now today is heading towards the multi-polar world.

17
 But the USA still didn’t give up the concept of Monroe doctrine in the form of OAS, even
though now its power is being seriously challenged by the China.
 So, OAS is meant to deal with the commercial and juridical (i.e., law up to which
jurisdiction) problems, common to the United States and Latin American Countries that
includes the Central & South American states.
 During the WW - II, when USA entered the war on the side of allies, most of the American
states sided with United States and declared war against the axis powers. In 1947, all the 21
independent states of western hemisphere agreed on a formal Mutual Defence Pact and
therefore, built an “Inter-American Treaty of Reciprocal Assistance”, which says that
‘you give us the assistance and in return, we will give you the assistance’.
 By 1948, when cold war has started, there was felt a need for a stronger security system to
deal with the international communism sponsored by the Soviet Union. So, in order to
confront that, a need was thus, felt for a stronger organisation to defend the western
hemisphere from the communism emanating from the Soviet Union.
 On 30th April 1948, the ‘OAS Charter’ was signed at the conclusion of the 9th Pan-
America Conference in Bogota and the state of Colon. In this Charter it was stated that
the aims of OAS were :-
1. To strengthen peace and security in the western hemisphere.
2. Peaceful settlement of disputes between the members of OAS.
3. Adoption of the principle of collective security among the American States (i.e.,
threat to one is threat to all)
4. To encourage cooperation in economic, social and cultural matters among the states
of the western Hemisphere.
 Most of the newly independent states joined the OAS in the 1960s. Canada joined it in
1990, and today the responsibility of Canadian security vests with the USA. Canada had
remained with the Britain, it became its commonwealth and thus, became an independent
state of British Commonwealth, whose nominal head of the state is the British Monarch. It
simply means that Canada has the dominion status. The British also wanted to give this
dominion status to India, where the head of the state would be king or queen of England.
But India refused this and it became a republic state, where the head of the state is not
hereditary and hence today, India have a President as its head. So, including Canada, all
other newly independent states in the American Continent also joined the OAS lately.
 In the post-cold war situation around early 1990s, the OAS became active to encourage
democracy among its member states. (America was a democracy, Canada was also a
democracy and there were some other states as well where democracy prevailed, but this
kind of democracy was doubtful. On the other side, the Latin American countries are very
infamous for the kinds of political systems they have, as most of them have dictatorship).
So, OAS became active to encourage democracy among the members. For this, it was also
ready to give a lead role in observing and monitoring elections in these countries as a
safeguard against the frauds and irregularities, taking place during the election process.

18
 In the economic and social fields, OSA adopted the Charter of “Punta del Este” in 1961.
Punta del Este is a city in Uruguay, in Latin America. This charter basically established the
‘Alliance for Progress’ and was sponsored under the ages of OAS. It aims at the
achievement of economic and social development by establishing a democratic
government. It said that there should be growth in per capita income of these countries &
there should be more equitable distribution of income i.e., taxes should be in place and
relief should be given to the poor people. Here, the growth in per capita income means
economic growth, while Equitable distribution of income signifies ‘an honest government’.

THE STRUCTURE OF OAS

The structure of OAS consists of :-
 General Secretariat - There is a General Secretariat which acts as an administrative
backbone of the OAS. It is headed by a secretary general, who is elected for 5 years. The
General Secretariat is located at Washington DC i.e., in the capital of USA.
 General Assembly - General Assembly is the chief policy making body of the OAS that
holds annual meetings at which the member states of OAS are represented by either the
foreign ministers or the heads of states. It also controls OAS' budget and supervises its
various specialized agencies and organisations.
 Permanent Council - Permanent Council comprises of an ambassador from each member
state. It acts or can act as a provisional organ in case of an attack or aggression till the
foreign ministers assembles in the assembly. If the assembly is not in session, then having
a permanent council becomes a kind of provisional organ till the assembly meets.
Collective action can take place only by the approval of 2/3rd of foreign ministers. Both the
General secretariat and Permanent Council, are located permanently in Washington DC.
∴ So, in short, OAS is a well-running organisation which gives USA a clear advantage. Most
of these countries support US policy and all of them express their agreement with it.

TWO IMPORTANT CASES OF REVOLT

i. One important case is of Cuba. Cuba in 1961 declared that it is a communist state now.
In 1962, there was Cuban Missile Crisis. When it occurred, Cuba was suspended from the
OAS and it remained suspended. In 2009, the case of bringing Cuba back to OAS was
being considered, though Cuba at this time had not remained that powerful as it was
earlier and its main patron, the Soviet Union has also collapsed. So, those days are gone
when Cuba used to be a powerful state, where its armies used to fight for the revolutions
even in the African Countries. Hence, by 2009 it was a spent bullet. The OAS still
reconsidered its membership case but Cuba refused. In many places, USA would
intervene in such cases regarding backing from the OAS.
ii. In July 2009, a coup ousted president, Manuel Zelaya from Honduras, Latin
America. The interim government announced its departure from the OAS because OAS
didn’t recognised its legitimacy, so they said that we’ll walk away. But OAS refused to
accept this withdrawal and instead, it suspended Honduras from the OAS membership.
∴ So, these were the only 2 important cases of revolt, otherwise USA didn’t face much
problem in taking the lead in getting support of all these American states.

19
3rd June 2021

SHANGHAI COOPERATION ORGANISATION

(SCO)
 Readings :-
- About SCO - eng.sectsco.org
- Shanghai Cooperation Organization - Department of Political and Peacebuilding Affairs
(dppa.un.org)
- The Role of the Shanghai Cooperation Organization in counteracting threats to Peace and
Security - United Nations

ABOUT THE SCO

 SCO is a permanent inter-governmental organisation that was created on 15th June 2001 in
Shanghai, China. The participants were; Republic of Kazakhstan (Central Asian Republic
of the former Soviet Union), Republic of Kyrgyzstan (Central Asian Republic), Republic
of Tajikistan (Central Asian Republic), Republic of Uzbekistan (again a Central Asian
Republic of the former Soviet Union), the Peoples’ Republic of China and the Russian
Federation. Later on, India and Pakistan were also added.
 This organisation was originally preceded by ‘Shanghai Five’ mechanism, which was set
up in 1996. Shanghai is a city in Peoples’ Republic of China. Its members were China,
Kazakhstan, Kyrgyzstan, Russia and Tajikistan. This organisation was basically built in the
post-cold war situation to counter the influence of the United States in this region. So,
these countries quietly built military, economic, diplomatic and political collaboration to
counter the United States influence primarily in the Central Asian Republics. Therefore,
these states came together to check the undue influence of the USA, that had become the
sole super power at this time immediately after the ending of the Cold War.
 The “Charter of SCO” was signed at the Russian city of St. Petersburg in June 2002 and
it entered into force on 19th September 2003. SCO is a kind of regional organisation
because it involves the Central Asian Republics, primarily China and Russia. Its charter is
the fundamental statutory or the legal document which outlines its principles, goals,
structure and its core activities.
 At a historical meeting, the Council of Shanghai Cooperation Organisation, on 8th and 9th
June 2017, decided to give full membership to both India and Pakistan. This meeting was
held at Astana in Kazakhstan. So, initially there were 6 members but now the membership
has increased to 8. The idea was economic-cultural cooperation and to develop a kind of
trust among these countries. Initially it started at the time, when USA became the sole
super power, in order to check its influence in this region.

 The official languages of SCO are “Russian and Chinese”. Ever since the days of Soviet
Union, the Central Asian Republics are well versed in Russian language, just like India and
Pakistan are well versed in English.

20
MAIN GOALS OF SCO
1. To strengthen mutual trust and neighbourliness among the member states. For India, it is
a very good organisation because two of the India’s rival states i.e., China and Pakistan
are included in this. So, this first goal goes in favour of India.
2. Promoting effective cooperation in politics, trade & economy, research, development of
technology and culture.
3. Enhancing ties in education, energy, transport, tourism, environmental protection and
other allied areas.
4. To make joint efforts to maintain and ensure peace, security and stability in the region.
5. Establishment of a democratic, fair and rational new international political and economic
order.

GUIDING PRINCIPLE OF SCO – BASED ON “SHANGHAI SPIRIT”

It augurs well for India noting the fact that both China and Pakistan in this organisation are
moving towards achievement of these goals. India’s growth of economy and its military
power, and the fact that it had now become a nuclear power, all these had also been taken into
consideration. This is called the Shanghai Spirit. It is based on two policies :-
1. Internal Policy of shanghai Spirit is based on mutual trust, mutual benefit, equality,
mutual consultations, respect for cultural diversity and a desire for development.
2. External policy of the shanghai spirt is in accordance with the principles of non-
alignment, non-targeting of any third country (i.e., non-member countries), and openness
i.e., to be very clear and transparent with others.

STRUCTURE OF SCO
 Heads of States Council (HSC) - It is the supreme decision-making body of SCO, where
the heads of the states meet. The meeting is held once in a year to discuss and to adopt
decisions and issue guidelines on all the important international issues. So, it is basically
the direction giving body of the SCO.
 Heads of Govt. Council (HGC) - The higher officials of the government meet at HGC,
that is why it is called Heads of Government Council, whosoever is the head of the
government that comes here. It also meets once in a year to discuss SCO’s multilateral
cooperation. It establishes high priority areas, resolve current economic and cooperative
issues and also approve SCO’s budget.
 Council of Ministers of Foreign Affairs - It considers issues related to day-to-day
activities.
 Council of National Coordinators (CNC) - It acts as a coordinator for the SCO members.
Apart from these, there are meetings of the heads of the parliament, secretaries of the security
council, ministers of defence meet, other emergency meetings, etc.

21
In SCO, there are two permanent bodies, which are as follows :-
 SCO Secretariat – It is located in Beijing, the capital of China. The Secretary General of
SCO heads the Secretariat, which is appointed by the head of the state council for a term
of three years. It aims to provide informational, analytical & organisational support.
 Regional Anti-Terrorist Structure (RATS) – It is an executive committee of SCO based
in Tashkent, capital of Uzbekistan. It is a headed by a director, which is also appointed by
the head of the state council for a term of three years. It was established with an aim to
combat terrorism, separatism and extremism.

MEMBERSHIP AND COMPOSITION OF SCO

In total, there are 8 members of SCO. Apart from it, there are 4 observer states which are;
Afghanistan, Belarus (a former member of Soviet Union), Iran and Mongolia. Also, there
are 6 dialogue partners with whom negotiations can take place, namely; Azerbaijan
(Former Soviet Republic), Armenia (Former Soviet Republic), the Kingdom of Cambodia,
Nepal, Turkey & Sri Lanka.

OPERATIONS OF SCO
Initially, the SCO focused on mutual intra-regional efforts to curb terrorism, separatism and
extremism in Central Asia. But in 2006, SCO’s agenda widened to include combatting
international drug trafficking as a source of financing global terrorism as well. It also
actively participated in bringing back stability in Afghanistan in 2008. Along with these, the
SCO took up a variety of economic activities. In 2003, SCO member states signed a ‘20-
year Programme of Multilateral Trade and Economic Cooperation’ for the
establishment of a free trade zone within the territory under the SCO member states.

STRENGHTS OF SCO
The SCO covers 40% of the global population, nearly 20% of the global GDP and 22% of
the world’s land mass. It has a strategically important role in Asia due to its geographical
significance, which enables it to control Central Asia and limit the American influence in
the region. Hence, SCO is seen as counterweight to the North Atlantic Treaty Organisation.
CHALLENGES FOR SCO
The SCO security challenges include combating terrorism, extremism & separatism, drug &
weapons trafficking, illegal immigration, etc. Despite being geographically close, the rich
diversity in member’s history, background, language, national interests, form of
government, wealth and culture, makes the decision-making of SCO, a bit challenging.

IMPORTANCE OF SCO FOR INDIA

India’s membership of SCO can help it in achieving regional integration, promote
connectivity and maintain stability across the borders.
1. Security - India through RATS can improve its counter-terrorism abilities by working
toward intelligence sharing, law enforcement and developing best practices &
technologies. Through SCO, India can also work on anti-drug trafficking and small arms
proliferation, and can cooperate on common challenges of terrorism & radicalisation.

22
 2. Energy - India being an energy deficient country with increasing demands for energy,
SCO provides it with an opportunity to meet its energy requirements through regional
diplomacy. Various talks are also being held on the construction of stalled pipelines like
the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline and IPI (Iran-Pakistan-
India) pipeline. Thus, India can get a much-needed push through the SCO.
3. Trade - SCO provides direct access to Central Asia by overcoming the main hindrance
in flourishing of trade between India and Central Asia. Therefore, it acts as an
alternative route to trade across Central Asia. Central Asian countries provides India
with a market for its IT, telecommunications, banking, finance and pharmaceutical
industries, which could also help India to strengthen its economic ties.
4. Geopolitical - Central Asia is a part of India’s Extended Neighbourhood. SCO provides
India an opportunity to pursue the “Connect Central Asian Policy” and it also helps
India to fulfil its aspiration of playing an active role in its extended neighbourhood as
well as checking the ever-growing influence of China in Eurasia. It basically provides a
platform for India to simultaneously engage with its traditional friend Russia as well as
its rivals, China and Pakistan.

CHALLENGES OF SCO MEMBERSHIP FOR INDIA

Some challenges being faced by India as a member of SCO are :-
1. Pakistan’s inclusion in SCO poses potential difficulties for India.
2. India’s ability to assert itself would be limited and it may have to play second fiddle
because China and Russia are the co-founders of SCO and thus, have dominant powers
in this region.
3. India may also have to either dilute its growing partnership with the West or engage in
a delicate balancing act since SCO has traditionally adopted an anti-western posture.

∴ So therefore, we can see that this organisation which started as a small group of countries,
like China, Russia and 4 central Republics and later on including India & Pakistan, was
initially built as a countervail to the expansionist design of USA in Central Asian Republics.
Establishment of Economic cooperation, Political cooperation, mutual strength, confidence
building measures, etc, were all the important aspects of this organisation. When India and
Pakistan became nuclear powers, they both were included in SCO and since India was also a
rising power, so SCO felt prudent to include India. But if we talk about Pakistan, then it is
very much possible that China must have persuaded SCO to include Pakistan as well.

23
3rd June 2021

BAY OF BENGAL INITIATIVE FOR MULTI-SECTORAL

TECHNICAL AND ECONOMIC COOPERATION
(BIMSTEC)
 Readings :-
- Brief on BIMSTEC - mea.gov.in (Important)
- It’s Time to Deepen Integration Around the Bay of Bengal - Ellen L. Frost (Carnegie India)
- What is BIMSTEC & why it has emerged as the preferred grouping of countries in South
Asia - theprint.in

 BIMSTEC includes the countries around Bay of Bengal. These are 1. Bangladesh, 2.
Bhutan, 3. India, 4. Myanmar (Burma), 5. Nepal, 6. Sri Lanka and 7. Thailand. Pakistan
and China are not included in these countries.
 If we count the population of these countries, it is 1.5 billion which is around 21 % of
world’s population and their combined GDP is 2.5 trillion US Dollars. So that is why it is
an important set up.
 BIMSTEC has originally started as ‘BIST – EC’ and it was formed in June 1997 in a
meeting at Bangkok, Capital of Thailand. At that time, it included Bangladesh, India, Sri
Lanka and Thailand (BIST). Here, EC stands of ‘Economic Cooperation’.
 In December 1997, Myanmar was admitted and its named changed to BIMST-EC.
 In February 2004, Bhutan and Nepal were also included and again it was renamed as
BIMSTEC.
 As far as its functioning is concerned, BIMSTEC is an inter-governmental organisation
having inter-governmental interactions through summits, ministerial meetings, official
meetings of expert groups, senior official meetings and also through BIMSTEC Working
Group, which is based in Bangkok. The idea of these groups is to encourage interactions,
negotiations, discussions, mutuality and economic & social cooperation.
 BIMSTEC permanent secretariat is to be established in Dhaka with 1st secretary general to
be nominated by Sri Lanka. India would be contributing 32% of the cost of secretariat.

AREAS OF COOPERATION
BIMSTEC has identified 14 areas of cooperation, where a member country takes lead or in
other words, where member states act as a coordinator. These are called ‘Priority Areas’.
India is the lead country for Transport & Communication, Tourism, Environment & Disaster
Management and Counter Terrorism & Transnational Crime. These Priority areas are :-
1. Transport and Communication – India is the leading state or the coordinating state in
Transport & Communication. The aim is to build BIMSTEC Transport, Infrastructure
and Logistic Study (BTILS) because in all these cooperation areas, the idea is to conduct

24
 studies and then make recommendations. So, BTILS conduct surveys, hold meetings at
ministerial level and presents ambitious projects for the road development.
2. Tourism – Here also India is the leading country. For tourism, a ‘BIMSTEC
information Centre’ has also been established in New Delhi in July 2007.
3. Counter Terrorism and Transnational Crimes (CTTC) - In CTTC, there are 4 sub-
groups with different leaders :-
a) Intelligence Sharing - The leader is Sri Lanka,
b) Combating Financing of Terrorism - The leader is Thailand,
c) Legal and Law Enforcement - The leader is India,
d) Prevention of narcotic drugs and allied substances - The leader is Myanmar.
So, all these 4 sub-groups are working under different leader states for overall project
of counter terrorism and transnational crimes that includes Drug Trafficking as well.
4. Environment and Disaster Management – Again, the leading state here is India. India
is establishing a ‘BIMSTEC Weather and Climate Centre’ at National Weather
Forecasting Centre in Noida.
5. Trade and Investment - The leader here is Bangladesh. A framework agreement for
BIMSTEC free trade area was signed in Phuket, Thailand in February 2004 where
Bangladesh has been given the lead. The Framework Agreement commits the parties to
negotiate FTAs in goods, services and investments. An agreement on Trade in Goods and
other provisions relating to Rules of Origin, Operational Certification Procedures and
agreement on Customs Cooperation was finalised in Jun 2009. India has also exchanged
its tariffs preference schedule with the member countries.
6. Cultural Cooperation - The leader is Bhutan. The members are being expected to sign
the MoUs (Memorandum of Understanding) on establishment of BIMSTEC Cultural
Industries Commission (BCIC) for the promotion of culture and BIMSTEC Cultural
Industries Observatory (BCIO), which was being built at Bhutan during the 3rd Summit.
7. Energy - The leading state is Myanmar. Here, meeting of energy ministers takes place.
India in this context is developing a ‘Central Power Research Institute’ in Bengaluru.
8. Agriculture - Myanmar is the coordinating state in Agriculture. However, India is also
contributing and taking the lead on various projects like prevention & control of trans
boundary animal diseases, development of agricultural biotechnology including bio-
safety, Affiliation of Universities/Research Institutions, development of seeds, etc.
9. Poverty Alleviation - The Coordinating Country in this project is Nepal.
10. Technology – In technology, Sri Lanka is the coordinating country where a
BIMSTEC technology transfer exchange facility is also being built.
11. Public Health - Thailand is the coordinating Country in this project.
12. Fisheries - Ireland is the coordinating country in Fisheries.
13. Climate Change - Bangladesh is the coordinating country in this regard. Very soon
Bangladesh will be circulating a concept paper on cooperation in this field as well.
14. People- To- People Contact - Thailand is the coordinating country here.

25
4th June 2021

INTERNATIONAL MONETARY FUND

(IMF)
 Readings :-
- International Monetary Fund (IMF) - Britannica
 IMF is considered as a kind of a specialized agency which was established at the “Bretton
Woods Conference” in 1945 i.e., almost in the immediate closing years of WW - I.
 After the ratification by 21 countries at the Bretton Woods Conference, the articles of
agreement of the International Monetary Fund finally entered in force on 27th December
1945, with its headquarters situated in Washington DC, USA.
 Economy plays a very important role in international relations. The first half of the 20th
century was marked by two world wars that caused enormous physical and economic
destruction in Europe. Also, the ‘Great Depression’ which occurred during 1930s brought
economic devastation in both Europe and USA. In economics, this term ‘Depression’ is
considered to be a complicated economic affair and nobody has a particular answer that
why it occurred, but one thing which was clear is that these occur in liberalized economies.
 This great depression affected USA, west Europe and most importantly Germany, which
had been defeated in the WW - I. When this depression occurs, the purchasing power of the
currency goes down, resulting in a large-scale unemployment. Although, this great
depression in a way helped Hitler to come to power because when the civilian economy
was in depression, he concentrated upon the military industry and people found
employment. So, it made people listen to Hitler as they were getting employed and that is
how this depression helped him. But the most important point is that during depression, the
currencies of the economy become weak and their purchasing power also goes down.
 After or may be during the time of WW - II, there was a desire along the victorious power
to create a new international monetary system which would help countries to stabilize the
currencies. So, IMF was built with an aim to secure International Monetary Cooperation to
stabilize currency exchange rates of the countries, which would become its members &
borrowers, and to expand international liquidity. Liquidity means availability of money;
when you have more money in the supply, then with that you can buy anything. So, here
international liquidity would mean to have hard currency. All these transactions in
western countries are taking place digitally. For instance, the way India decided during
monetization to digitalize the economy. In context of India, the digitalization is very
important because people hold money and keep that money in the banks, lockers etc. Now
due to this money becomes less and the government taxes don’t come the way these should
have come, and therefore Government resorts to money supply either by borrowing or by
printing new Currency. In both these cases, the volume of the money increases and when
the volume of money increases, its purchasing power goes down. Anything whose supply
is increased; its value will come down. For example; if mangoes are in surplus supply, the

26
 values of the mangoes will fall. Similarly, if money is in surplus and is circulating in the
market, the purchasing power will go down. More money is supplying because of the
hoardings in the country and it causes lessening of purchasing power of our currency and
ultimately it leads to inflation. Inflation means that you have money but it cannot buy
things. Therefore, those who have hoarded this money, will be the beneficiaries and those
who are poor and have worked with honest intentions, would be the sufferers. This thing is
happening from a long time in the country. Demonetization happened to address this only.
Hence, we can say that digitalization is very important for us, so that we do not have this
kind of hoarded corrupt money in the country.
 In the western countries, digitalization is a very old thing. You simply purchase things
through digitalized process which may include issuing of the cheque, drafts, etc. When you
speak of international liquidity, it would mean that people would be able to buy more hard
currency. Hard Currency is a stronger and stable currency, whose purchasing power is
strong like the US Dollar, the Pound, the Yen, etc. These are the currencies which people
look upon when their own currency becomes weak.
 Therefore, events like WW-I & the Great Depression kindled a desire to create and secure
a new international monetary system that would stabilize the currency exchange rates
without backing the currencies with gold (Earlier when the purchasing power of a currency
went down, the governments used to tackle it with gold, but now this was International
monetary security without resorting to gold reserves), reduce the frequency & severity of
balance-of-payments deficits (Balance-of-payments deficits occur when more foreign
currency leaves a country than entering it i.e., if we have more imports and less exports),
and eliminate the destructive mercantilist trade policies such as competitive devaluations
and foreign exchange restrictions. Countries resort to devaluation of their own currency in
order to promote exports because if their currency is devalued, then with the lesser foreign
currency they can buy more of our goods. This is a way to encourage foreigners to buy our
goods, resulting in an increase in exports. So, all these are monetary fiscal procedures
which are a part of an economy and therefore, International Monetary Fund was created so
that true international cooperation can be achieved and those countries which are members,
should be able to pursue independent economic policy.

OPERATIONS OF IMF
Since its creation, the IMF’s principal activities have included stabilizing currency exchange
rates, financing the short-term balance-of-payments deficits of the member countries, and
providing advice & technical assistance to the borrowing countries.
At the Bretton Woods conference, the framers wanted to establish a monetary system or a
monetary regime that would promote world trade, investment and economic growth of all the
countries. Weak currencies are the indication of those countries that are economically weak
and economically weak countries may not be able to indulge in much trade because trade
usually takes place among healthier economies. So, the Bretton Woods conference wanted to
make the economies healthy by making the currency exchange rates stable. The countries
which have moderate and temporary balance of payment deficits, were expected to finance

27
their deficits by borrowing foreign currencies from IMF, rather than resorting to devaluation
or imposing exchange controls which could disturb the international economic system. So, if
your currency is weak, then you can always borrow from IMF and can make your currency
strong, but only when there is temporary and moderate balance of payment deficits.

ORGANISATION OF IMF
 BOARD OF GOVERNORS - IMF is headed by a board of governors each representing
a member state. Currently, there are around 180 member states at IMF. The governors
who are members of the IMF Code of Governors are usually each country’s Finance
Ministers. There are yearly meetings of the Board of governors at IMF.
 EXECUTIVE BOARD - For IMF’s day-to-day operations, there is an executive board
consisting of 24 executive directors who meet at least 3 times in a week. Out of these 24
executive directors, 1/3rd of these directors i.e., 8 executive directors represent individual
countries i.e., the United States, United Kingdom, Russia, France, China, Germany, Japan
and Saudi Arabia. All these are pretty rich countries having stable economies and
currencies. The other 16 executive directors represent different regions of the world. The
decisions are taken by consensus and the meetings are cheered by managing directors,
who are appointed by the executive board for a renewable (same person can be re-elected)
tenure of 5 years.
 The IMF staff consist of 2,700 employees, who belong from these countries but the
managing director is generally a European. This is by tradition that managing director is
almost always from Europe because after USA, any powerful group which can contribute
money is Europe.

Ques - From where does the IMF gets money to lend to those countries who want to
stabilize their currencies?
Ans. Each member contributes a sum of money called “Quota Subscription” (Subscription
is a kind of fees which you pay when you became a member of any organisation) and these
quotas are revised every five years that how much money is to be given by a particular
member. Quotas are basically based on each country’s wealth and economic performances.
Each country pays its quotas in accordance to its paying capacity, which obviously means
that rich countries will pay more and poor will pay less, and therefore, the richer countries
have larger quotas. If you are contributing more to the system, then in return you will
obviously expect more and that is depicted in the working of IMF system because the quotas
when come together, make a pool of loanable funds and determine how much money each
member of IMF can borrow and how much voting power it will have. Voting power of a
country would depend upon how much money it gives to the system. Example; if a country
which is not economically rich asks for the loan and it is to be debated whether the loan
should be given or not, then the country with more votes in IMF will be in a stronger position
to decide that. So, if you want power to decide within this system, then your quota must be
larger because your votes are going to be in proportion to the contribution you make.
Therefore, this makes IMF as rich person’s club because ultimately, these rich persons will
only decide what is to be done and what not.

28
The group of 8 industrialized countries i.e., Canada, France, Germany, Italy, Russia,
United Kingdom, USA and Japan, control nearly 50 % of IMF’s votes. Among all these
countries, USA is the strongest. The United States contributes 83 billion dollars i.e., 17 % of
the total quotas, and in return it receives 17 % of the total votes on both the board of
governors and the executive board. Hence, the decision-making power in IMF rests upon the
contribution you make.

ACTIVITIES OF IMF
Activities which IMF has been doing ever since its inception is that it has been stabilizing
currencies and exchange rates of countries though its loans, financing short term balance of
payment deficits (these would occur when your imports are more and exports are less), and
also providing advice and technical assistance to the borrowing countries.
Example :- India was experiencing a huge problem when Dr. Manmohan Singh became the
finance minister of India. The socialist economy we had, was looted because all the economic
sectors belonged to the state and so, the higher officials of the government looted it,
deposited their money in foreign banks then send their children to study in the foreign
countries and those children then acquire the citizenship there and after all this, they give
excuses that we have grown old, so will also migrate there with our children. That is what has
been going on from past 70 years since independence. So, a lot of money has been drained
and that’s why PM Modi has said that if we bring all that money back here, the government
of India would be able to pay 15 lakhs to each and every Indian. The IMF takes the burden
off their head that this much of money is lying here but they will not tell to whom this money
belongs. So, this was the state of affairs in which Indian gold was pledged in the international
market. When households become bankrupt, they have to pledge their gold in the market.
Similarly, this country is also like a household with all the traitors who are looting it. Under
these circumstances, Manmohan Singh became the finance minister. He was an absolutely
honest man and a brilliant economist who came from a very modest family. His name is
trusted because of his brain & honesty. This man’s business was to privatise Indian economy
because in privatization, no one can loot. Like if we talk about electricity coming from
government then it may be looted through illegal methods, but if it is a privatized electricity
then it won’t be looted. So, the main focus of Manmohan Singh was to build a privatise
economy with the loans which he would get from IMF. In the 1st budget he presented,
everyone was shocked in the Parliament that he has shown our national budget to the
agencies like IMF and world bank, because national budget shouldn’t be showed. But this
was a good step because if you want to take a loan from any of such agency, then you must
tell that about your plans clearly.

CRITICISM
1. IMF can control the national budget, and it can also tell where to invest and where not to.
2. Richer countries may indulge in reckless spending knowing the fact that if anything goes
wrong, they can always borrow from the world bank, and this reckless spending may be
at the cost of the world. Therefore, IMF can rescue all the rich countries budgets through
the loans.

29
5th June 2021

THE WORLD BANK (WB)

 Readings :-
- World Bank: Definition, History, Organisation & Facts – Britannica
- World Bank: Purpose, History, Duties, and Mission - The Balance
- History-World Bank Group - worldbank.org
 World Bank is associated with the United Nations and it is designed to finance those
projects that enhance economic development of the member states. So, this institution is
for economic development of the member states of the UN, especially those who wanted to
take advantage of the Word Bank. Its headquarters is in Washington DC, USA.
 World Bank is the largest source for financing the developing countries. It provides
technical assistance and policy advise to those who avail its services. Together with
International Monetary Fund and World Trade Organisation, World Bank plays a central
role in overseeing economic policy and reforming the public institutions in the developing
world. Therefore, the developing countries, where there is backwardness, can take money
from the World Bank in order to reform their institutions.
 The role of World Bank is important in the case of those countries which are switching
over from socialist economy to a market oriented privatized economy, like India. So, here
in such countries, the financial support is required because there are business houses which
require loans and the governments may also try to facilitate certain things for development
in these countries, hence for all these activities, money is coming from the world bank.
 Similar to the IMF, the World Bank has also originated at the “Bretton Woods Conference”
in 1944. However, its official operation began later in 1946.
 The earliest loans given by the World Bank were the loans given for the post war
reconstruction, primarily in Europe.
 During the 1950s, it began to play a major role in financing investments in infrastructure
building like road building projects, hydroelectric dams, water and sewage facilities, sea
ports and air ports, in the developing countries. Today, various projects of sewage, road
building, electrification, etc, are being sponsored by the world bank.
 World Bank is composed of 5 Constituent Institutions, which are as follows :-
 IBRD – It stands for ‘International Bank for Reconstruction and Development’. It is the
most important institution amongst all.
 IDA – It stands for ‘International Development Association’.
 MIGA – It stands for ‘Multilateral Investment Guarantee Agency’.
 IFC – It stands for ‘International Finance Corporation’.
 ICSID – It stands for ‘International Centre for Settlement of Investment Disputes’.
Here, the term ‘Constituent’ means that ‘all these five institutions come together to form
the World Bank’.

30
FUNCTIONS OF THE WORLD BANK & ITS CONSTITUENTS
 IBRD - It provides loans at the market rate of interest to the middle-income developing
countries and to the creditworthy lower income countries. Here loans are given at the
market rate of interest (which may be a bit high) and these are given for reconstruction and
development to the middle-income developing countries and to the creditworthy countries.
Creditworthy country is that country which takes these loans and is confident, and also
expected that it will return these loans. When Dr. Manmohan Singh showed the national
budget to the IMF & World Bank, the Indian Parliament questioned him that why did he
showed them our national budget. But the matter of fact is that it is important to show how
will his country return back these loans because IMF & World Bank will give the loans,
only when they are satisfied that this country is creditworthy and is capable enough to
return these loans.
 IDA - Since 1960, it has been providing interest free long-term loans, technical assistance
and policy advice to lower income developing countries in areas such as health, education
and rural development. The idea is that even if this primary or basic infrastructures are not
being developed in these countries, then there would be sub-human conditions and thus,
they will not be able to develop. All round development of the world is important and if
you want your goods to be sold in a larger market, then all the countries must have the
buying capacities. So therefore, here IDA is helping the poor countries to improve their
basic structure and that’s why these loans are interest free loans. The sole motive behind
the free interest is to develop these countries, while putting less burden of interest
 IFC - It operates in partnership with private investors to provide loans and loan guarantees
to finance the business undertakings.
 MIGA - MIGA provides insurance against loss to the foreign investors in non-commercial
areas. Foreign Investors come in commercial areas because a good amount of profit can be
made here. But in non-commercial areas where profits may not be forthcoming and
governments may have to pay, there this institution (MIGA) provides insurance against
loss to the foreign investors.
 ICSID - It operates almost independent of the IBRD and it settles disputes between the
foreign investors and the host country. Therefore, its main business to settle the disputes.
 From 1968 to 1981, the president of the World Bank was former U.S. secretary of
defence, Robert S. McNamara. Under his leadership the bank formulated the concept of
“Sustainable Development”, which attempted to align/ reconcile economic growth with
environment protection, especially in the developing countries because if you develop and
erode your environment in the process, then that would be a great problem.
 The World bank also ensures capital flows to the developing countries in the form of
foreign investments, and also provides development assistance to bridge the gap between
the rich and the poor countries.

31
ORGANISATION OF THE WORLD BANK
 Although the World Bank is related to the United Nations, but it is not accountable either
to the UN General Assembly or to the UN Security Council.
 Each of the world bank’s 180 countries are represented by its board of governors which
meet once in a year. The governors are usually the finance ministers of their respective
countries or the governors of their country’s Central Bank, like in case of India, the central
bank is RBI.
 The actual power of the world bank is yielded by its board of 25 executive directors. Out
of these 25 executive directors, 5 countries i.e., the United States, United Kingdom,
France, Germany and Japan, appoint their own executive directors as these are
economically and financially rich countries. While, the other countries are arranged into
groups of their regions and each group elects its own executive director.
 There is also a President in the board of executive directors. Throughout the World Bank’s
history, the bank president, who serves as the chairman of the Executive Board, has always
been an American citizen.
 The voting power in world bank is based on a country’s capital subscription. The more
money a country will give to the world bank, the more votes that country will have. The
wealthier countries that are major shareholders in the world bank controls more votes. For
example, United States controls 1/6th votes in the IBRD, which is perhaps the most
important Constituent Institution of the World Bank. Sometimes IBRD is addressed as the
World bank itself. So, the developing countries have a small number of insignificant votes
that just like IMF, makes the world bank a club of the rich countries. Just like in IMF, here
also the dominant class dominates the poor. Hence, it is the wealthier country’s game to
control the policies and to decide which loans to give and which not to give.

32
5th June 2021

GROUP OF 7 (G-7)
 Readings :-
- G7 Summit: Definition, Members, and What Happens - The Balance
- G7 Summit: What is it and why is it in Cornwall? - BBC News
- Group of Seven (G-7) Definition - Investopedia
 G7 is an international organisation, made up of ‘7 largest advanced economies’ of the
world, which are; the United States, the United Kingdom, France, Germany, Italy,
Canada and Japan. Russia had also joined it in 1998 but in 2014, when Russia annexed
Crimea, in its neighbouring state of Ukraine, it was excluded. European Union is
considered to be a de-facto member (de-facto is in the actual working), so except for the
fact that European Union is not given the chairmanship, it is always there. France,
Germany and Italy are European Union Members and yet the European Union as a whole
is represented in the group of G7. China has never been a member of this group despite the
fact that it has a very large economy and world’s largest population, probably due to
China’s low level of wealth per capita, that does not make China an advanced economy in
the eyes of G7. India for obvious reasons is not a member of G7, though it is also a
growing economy.
 In June 2021, a summit is taking place in England and in this, India, South Korea and
Australia has also been invited. So, wherever the summit takes place, the presidency is also
given to that country. This time (2021) the presidency is in UK, while last year it was in
United States but however, that couldn’t take place due to the pandemic of COVID - 19.
 So, throughout the year, the ministers of these countries hold meetings, reach agreements
and publish or issue joint statements on various global events. But G7 is not a formal
official organisation, rather it is an informal organisation. So therefore, it is not having the
power to legislate authoritatively and also it cannot make any laws which will be binding
upon everyone. Since it does not have the power to enforce the recommended policies and
plans, so the members are expected to comply with its agreements willfully, but ultimately
it cannot force the countries to comply with them.

WORKING OF G7
 The major purpose of G7 is to discuss and sometimes to act in consonance to help resolve
various global problems with special focus on economic issues. Since its inception in
1970s, this group has discussed financial crisis, monetary system and several major world
Crisis, such as oil shortages. It had become G8 with the inclusion of Russia and after the
exclusion of Russia, it had once again become G7.
 This group originated in the early 1970s when leaders of the United States, the United
Kingdom, France, West Germany and Japan, used to meet in Paris to discuss recession in
oil crisis. Since then, they have been transformed into an informal working group. Russia

33
 had also been added to this group in 1998 after it launched the free market reforms there,
but due to its annexation on Crimea in 2014, it was excluded from this group.
 G7 has also launched many initiatives to fund issues and relieve crisis when it sees
opportunity for joint action. These efforts have generally been aimed at debt relief for the
developing countries.
 In 1996, the G7 has launched an initiative for 42 Heavily Indebted Poor Countries (HIPC)
with a Multilateral Debt Relief Initiative (MDRI).
 In 2005, it pledged to the IDA (International Development Association) to cancel the debt
of those countries that have gone through MDRI programme.
 Recently, there is a Summit coming around from 11th - 13th June in Cornwall, UK. There
they will be discussing about finance, trade, digital issues & technology. The summit will
begin with the ministers meet, then there would be health ministers meet, then climate &
environment ministers meet and finally the foreign ministers, the development ministers
and the interior (Home) ministers will meet.

CRITICISM OF G7
 G7 cannot pass any laws because it is made up of separate nations with their own
democratic processes. We know that laws are binding in nature, but whatever the
agreements this group reach and whatever the statements they issue, these are not binding
upon others since it does not have the authoritative power to legislate.
 Although, it has been criticized on the point that it has kept out large economies like India
and China but it has also done some major projects to help the world, like the creation of
global funds to fight diseases like Malaria & Aids, which can also not be neglected.

34
5th June 2021

GROUP OF 20 (G-20)
 Readings :-
- About the G20 - g20.org
- G-20 Members, Summit Meetings, and History - The Balance
- Group of 20 (G-20) Definition – Investopedia
- The Group of Twenty - G20 - mea.gov.in (Important)
 G20 is an international forum (a platform where you can discuss) which brings together
some of the world’s major economies. It is a Group of 20 countries and its members
account for 80% of the world’s GDP (if we combine them then out of 100 GDP, 80 GDP
belongs to this group), 75% of global trade and 60% of world’s population. Therefore, on
an average this group is doing well.
 G20 has been initiated in 1999 and since then, the forum has met every year. After 2008, it
has also included yearly Leader’s summits (where top-ranking people come & meet) with
the participation of the heads of states (like the President of United States) and heads of the
governments (like the Prime Minister of India).
 In addition to these summits, there are ministerial meetings and more importantly, there are
Sherpa meetings. ‘Sherpa’ is a designation which means ‘in-charge of carrying out
negotiations and building consensus among the leaders.’ So, there are officials who are
called Sherpa. Their main function is to bring about negotiations and during such
negotiations, their business is to bring about consensus. Apart from it, there may also be
meets on some special events as well.
 The participant countries are; 1. Argentina 2. Australia 3. Brazil 4. Canada 5. China 6.
France 7. Germany 8. Japan, 9. India 10. Indonesia 11. Italy 12. Mexico 13. Russia 14.
South Africa 15. Saudi Arabia 16. South Korea 17. Turkey 18. The United Kingdom 19.
The United States and 20. The European Union. Spain, which is not a formal member of
this group, was also added but it is represented as a permanent guest.

WORKING OF G20
 The G20 group operates without a permanent secretariat or staff, still the meetings and
discussions are held every year. The agendas and activities are set with rotating
presidencies in cooperation with membership. These countries get rotational presidency
and presidency in cooperation with rest of the members decides what is the agenda and
what activities are to be performed.
 In 2008, there was a fiscal crisis in the world, so the US proposed to increase the level of
G20 by calling upon the heads of state and heads of governments to institutionalize it as a
forum for global economic and financial cooperation. The G20 leaders then began to meet
annually since 2010.

35
 We have discussed that G20 operates without a permanent staff. Therefore, the chair
rotates annually among the members and is selected from a different regional grouping of
countries. The chair is a part of a revolving three-member management group of past,
present and future chairs referred to as the ‘Troika’. Troika means the predecessor
presidency, the present presidency and the successor presidency. Currently the presidency
is with Saudi Arabia. The predecessor, the present and the successor presidency brings
about continuity, with the discussions in which they are cooperating with each other, and
with the cooperative assistance. This is how continuity in G20 is built.
 The preparatory process for the G20 Summit is conducted through the established Sherpa
and Finance tracks that prepare and follow up on the issues and commitments adopted at
the G20 Summits. The Sherpa’s Track focuses upon non-economic and financial issues,
such as development, anti-corruption and food security, while addressing internal aspects
such as procedural rules of the G20 process. The Sherpas also carry out various important
planning, negotiations and implementation of tasks continuously.
 The Finance Track as the name suggests, focuses upon economic and financial issues.
Finance track is where meetings between finance ministers and economy ministers, central
bank governors, vice ministers and the Sherpas, takes place and the focus is on economic,
financial, monetary and tax issues.
 The outcome of these negotiations is a broad Communique. ‘Communique’ is a kind of
an agreement, which is traditionally adopted by the G20 heads of governments and heads
of states, at the end of the summit meeting. So, it is a kind of an agreement they would
reach regarding what is to be done further.
 As far as empowerment is concerned, G20 calls itself an alliance to empower women that
these 20 countries will work for their empowerment by collaborating with each other, by
co-operations, discussions, negotiations and agreements, while giving special attention to
the women’s economic representation. So, this is the empowerment of women on the
economic forums. Governments have taken care of this by setting a kind of nexus between
the governmental structures and the private sectors, so that these negotiations between
governmental structures and private sectors, could empower people, especially the women.

∴ In short, Groups like G20 & G7 are the international discussion forums, where they try
to reach agreements and issue joint statements. G7 is said to be more powerful because it
consists of wealthier countries. However, G20 is also performing very well and here, both
China and India are represented along with many other countries whose economies are
doing well, for example Argentina, Australia, Brazil, etc.

36
6th June 2021

THE IDEA OF WORLD COMMUNITY & WORLD GOVERNMENT

 Readings :-
- Useful Notes on World Community - Sociology Discussions
- World Government - Research Gate
- World Government - Stanford Encyclopedia of Philosophy (Important)

INTRODUCTION
Both the world community and world government are very old concepts. The Political
philosophy begins with the readings on Greeks, when the Greeks were divided into small
states. All the knowledge of political science comes from those small Greek states because all
those states had a different social system which gave rise to a different political system. So,
some states had monarchies i.e., one person’s good rule, some states had aristocracy i.e., rule
of few persons, some had oligarchies i.e., where wealthy people rule, some states were
tyrannies where there was dictatorship, and some were moderate democracies where the rule
of law was there inside the democracy. In rule of law, the law was based on the customs and
traditions. Thus, different states had different social systems. An example of such different
social systems prevailing among the Greek states was of Athens and Sparta. Athens, which is
considered to be an intellectual centre, there the women were not supposed to have formal
education, whereas in its rival state of Sparta in Greece, women were used to be soldiers.
These states had rivalries, animosities and there were wars between them because they
wanted to become self-sufficient/ self-reliant, and also there were state boundaries too, in
which the citizens lived. So, this was the scenario which used to exist around 2,500 years ago.
However, there was one festival i.e., “The Olympics”, during which these boundaries were
dissolved. Here, at one place of Greece, all the sportsmen and their spectators gathered and
the whole of Greece became one. They all spoke the same language and also have a set of
Gods like Hindus (Although Hindus say that most of these Gods are incarnations of Vishnu,
yet they are called by different names and worshipped differently). So, we can see that the
culture is different among Hindus. Similarly, among the Greeks, the culture is different and
similarly like the Hindus, the Greek city states were also politically divided, each having its
own culture, community and traditions. But there was an animosity between the states and
therefore, there were the thinkers, whom the Greeks called Cynics (However in today’s era,
Cynic is referred to that person who is not of the right mind) and Cyrenaic. These were the
thinkers who felt that these boundaries of the states are man-made and the presence of so
many states with animosity, wars and rivalries, is inhuman. But Aristotle, who is the father of
political science, contradicted this view by saying that the state is not man-made, rather in his
theory of State, he said that it is a natural entity. He also argued that slavery is also natural as
it is practiced on a very large scale. While Cynics and the Cyrenaics said that all the social
differentiations and hierarchies among the humans are man-made/ artificial, including the
distinction between a free man and a slave, and it exists because the state maintains it. They
also said that the boundaries between these states are also man-made and therefore, the whole
institution of State is a man-made institution. So, we must have a world community, where

37
everybody would be equal and live together. This was one set of people who were
speaking about the world community.
Both the concepts of World Community and World Government are interrelated because we
can actually have a world government only if we first accept that the world is a community.
Otherwise, if there are differences between the human beings then the World Government
would be in the hands of one set of people subjugating the rest, and that is not what it meant.
So, the concept is that first you establish a world, where everyone is equal and living together
in peace like the ancient Hindus said, Vasudhaiva Kutumbakam, which means that the world
is a family. Therefore, this is what the concept of world community ultimately talks about.

WORLD COMMUNITY
 Similar to the view of Cynics and the Cyrenaics, these conception of national sovereignty
or national divisions are villains because if the concept of nationalism exists, or the concept
of nation exists (Nation becomes nation states, when they become sovereign. The
difference between nation and the nation state is that nations are without sovereignty where
the power is shared between the kings and the feudal lords), then the supreme power is in
the hands of a particular point, and that point may be a king, or a small number of people,
or even a parliament or an assembly.
 So, the world community actually competes with the concept of nation and nation states,
because for the world to become a community, these distinctions based on race, caste,
colour, language or nations, that has divided the humanity into so many groups, will have
to go. Earlier, there had been kings and emperors who have thought of conquering the
world, but it is to be seen whether they were treating the world as one community or not.
 Now comes the concept of certain World religions. World Religions believe in converting
people to their domain/ fold on a very small scale because the number is very small. For
example, at a larger scale from India, Sikhism is one such religion which welcomes
everybody from all over the world within its domain/ fold and, only Buddhism is another
such religion that welcomes everyone to its domain, irrespective of any distinctions.
Although the population of Buddhists may not be that much in India, however if we look at
their population in the World, then they are huge in numbers, like in China, Japan, Sri
Lanka, South-East Asia, etc. Then comes Christianity and Islam. So, all these religions
want to treat their followers as equals. But if we look at them closely, then we can see that
there is no equality in their eyes between the followers of their religion and the outsiders.
That is what is giving them the incentive to bring people into their fold i.e., into their
religion. But if you do this with any particular religion, suppose if you want the whole
population of the world to become Buddhist or Sikh or Christian, then you may do it, but
the fact is that you basically want the world to conform to your religion where you will
treat everybody equal, however it cannot be done because the whole world cannot convert.
Thus, there is no world community. So, the religions which have these kinds of ideas that
all the people of the world will come to their fold and will become one community, that is
not easy to happen.

38
 The next important thing is that there was much violence during the years of the WW-II
because the country which was dominating and which conquered nearly the whole of the
Europe was Germany. So, Germany was ruled by Nazi Party, which was led by Hitler at
that time. They used to believe in racism. According to them, there are certain Nordic races
mainly in Europe, which are sometimes known as alien races. They said that these Nordic
races are the master race and the rest is born to serve the master race. Among these races,
these Nazis found the Jews to be a burden, and so they killed around 6 million Jews
through gas chambers. Unfortunately, Jews were not the only the ones who were killed by
the Nazis, but whosever was of the inferior race and incapable of living according to them,
were killed because they were considered to be useless persons and a burden on the earth.
 But after the WW - II, interest in the world community suddenly increased so much that a
new concept emerged, which is called “multiculturalism”. Today, many western countries
including Australia & New Zealand, have started bragging about multiculturalism.
Multiculturalism means that you can follow your own religion, culture and traditions
including your mother tongue and the state will not interfere in that. When the British came
to rule India, then in almost 200 years of their ruling, the Indian culture was put down. We
all are studying and conversing in English because right from our childhood we are taught
this only. Today, there are a lot of changes in our thinking and lifestyle, like the changes in
our sitting habits or dressing sense, and with the emerging globalisation, even the western
foods are invading Indian Territories, which is making Indians more inclined towards the
western food & culture, instead of their own traditional food. These western countries try
to attract Indians to their countries by saying that they are practicing Multiculturalism but
in reality, they are practicing apartheid and segregation. In USA, till 80s & 90s, there were
separate drinking water taps and separate schools for the coloured & whites, and
unfortunately this segregation even exist today in some or the other forms. Like, colored
people in their country lives in their own colonies and their children attend schools of that
particular colonies only, where whites don’t live. So, it can be said that the text has
changed but the matter is not changed. Thus, even after all this, these western countries are
proclaiming that they are practicing multiculturalism in their country. From a long time,
people of different denominations have been living together for centuries in various parts
of the globe. India is also one of the oldest multiculturalists which has never bragged about
multiculturalism, but these countries are now taking interest in it because they actually
wanted cheap labour and for this, they exterminated the non-white population.
 So, immediately after the WW - II, they began giving slogans that there would be world
community and that everyone will be treated equally without practicing any kind of racism.
Simultaneously, they were building institutions like NATO and establishing nuclear
weaponry to militarily deal with rest of the world (because when WW-II occurred, the
United States threw atom bombs in Hiroshima and Nagasaki, only on Japanese & not
Germans because the Germans were whites). They were also building world bank and IMF
which are the rich nation’s club to control the economic destinies of the rest of the world.
However, this cannot be called a World Community in its true sense.

39
 Within the United Nations, it is supposed to be a sovereign equality among all the Nations.
This is the principle on which the international organisation is supposed to be built. But if
there is sovereign equality of states, then the concept of Veto Power should not be there.
However, what is being propagated is that the world has become a global village because
of globalisation or advancement of technology, which has made communication &
transportation much faster and therefore the world has become a community. For building
a community, the territories are needed, so they have made the territory short i.e., they have
reduced the distance significantly by introducing faster modes of communication (like
smart phones) and transport facilities (like airways, waterways, etc). Therefore, in effect,
the territory has been reduced.
 The definition of community has changed over a period of time. If we look at the
traditional definition of Community, then the Community is a group of people living
together at a particular place and the people who found the community have a very close
relationship amongst them, since they live in the same area. So earlier, the areas were very
distant and it took months or may be years to go from one part of globe to the other, but
now it is a matter of hours only. So, the area has reduced. But the other requirements for
the community is conversion of ideas, thoughts, common sentiments and common values.
If the world is a community, then there should be common values. And if these values are
common, then why there are institutions like IMF and World Bank, where poor countries
are reduced to a margin. Is this called a community of interest? Or is the Veto Power in
United Nations, a symbol of community interest? So, these are the major questions.
 We find today that the United Nations with all its great powers has bagged for itself one
great achievement and that is, it has not let any small wars get turned into a world war.
Though they had collected weapons and arsenals, but yet because of nuclear balance of
power or ‘Mutually Assured Destruction (MAD)’, there is no WW - III.
 Rest of the functions performed by the UN in the world are Socio-Economic Functions, but
these functions are reduced to marginalised things. If we look at the working of the rich
economies, we can see that while they ruled, they did not let corruption occur here but once
they left, they have encouraged the elites which are ruling here (Not only in India, but also
in the rest of the areas of 3rd World) to become increasingly corrupt and these were the
elites who looted money from here and deposited it in the western countries. Though, today
students are taught much about the freedom struggle than in older times but still even after
reading about the past, the urge of the youth to live in foreign countries is much larger than
it was in early years. This is probably because they have created such a kind of situation
where the centre of gravity has shifted to these western rich countries in a way which was
not there when they were ruling us. The simple thing is that the rich countries can control
poor countries much more effectively than they could do when they were ruling us. It is
because earlier it took a lot of time to travel from here to there and thus, they could only
come through seas which nearly took a period of months. So territorially, they may have
reduced the distance but as far as the conversion of interest or the value system is
concerned, we can see what they are actually doing. So, the United Nations has been a
failure. Today there is a very strong atmosphere of emotional prejudices. Emotional

40
 prejudices are when you have biased opinions. Some have biased opinions in favour of the
western countries, while some have biased opinions against these western countries. Thus,
if we talk about the culture of India, then unfortunately today it stands pole apart from their
culture that used to exist in the past, and so in this situation how can there be a community!
 A community should have same common values. In reality, the big powers are not
interested in making this world a world community. What actually the system they have is
that they can now exploit this world much more efficiently for themselves. They have
security intact, pride and international system which governs to their laws and the smaller
countries which are left out of this great power dominance, they have certain interests
which they call narrow. If we talk about Indianness, then it is called ‘narrow national
Indianness’. So, if we talk about India’s economy getting sucked into the world’s
economy, then it is a narrow economic interest and there is narrow political interest.
Hence, there is a tussle going on between these two concepts.
So, after taking into account the above considerations, it is hard to believe that any world
community is prevailing today, in spite of the fact that territory or distances have been
reduced because of the faster modes of communication & transportation facilities.

WORLD GOVERNMENT
 “World government” refers to the idea of uniting all the humankind under one common
political authority. Proposals for a unified global political authority have existed since
ancient times, in the ambition of kings, popes and emperors, and even in the dreams of
poets and philosophers. Recently, some have argued that a world government is already
here, or nascent in contemporary conditions of capitalist globalization. There is much
debate about whether global institutional developments towards a world state are inevitable
or contingent, stable or subject to reversal, and whether unifying economic and political
developments are to be desired or feared, justified or illegitimate, actively promoted or
resisted. Proponents of world government offer distinct reasons for why it is an ideal or
necessary form of political organization. Some are motivated negatively and see the world
government as functionally the definitive solution to both the old and new human problems
such as war, development of weapons of mass destruction, global poverty, inequality,
global financial instability, infectious disease & pandemics, and environmental degradation
& climate change. More positively, some have advocated world government as a proper
reflection of the unity of the cosmos, under reason or God, or as the teleological end-state
of struggles for recognition or moral freedom or the perfection of humanity. Proponents
have also differed historically in their views of the form of government that a world state
should take. While medieval thinkers advocated world government under a single monarch
or emperor who would possess supreme authority over all other lesser rulers, modern
proponents of world government generally have not advocated a wholesale dismantling of
the sovereign states system but incremental innovations in global institutional design to
move humanity toward pacific world federalism or cosmopolitan democracy.
 World government is also a very old concept, which is related to the concept of world
community. This concept is equally contagious as that of the world community. In India,

41
 we had a concept of Chakravarti, Sarvabhauma and there have been people who call
themselves the world conquerors. This concept has been institutionalised ever since the
Alexander the great, moved out of his state of Macedonia and conquered the whole of the
Greece. He then moved to the east to confront the Persian Empire which had traditionally
been trying to conquer Greece but were defeated by the Greeks. So, the Alexander
conquered Persia, he destroyed the Persian Empire completely and then moved to India. He
came up to the river Beas and he is considered as a world conqueror. Many kings and
emperors kept their name after him, some called themselves as Alexander, while some
called themselves as Sikander. Also, there have been the concept of holy Roman emperors
& Caliphs among Muslims. So thus, there have been people in the past, who desired to
establish the entire world under their government and wanted all the human beings to be
united. But this has been the dreams of the kings, the emperors, the conquerors, and even
the religions, which believe in making all the people of the world to come into their fold.
This has also been the dreams of the poets and philosophers, and it has been seriously
undertaken in campaigns by Alexander, Napoleon and Hitler as well.
 The concept of World government is discussed in academic circles like social science and
political science. People give example of European Union as a role model for the world
government. For 100s of years, Europeans were at conflict with each other and then they
realised that they can come together in European Union. If they come together, they will
have a European parliament, a European Commission & an integrated European economy,
then why these European countries are giving themselves a representation in the World
Bank & why Britain moved out of European Union? So, it is because the British pound has
an aura of its own, and therefore, why should the British do away with their pound and
accept their currency as Euro.
 So, this kind of scenario is a hoax. If such kind of situation exists, then there will be great
impediments in the formation of the world government. They may say that the world
government may be a solution for all the human inequalities and all the divisions which
may exist today between cultures and religions, which may mean that there will be no wars
in future, but the point is of government, that who is going to rule? The westerners who
have been dominating this planet are very small in number. They are telling people
everywhere in the world that they want democracies. If we talk about OAS, then USA is
making the American countries to conform to democracies. Wherever the USA wants to
topple a particular government which is not of its liking, it is facilitated by the slogan of
Democracy. India have been a democracy, though it is not a substantive democracy but it is
a genuine procedural democracy, which is a stepping stone towards substantive democracy.
Substantive democracy means whatever is promised during the elections, that is fulfilled.
Whereas, Procedural democracy means where free and fair elections are held. According to
the top philosophers of Europe, democracy is a bad government. European civilization
stands on 2 pillars; one is the ‘Greco - Roman thought’, especially the Greek thought and
the other is ‘Christianity’, and none of them are the supporters of democracy. Even none of
the religions of the world today practice democracy, except Sikhism. Sikhism is the only
religion where democratic elections for the election of Shiromani Gurudwara Prabandhak
Committee are held. Even the election of the pope is not a democracy. The Pope appoints

42
 all the top officers in Vatican City. Pope is for life, when pope dies, a new pope has to be
there because the popes have no sons or daughters, since they don’t marry. But how is he
elected? The top officials of the Catholic Church elect the new pope by a secret vote and
when the new pope is elected, then he can dismiss all those persons who elected him. So,
what kind of a world government could be? Would it be a democracy because the western
thought says that in democracy the focus is only on the quantity and not on quality, so what
kind of a system will the world government will have? Hence, all these things are flowery
when we say that the world government will promote moral freedom, it will be the end of
the struggles and it will be a very peaceful world. But in reality, it is not that easy as said.

CRITICISM OF THE WORLD GOVERNMENT

Critics of the world government come from a wide political spectrum i.e., from radical and
post-colonial to liberal, or to far right political adherents. Critics have offered three main
kinds of objections – to do with the feasibility, desirability and necessity of establishing a
common global political authority.
1. FEASIBILTY - It is related to who will bring that government? Will it be brought by
force or will it be brought democratically, where education is in such disparity?
2. DESIREABILITY – It is related to whether is a world government desired or not? since
the beauty of this world is in its diversity across people, cultures, religions, etc.
3. NECESSITY - The most important point is the necessity, that is it really needed? And if
needed, then who will be those few people who will control the rest of the people?

∴ So, both the world government and the world community are a kind of a hoax, because
they don’t carry much weight. They are only the ideas which can be discussed, but not
taken seriously because freedom will not be found in the world government as the peace
would be an enforced peace, and justice would be biased, because what is justice to one
person that may be injustice to another person, since Justice is a very complicated term.

43
7th June 2021

WORLD TRADE ORGANISATION (WTO)

 Readings :-
- The WTO in brief - wto.org
- Understanding the WTO: What is the world trade organization? - wto.org
- What is the WTO? - wto.org
- World Trade Organization (WTO): History & Facts - Britannica
- World Trade Organization (WTO): Definition - Investopedia
 WTO is an international organisation which was established in 1994-1995 in order to
supervise and liberalize the world trade. Since trading is a very sensitive activity, so when
countries trade with each other, there may be the chances of disputes and therefore, a kind
of a supervision or mechanism for trading and liberalizing the world trade is needed.
(Liberalizing means where companies from various countries would trade in other
countries). So, that is why there is a need of an international body to govern trade and its
related activities, systematically across the whole world to avoid any conflicts.
 WTO is a successor to the “General Agreement on Trades & Tariffs (GATT)”, which
was created in 1947. At that time, it was thought that, there would be a general UN
Specialized Agency, called the “International Trade Organisation (ITO)” which would
be established along with the IMF and the World Bank, and that this would also serve as
one of the key pillars for post-war reconstruction and economic development. But this
could not take place because the United States failed to ratify (though it participated in the
negotiations) the ITO’s Havana Charter and therefore, GATT continued to exist as a kind
of temporary arrangement, which continued for almost 5 decades, and it was extremely
successful in managing world trade during these 5 decades. Therefore, though GATT was
provisional, yet it was the only major organisation or agreement which governed
international trade till the WTO took over.
 GATT evolved during 47 years. It was a de-facto global trade organisation (De facto
means which operates in actuality), but it was not given the de-jure recognition i.e., formal
recognition. So as a de-facto organisation, its most important work was to hold
negotiations and regulate international trade that involved 130 countries. All the
negotiations which took place in GATT from 1947 to 1994 (until WTO took its place),
these negotiations are known as ‘GATT-1947’. So, 1947 marked the beginning of GATT,
which continued till 1993. There had been negotiations going on for launching of WTO
and at the completions of these negotiations which took place from 1986 to 1993, there
were 123 countries involved. These are called ‘Uruguay Round of Talks’. In 1994, GATT
(the entire GATT from 1947 - 1993) became a part of the WTO. So, WTO did not
abolished GATT but it was built further on it. Hence, WTO finally began its operation
from 1st January, 1995.

44
 So, the WTO which stands today is made up of the following agreements :-
1. GATT (entire GATT from 1947 - 1994),
2. A dozen multilateral agreements,
3. General agreements on trade and services i.e., called ‘GATS’,
4. Agreement on trade related intellectual property rights (TRIPS), which is a trans-
border agreement. (Here, Intellectual Property rights means, if somebody makes
something new then another person cannot use that mechanism without paying royalty
to that person who created it).
5. An understanding on rules and procedures governing settlement of disputes,
6. Trade review mechanism, which was built to review national trade policies and to see
whether these are in conformity with the WTO rules or not. These national trade
policies are reviewed after every certain period of time to see whether these countries
are conforming to rules of WTO or not.
7. Four Plurilateral/ Multilateral Agreements, which include :-
i. First on the Civil Air Crafts,
ii. Second on the governments’ procurements, that how governments procure goods
for trade,
iii. Third on the dairy products,
iv. And fourth on the Bovine meat, which is basically the meat from beef, especially
from the cows.
NOTE - Out of these 4 agreements, the last two agreements i.e., agreement on
dairy products and bovine meat, were terminated later by the year 1997.
 The Agreement on WTO was signed in Marrakesh, Morocco, and thus, this WTO
Agreement is also known as ‘Marrakesh Agreement’. It was signed in April 1994 and
after the ratifications, all those states which signed & ratified it, became the members of
WTO. However, it was officially launched on 1st January, 1995 and today it has more than
160 member states.

BASIC OBJECTIVES & OPERATIONS OF WTO

WTO has six major aims or objectives, which are as follows :-
1. To set up and enforce rules for international trade. It makes these rules and enforces them
upon the member states.
2. To provide a forum for discussions, negotiations and monitoring further trade
liberalisations (Trade liberalisations means when private companies operate in other
countries & tariffs are brought down). So, it aims at liberalising the trade further by
reducing the trade barriers like tariffs, customs & duties.
3. To resolve trade disputes. The disputes which occur in trade those have to be resolved
and WTO has to look over this mechanism as well.
4. To increase transparency of decision-making processes.
5. To cooperate with other major international economic institutions involved in global
management. Here, also the most important institutions would be the world bank & IMF.

45
 6. To help developing countries benefit fully from global trading system. WTO has to take
care of the economically less advance or the developing countries as well, so that they
can also take benefit from the globalisation or global trade system.
So therefore, all these things make WTO more comprehensive than GATT (which the WTO
has absorbed within itself) because GATT had focused only on trading of goods and has
excluded agriculture and textiles, while WTO included goods, services, intellectual property
rights and also deals with some investment policies. There was not much provision for
intellectual property rights in GATT, so WTO deals comprehensively with these as well.
Apart from this, it also deals with some investment policies. Another major difference
between the two is that the GATT had an interim Secretariat, while WTO has a permanent
secretariat. This permanent secretariat of WTO plays an important role as it the one which
formalizes mechanism for reviewing trade policies and settling disputes.

THREE MAJOR RULES OF WTO

There are major 3 rules of WTO (earlier of GATT) which have three different purposes :-
1. To attempt to protect the interest of the small and weaker countries against the
discriminatory trade policies of large and powerful states, because in trade there are larger
and powerful economies which dominates. So, protection of the weaker economies is one
of the most important purpose of WTO.
2. WTO’s rules require the members to limit their trade through tariffs and provide market
access to less favourable countries too, by conforming to their commitments in WTO
agreements. So, they put limit on their tariffs and for this, the countries are asked to look
after the less fortunate countries by committing everybody to WTO’s rules. The idea here
is that everybody should be accommodated.
3. Rules are meant to resist lobbying i.e., building pressure, by domestic interest groups on
their respective governments. There are powerful interest groups, which have a linkage
with the government, so whatever the government may agree at the international forum,
they are in a position to pressurize the government. So, this should not happen as once the
government has agreed, then after that, no pressure should be built upon the governments.

TWO IMPORTANT ASPECTS OF WTO

1. RESOLUTION OF TRADE DISPUTES –
If disputes occurred in trading, then how WTO is supposed to resolve them? So, if there are
trade disputes, then the member states are not supposed to take unilateral actions against the
other member states, instead the members are expected to seek recourse to WTO’s Dispute
Settlement System, and abide by its rules and findings. According to this mechanism, the
dispute resolution process begins with the bilateral consultations between the countries which
have disputes, either through good offices (Good offices is when a third party sits at the
discussions to make the disputed parties talk, but it does not participate in those
discussions) or by the mediations of the Director General of WTO (Mediation is when the
third party actively participates in the discussion). So, if there are disputes between two
countries, then the first step they should take is to negotiate with each other, which is known
as bilateral consultations. If this process i.e., negotiations through good offices or mediations

46
fails, then an independent panel is created to hear the disputes and the views of both the
parties. In the first step, the countries were discussing with each other, but now their dispute
is submitted to a panel which tries to investigate further. The panel then submits a private
draft (temporary) report to the parties for comments. After taking the comments from the
parties in written, the panel may revise its reports before submitting it to all the other
members of the WTO. So, this is how the process of resolution of trade disputes work. The
point to be noted here is that, unlike the IMF & the World Bank which have weighted voting,
here each member has one vote, but the negotiations are carried out in such a way that
ultimately a consensus may come out. So basically, here they try to reach a consensus
(Consensus is referred to the give and take process, after which everybody agrees). Hence, it
is not a straight voting, rather it is through consensus, and this is where the negotiations will
take place. But it is also to be kept in mind that these rich and powerful countries, with their
wealth and a much more experience in trade, are better negotiators as well.
2. TRADE POLICIES REVIEWS –
This is pertaining to the national trade policies. These policies, which are being incorporated
in the system, need to be reviewed. Despite the rules, mechanism & commitments, it may be
found that certain states’ national policies are not encouraging trade, rather they are distorting
it, and the only way to encourage the trade is to abide by the rules. So, there is a need for
increasing awareness about ‘trade distorting policies’ (i.e., the policies which once adopted,
may later found to be actually distorting the trade, instead of facilitating it). This may lead to
Annual Notification Requirements, which are made available to the trading partners. So there
has to be transparency. Therefore, a trade review policy mechanism is established because
there are certain countries like India, China and Russia that earlier had centralised planning.
There may be many centrally planned economies which have joined the WTO system and all
these countries have to be reminded that they must conform to the WTO’s rules. So, the 4
largest economies i.e., the European Union, the United States, Japan and China, which have
more chances of distorting the trade or even monopolising it (because they are very rich),
their trade policies are reviewed by WTO every two years. The next 16 largest economies are
reviewed by WTO after every 4 years and the remaining after every 6 years or more. All this
involves the consultations with the member country, whose policy is going to be reviewed.
The secretariat publishes report about whether the members are meeting the commitments to
the rules of WTO, and providing information to the WTO or not. So, this is to be reviewed.
∴ So, the assessment is that, these are the mechanisms which are working in the globalised
economy where negotiations take place, but these negotiations may not be fair because of the
power of the rich countries, who can sway these negotiations to their advantage. But the
countries like India are very sensitive to politically sensitive issues like agriculture, so here
there is a problem with these rich countries because these countries stress that we in the 3rd
world should not subsidise our agriculture and instead go in for trade. So, after this, we can
understand that this is an attempt to bring big and small states into the process of
globalisation, of which efforts are also being made, yet there is always a lurking fear that
these countries (despite the fact that in WTO each member state has one vote but these are
complicated businesses of trading and the rules regarding trading) which have smaller
economies and not much experience in trade, may find themselves at the receiving end.

47
8th June 2021

BRAZIL, RUSSIA, INDIA, CHINA & SOUTH AFRICA

(BRICS)
 Readings :-
- Brazil, Russia, India, China and South Africa (BRICS) – Investopedia (Important)
- The Rise of the BRICS and their Challenge to the G7 - Golam Mostafa (Research Gate)
- BRICS, Soft Power and Climate change - new challenges in global governance?- Francesco
Petrone (Research Gate)

INTRODUCTION
BRICS is an acronym for the economic bloc of the developing countries, consisting of
“Brazil, Russia, India, China and South Africa”. Earlier, these countries were known as
‘BRIC’ countries, because there were only 4 countries. But later in 2010, South Africa was
also added and hence, it became BRICS.
In the year 2001, an economist named ‘Jim O’Neill’ coined the term BRIC. He was a leading
and an eminent person in ‘Goldman Sachs’, which was a US-based leading global
investment banking, securities and management multinational company, and it deals with
investments, securities and assets management. Jim O’ Neill claimed that by 2050, these 4
economies (Brazil, Russia, India & China) would come to dominate the global economy.
According to him, these were the 4 major growing economies in the post-world war period.
We can see that Jim is speaking about a time period which is half a century later. He said that
the rate at which these economies are growing is such that they will ultimately become the
dominant economies. However, South Africa was added to this word in 2010 and then it
became BRICS. There were some persons who were skeptics (person who doubts) from the
beginning. In other words, there were persons who doubted that no matter that these
economies have become liberalized and there was also no doubt that these economies were
growing rapidly, but what they actually doubted was that whether these economies will be
able to maintain their pace by 2050 and become the dominant global economies.
If we talk about today then all this euphoria has almost evaporated, and this happened in 2015
when Goldman Sachs closed its BRICS focused investment fund and it merged with other
broader emerging market economies. So, the euphoria which was generated by Jim O’Neill,
came down by 2015.

ABOUT BRICS
 BRICS originally started as BRIC in the year 2001, and South Africa was added in 2010.
 The notion was that these economies which were interacting with each other, would
collectively come to dominate global growth by 2050.
 At the time, when Jim O’Neill gave his thesis, it was believed that BRICS nations are to be
seen as the right area for expansion of foreign firms where there would be strong returns or
institutional investments. The idea was that since this was an area which is economically

48
 fertile, so if there are institutional firms i.e., the firms which make investments, in this area,
then the returns would be handsome.
 By the year 2015, this euphoria had begun to die in Goldman Sachs. Goldman Sachs
became disinterested in this area, which itself had first suggested that this is the best area
for investment. Goldman Sachs own investment funds for this area was called off in 2015
and it was merged with something else.
 It has been suggested that these countries Brazil, Russia, India, China and South Africa are
among the world’s fastest growing & emerging market economies, and so these could
become dominant economies in the world since there was a lot of low-cost labour,
favourable population and abundant natural resources in these areas. Here, favourable
population is referred to the population which is growing from a young age (There are two
types of phenomena; one is Growing (Favourable) population and other is Ageing
population i.e., when population goes down). In these countries the population was
significantly coming up. So, growing population, world’s best natural resources & low-cost
labour, all this was at the time when global production was experiencing a boom. This was
also the time when globalisation and advanced technology was coming together, and the
world started to become a community by reducing the size of its territories through
transportation and communication. Therefore, when the global economies were supposed
to grow up with this kind of globalisation, these countries held the key. So, this is what
Goldman Sachs thought.
 Goldman Sachs thesis never suggested that these countries should become a political
alliance, like European Union or even a formal trading association, like ASEAN, because
both politically and socially these countries have nothing much in common since they were
altogether different countries. The only thing in common was that they had the potential to
become great economies, but there was a hope that the economic power of these economies
might bring them together as a political power later and seeing this, taking queue from
Goldman Sachs, these countries started holding summit meetings almost every year and
they also started acting in concert with each other from the year 2009-10.
 In 2001, O’Neill at Goldman Sachs had noted that the whole global GDP would rise by 1.7
% in 2002 and the forecast was that the BRICS Nations were destined to grow faster than
G7, which is a group of the world’s largest & advanced economies. So, at Goldman Sachs
in 2001, it was predicted that from 2002 onwards, the BRICS Nations were supposed to
grow much faster than G7.
 In 2003, two colleagues of Jim O'Neill at Goldman Sachs named, Dominic Wilson and
Roopa Purushothaman, in their report entitled “Dreaming with BRICS” claimed that
with 2050, the BRIC Cluster would grow economically to be larger than G7 and hence,
they predicted that by 2050, the world scenario in economics would be totally different
because the world would then not be primarily dominated by these European economies,
rather it would be dominated by those nations which were composed of BRICS.

49
 In 2007, there was another paper published from Goldman Sachs entitled ‘BRICS &
Beyond’, that focused upon the growth potential of BRIC, that how much potential is
needed for growth of these countries and what kind of an impact they would have on the
environment. But what eventually happened was that the BRICS economy had slowed
down after the global financial crisis and the oil price collapse, that began in 2014. So,
these liberal economies are very sensitive, unstable and unpredictable economies as well.
 By 2015, countries of the BRICS were no longer attracted for the investment and therefore
the investment funds were being diverted from these countries to other growing economies.
It was so much that Goldman Sachs own investment funds suffered a loss of 88% in
BRICS countries and that’s why it had to divert their funds to somewhere else.
 Although by this time, BRICS had become a kind of a group. They were holding annual
Summit Meetings and there was a certain agenda, and this agenda was supposed to be
based on 3 pillars, which were known as “3 Pillars of BRICS”.

THE THREE PILLARS OF BRICS

1. Concerning Political and Security Matters - BRICS held meetings to bring these
countries closer to each other politically. They tried to coordinate their foreign policy and
tried to establish a common view on political matters and also on security matters. For
example, they tried to develop a consensus on terrorism. Three of the BRICS countries
i.e., India, China and Russia, were suffering from Islamic Fundamentalism that was
gradually taking the shape of Global terrorism and therefore, these countries tried to
evolve their policies to combat with this.
2. Pillar of Economics and Finance - For this, these countries tried to build coordination in
the fields of trade, agriculture, infrastructure building, small and medium enterprises,
Energy Sector, Finance and Banking. In this economic front, these countries tried to
coordinate their actions, and thus, at the 4th summit in New Delhi in the year 2012,
“BRICS Bank” was established, which was also known as “New Development Bank”.
This bank became operational on 15th July 2014 with the Initial capital of 100 billion US
Dollars. So, BRICS continued to function as a group. Even though its euphoria has come
down but they believe that if the economy has slumped at the moment, then it may rise
again too. Therefore, on this basis the BRICS Nations collaborate with each other and hold
yearly meetings.
3. Cultural Pillar - The cultural exchanges encourage people-to-people contact, so that a
kind of atmosphere which is conducive to unity can be brought about in these countries.

50
9th June 2021

CONCEPT OF INTERNATIONAL ORGANIZATIONS

FOR COOPERATIONS
Institution for international Cooperation is not a separate topic, rather it is basically a title for
the other topics, like important institutes for international relations such as the World Bank,
the IMF and now even the WTO. Whatever things these institutions do, that is what the
international institutions for economic cooperation is talking about. In the post-cold war
situation, there was a movement that these institutions should be given importance because
the world now has become globalised, and thus it became a globalised economy. So, in this
globalised economy, international cooperation was considered to be something very
important and pertinent. Some of these things pertaining to international economic
cooperation has also been discussed in the context of World Debates as well.

Therefore, International Organisations (IOs) play a crucial role in supporting international

regulatory cooperation and helping countries to achieve their public policy objectives. They
facilitate cooperation and coordination among their members and also play a key role in
addressing the cross-border challenges as well.

REFER PDF :- Opportunities and Constraints for Cooperation between International

Organisations - Catherine Rhodes

THE END

51