Comparing and contrasting the governance mechanisms of the United Nations, the World Bank, and the International Monetary Fund; in each case, and with the aid of relevant examples, showing the extent to which such mechanisms have enabled the organisation to stay true to its mandate as defined in its charter.

By Bakampa Brian Baryaguma

[Dip. Law (First Class)–LDC; Cert. Oil & Gas–Mak; LLB (Hons)–Mak]

bakampasenior@gmail.com; www.huntedthinker.blogspot.ug

April 2022

1.                  Introduction

A.                Governance Mechanisms Defined

The term governance mechanisms is mostly used in corporate and business settings and discourse, in which it means the policies, guidelines and controls to manage an organization and reduce inefficiencies. Governance mechanisms are sets of controls employed by an entity to streamline its work or operations. They are structures and systems that are inherent to or inbuilt in an organization and are therefore part and parcel of it. Examples of governance mechanisms are leadership, operating principles, quality control systems and accountability measures. These must be in every organization, even though they are crudely or amateurishly set: there must be leaders since not everyone can be boss; there must be ways / principles of doing things, however unclear they may be; some quality standard must be set, however unsatisfactory it is; and definitely some explaining has to be done at some point, especially by juniors to seniors. Governance mechanisms drive and help an organization achieve its mandate by maximizing is performance in relation to its purposes.

The importance of governance mechanisms is underscored by Julie Davoren thus: “Effective corporate governance is essential if a business wants to set and meet its strategic goals. A corporate governance structure combines controls, policies and guidelines that drive the organization toward its objectives while also satisfying stakeholders' needs.”^[1] Davoren says that a corporate governance structure is often a combination of various mechanisms and identifies three of such mechanisms: internal mechanisms like oversight of management, independent internal audits, structure of the board of directors into levels of responsibility, segregation of control and policy development, which are the foremost sets of controls of an organization that monitor its progress and activities and take corrective actions when its affairs go off track;^[2] external mechanisms which are often imposed as regulatory guidelines and as determinants of best practices by those outside an organization and serve the objectives (notably adequate debt management and legal compliance) of entities such as regulators, governments, trade unions and financial institutions, to whom concerned organizations typically report their status and compliance;^[3] and independent external audit which gives a broad but limited view of the organization’s internal working mechanisms and future outlook to both internal and external stakeholders like investors, employees, shareholders and regulators, by helping them determine the financial performance of the organization.^[4]

The effectiveness of governance mechanisms in maximizing an organization’s performance is measured by eight factors of good governance as identified by the United Nations i.e. participation, consensus oriented, accountability, transparency, responsiveness, effectiveness and efficiency, equity and inclusiveness and rule of law.^[5] These are wide concepts whose detailed study and analysis is beyond the scope of this essay.^[6] Nonetheless, suffice to say that participation entails that everyone concerned should be empowered and represented in institutional processes; consensus oriented implies that discussions and decisions made should accommodate all views, but not mere impositions of some onto others; accountability denotes responsibility, meaning that whatever is done or not done should be traceable to and explainable by someone; transparency demands that processes and their outcomes should be fair, open and accessible; responsiveness means that the institution and its processes should necessarily respond to, answer or solve needs as and when they arise; effectiveness and efficiency means that the institution’s structures and procedures should be fit for purpose, able to fulfill the organizations purposes and satisfy its needs; equity and inclusiveness require that the institution addresses power inequalities by providing a leveled playing field for all to operate in; and rule of law requires that the institution’s governing laws be followed.

B.                 About the United Nations

The United Nations (UN) is an international organization founded in 1945, by 51 states.^[7] The UN is established by the Charter of the United Nations (hereinafter “the UN Charter”), which took effect on 24 October 1945, marking the official birth of the United Nations.^[8] It is made up of 193 Member States currently.^[9] Hence, every independent country in the world is a member of the United Nations, except Holy See/Vatican City, the global headquarters of the Catholic church and the smallest independent nation in the world.^[10]

The mandate of the UN is enshrined in Article 1 of its Charter, which states the organization’s purposes and principles that also guide its work. These are:

1.      To maintain international peace and security, and to that end: to take effective collective measures for the prevention and removal of threats to the peace, and for the suppression of acts of aggression or other breaches of the peace, and to bring about by peaceful means, and in conformity with the principles of justice and international law, adjustment or settlement of international disputes or situations which might lead to a breach of the peace;

2.      To develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, and to take other appropriate measures to strengthen universal peace;

3.      To achieve international cooperation in solving international problems of an economic, social, cultural, or humanitarian character, and in promoting and encouraging respect for human rights and for fundamental freedoms for all without distinction as to race, sex, language, or religion; and

4.      To be a center for harmonizing the actions of nations in the attainment of these common ends.

In a nutshell, the core and essence of the UN’s mandate is the betterment of the living conditions of people around the world.

The UN proudly says – and rightly so – that it,

“… has evolved over the years to keep pace with a rapidly changing world.

But one thing has stayed the same: it remains the one place on Earth where all the world’s nations can gather together, discuss common problems, and find shared solutions that benefit all of humanity.”^[11]

It should be noted that the United Nations is not just a single entity per se. It is a system, comprised of many autonomous organizations or agencies, including the World Bank and the International Monetary Fund.^[12] They share the same goal of raising living standards in their member countries.^[13] Their approaches to this goal are complementary, with the IMF focusing on macroeconomic and financial stability issues and the World Bank concentrating on long-term economic development and poverty reduction.^[14] They were created at the same time during the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, 1^st to 22^nd July 1944.^[15] The goal of the conference was to establish a framework for economic cooperation and development that would lead to a more stable and prosperous global economy.^[16]

C.                About the World Bank

The World Bank (hereinafter “the Bank”) was founded in 1944.^[17] The World Bank provides financing, policy advice and technical assistance to governments of developing countries,^[18] in order to promote long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain sectors or implement specific projects – such as building schools and health centers, providing water and electricity, fighting disease and protecting the environment.^[19]

Technically speaking, the World Bank comprises two autonomous institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).^[20] Each institution though is established by its own constitutive agreement.

The International Bank for Reconstruction and Development (IBRD) is the earliest institution of the World Bank Group. It was created in 1944 to help Europe rebuild after World War II.^[21] The IBRD is constituted and governed by the International Bank for Reconstruction and Development Articles of Agreement (hereinafter “the IBRD Articles”), which were drawn up at the Bretton Woods conference.^[22] The Articles became effective on 17 December 1945 and have been amended three times: 17 December 1965, 16 February 1989 and 27 June 2012.^[23] The IBRD is a global development cooperative and largest development bank in the world that provides loans, guarantees, risk management products and advisory services to middle-income and creditworthy low-income countries.^[24]

On the other hand, the International Development Association (IDA) was established in 1956. It is constituted and governed by the International Development Association Articles of Agreement (hereinafter “the IDA Articles”), which were drawn up by the Bank's Executive Directors and came into effect on 24 September 1960.^[25] The IDA focuses on the world’s poorest countries,^[26] offering them concessional loans and grants. Thus the key difference between the IBRD and the IDA is that IBRD targets poor but a bit rich countries, while IDA focuses on extremely poor countries.^[27] For a country to become a member of the IDA, it must first become a member of the IBRD by virtue of the provisions of Article II, Section 1 (a) of the IDA Articles which dictates so.

This essay however, focuses on the International Bank for Reconstruction and Development (IBRD) because Articles I and VI, Section 6 of the IDA Articles designate the IDA as a separate and distinct entity from the IBRD – clearly referring to the former as “the Association” and the latter as “the Bank.” For this reason therefore, only the IBRD Articles will be referred to and considered in the ensuing discussion.

A state cannot become a member of the World Bank unless it is first a member of the IMF. This is because Article II, Section 1 (a) of the IBRD Articles dictates so. No wonder, “The two have always been known as the “Bretton Woods twins” …”.^[28] But a state can become a member of the IMF without being a member of the World Bank.

D.                About the International Monetary Fund

The International Monetary Fund (hereinafter “the IMF” or “the Fund”) was founded on 22 July 1944, when its constitutive and governing document, the Articles of Agreement of the International Monetary Fund (hereinafter “the IMF Articles”) were adopted.^[29] The IMF Articles were originally accepted by 29 countries and since then have been signed and ratified by 190 Member countries.^[30]

The IMF's primary purpose is to ensure the stability of the international monetary system the system of exchange rates and international payments that enables countries and their citizens to transact with each other.^[31] It does so by keeping track of the global economy and the economies of member countries principally by monitoring their currencies, lending to countries with balance of payments difficulties, and giving practical help to members.^[32] The IMF works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.^[33]

E.                 United Nations vis-à-vis World Bank and International Monetary Fund

The UN, World Bank and IMF are all part of the United Nations System. As such therefore, in striving to stay true to their mandates as determined in their respective constitutive documents, similarities or close resemblances in their governance mechanisms become inescapable and unavoidable.

1.                  Similarities

Being members of the same family (so-to-speak), a close study of these institutions’ mandates reveals that they share the same goal of raising living standards in their member countries, thereby ensuring world peace, stability and prosperity. Certainly this is the case for the World Bank and IMF.^[34] Their approaches to this goal are complementary, with the UN concerned with political, social and general economic wellness; the IMF focusing on macroeconomic and financial stability issues;^[35] and the World Bank concentrating on long-term economic development and poverty reduction.^[36] According to James M. Boughton, the IMF’s relationship with the World Bank is the most important linkage for the Fund.^[37] I think the same is true for the Bank.

2.                  Differences

The main difference between the UN on one hand and the IMF and the World Bank on the other is that while the UN is largely a political institution, the IMF and World Bank are economic bodies.

As between the IMF and World Bank, the difference between them lies in their respective purposes and functions. The IMF oversees the stability of the world's monetary system, while the World Bank's goal is to reduce poverty by offering assistance to middle-income and low income countries.

2.                  Governance Mechanisms of the United Nations, World Bank and International Monetary Fund and the Extent to which those Mechanisms have Enabled the Organizations Stay True to their Mandates

Governance mechanisms of the UN, World Bank and IMF can be classified into two: structural and non-structural.

A.                Structural Governance Mechanisms

Structural governance mechanisms refer to organs that are responsible for operating and making decisions for and of the institution concerned. Envisaged here, for example are offices and officers manning them.

1.                  United Nations Structural Mechanism

The structure of the United Nations is established in Chapter III, Article 7 of the UN Charter and expounded upon in subsequent provisions. Article 7 states as follows:

1.      There are established as the principal organs of the United Nations: a General Assembly, a Security Council, an Economic and Social Council, a Trusteeship Council, an International Court of Justice, and a Secretariat.

2.      Such subsidiary organs as may be found necessary may be established in accordance with the present Charter.

Therefore, the UN’s structural governance mechanisms are comprised of:

(a)                General Assembly;

(b)               Security Council;

(c)                Economic and Social Council;

(d)               Trusteeship Council;

(e)                International Court of Justice;

(f)                Secretariat; and

(g)               Subsidiary organs.

This essay pays particular attention to the General Assembly, Security Council and International Court of Justice.

2.                  World Bank Structural Mechanism

The structure of the World Bank is stipulated in Article V of the IBRD Articles. Section 1 thereof states that, “The Bank shall have a Board of Governors, Executive Directors, a President and such other officers and staff to perform such duties as the Bank may determine.” Therefore, the Bank’s governance mechanisms are comprised of:

(a)                Board of Governors;

(b)               Executive Directors;

(c)                President; and

(d)               Other officers and staff.

3.                  IMF Structural Mechanism

The governance structure of the IMF is provided in Article XII of the IMF Articles. Section 1 thereof states that, “The Fund shall have a Board of Governors, an Executive Board, a Managing Director, and a staff, and a Council if the Board of Governors decides, by an eighty­five percent majority of the total voting power, that the provisions of Schedule D shall be applied.” Therefore, the IMF’s governance mechanisms are comprised of:

(a)                Board of Governors;

(b)               Executive Board;

(c)                Managing Director;

(d)               Staff; and

(e)                Council.

B.                 Non-structural Governance Mechanisms

Non-structural governance mechanisms refer to the procedures through which management decisions are made. The most common example here is mode of voting. The type of voting is crucial because it appreciates and harmonizes three realities that characterize the international system: “… the existence of sovereign nation-states; different population sizes of those states; and different national capacities and resources.”^[38]

1.                  United Nations Non-structural Mechanism

The United Nations uses an equal voting mechanism, under a one country–one vote system. This is the traditional voting method for international organizations.^[39] Here, every member country is entitled to strictly one vote on any particular issue irrespective of its status or standing – geographical size, population size, economic status, military might, etc. So, in the UN, a superpower like the United States of America has the same voting power with a tiny and largely insignificant country like Vanuatu. This is because, under Article 2 (1) of the UN Charter, “The [UN] is based on the principle of the sovereign equality of all its Members.” It should be noted however, that the UN Security Council does not strictly follow the equal voting system since there are five permanent members, any of whom can veto substantive decisions of the Council, notwithstanding the fact that majority of members support it.

2.                  World Bank and IMF Non-structural Mechanism

The World Bank and International Monetary Fund use an economically weighted voting system, which was introduced after World War II.^[40] This voting system is a central feature of the institutions’ governance structure.^[41] In this system, “Each country’s vote is equal to a quota, based on its weight in the global economy (which also determines its financial contribution to, and access to borrowing from, the Fund), and a basic vote which is equal for every country.”^[42] Thus one vote can weigh more than its face value by attributing to it a greater value. Here, “… a nation's economic or military strength is reflected in its voting strength …”,^[43] although economic strength is the commonest reason for adopting this method. So, in the World Bank and IMF, a superpower like the United States of America does not have the same voting power with a tiny and largely insignificant country like Vanuatu. Potentially however, tiny Vanuatu can have the same or higher votes than huge America under this voting modal if its economic size permits. According to Brahima Sangafowa Coulibaly and Kemal Dervis, “Weighted voting works best for global, or indeed regional, multilateral institutions,”^[44] because, “… weights linked to certain objective variables automatically reflect changes over time in these variables. So long as these variables and the weights given to them are considered legitimate, such a governance system can endure and retain its legitimacy.”^[45]

C.                The Extent to which Governance Mechanisms of the UN, World Bank and IMF have Enabled them to Stay True to their Mandates

Through the IMF and World Bank, the UN (as the mother institution), says that it has, “… helped many countries to improve their economic management, provided temporary financial assistance to countries to help ease balance-of-payment difficulties and offered training for government finance officials,”^[46] hence enhancing economic development in the world. The structural and non-structural mechanisms of the three institutions arguably made this possible by enabling them to stay true to their mandates as determined in their constitutive documents.

The equal voting method, which permeates virtually the entire UN system (with the notable exceptions of the World Bank and IMF), has by-and-large proved to be very effective and necessary in light of the UN’s overall design as a political institution. The one country-one vote modal guarantees friendliness, equal rights and self-determination by preventing domination of one state over others, in line with the UN’s cardinal mandate under Article 1 of its Charter of maintaining and strengthening universal peace and security by, “… develop[ing] friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples …”.^[47] Using the equal voting method, UN organs have been able to successfully deliver on their mandates as demonstrated hereunder.

1.                  United Nations General Assembly

As at the writing of this essay, Russia – a global superpower and permanent member of the United Nations Security Council – is facing accusations of aggression, bullying and domination against Ukraine (a weaker country and formerly part of Russia) following its (Russia’s) attack and annexation of Ukraine’s territory of Crimea. The General Assembly of the United Nations expressed displeasure with Russia’s conduct by voting in favor of resolutions aimed at castigating it (Russia) for invading Ukraine^[48] and has demanded that Russia ceases its war on Ukraine and withdraw troops from Ukrainian territory.^[49] But Russia ignored the General Assembly and in fact attacked Ukraine on 24 February 2022, saying that its purpose and objective is the prevention and punishment of genocide in the Luhansk and Donetsk oblasts of Ukraine.

2.                  International Court of Justice

The International Court of Justice (ICJ) is an organ of the United Nations that helps to resolve major international disputes. The United Nations says that, “By delivering judgments and advisory opinions, the International Court of Justice (ICJ) has helped to settle international disputes involving territorial questions, maritime boundaries, diplomatic relations, State responsibility, the treatment of aliens and the use of force, among others.”^[50] The latest decision of the ICJ helping to settle international disputes is an order for provisional measures in a case referred to the Court by Ukraine, following Russia’s invasion of it (Ukraine).

The Court is established by Article 7 (1) of the UN Charter. The ICJ is the principal judicial organ of the United Nations, under Article 92 of the Charter. Article 36 (1) of the Statute of the International Court of Justice (hereinafter “the ICJ Statute”), provides that, “The jurisdiction of the Court comprises all cases which the parties refer to it and all matters specially provided for in the Charter of the United Nations or in treaties and conventions in force.” It is in accordance with this provision that Ukraine instituted proceedings in the ICJ against Russia on 26 February 2022, concerning, “a dispute … relating to the interpretation, application and fulfilment of the 1948 Convention on the Prevention and Punishment of the Crime of Genocide.”^[51] Ukraine applied under the provisions of the Convention on the Prevention and Punishment of the Crime of Genocide, which was adopted by the UN General Assembly on 9 December 1948. In the application, Ukraine sought many reliefs including orders that Russia immediately suspends its military operations and ensure that any military or irregular armed units which may be directed or supported by it, as well as any organizations and persons which may be subject to its control, direction or influence, take no steps in furtherance of the military operations.”^[52]

In an order indicating provisional measures, the Court, by a majority of 13 to 2, directed that Russia should immediately suspend the military operations it commenced on 24 February 2022 in the territory of Ukraine and ensure that any military or irregular armed units which may be directed or supported by it, as well as any organizations and persons which may be subject to its control or direction, take no steps in furtherance of the military operations.^[53] Further, the Court directed both parties to refrain from any action which might aggravate or extend the dispute before it or make the dispute more difficult to resolve. Although Russia has so far ignored and disobeyed the orders of the ICJ, considering that it has continued with its so-called “Special Military Operation” on Ukraine’s territory, nevertheless the Court performed its duty of delivering justice in international disputes, hence fulfilling the UN’s mandate of settling international disputes by peaceful means in conformity with the principles of justice and international law, under Article 1 (1) of the UN Charter.

3.                  United Nations Security Council

The Security Council is perhaps the most prominent and powerful organ of the United Nations. It is evidently the most powerful because under Article 25 of the UN Charter, it is the only U.N. organ that has the power to make obligatory decisions that the member states must carry out. The Council is established by Article 7 (1) of the UN Charter and expounded upon in chapter V of the same. Article 23 (1) of the Charter (as amended 1965) prescribes 15 members of the Council, of whom five are permanent members namely, China, France, Russia (being the successor of the Union of Soviet Socialist Republics), United Kingdom of Great Britain and Northern Ireland and United States of America). The other six non-permanent members are elected by the UN General Assembly for a term of two years. The Security Council follows the equal voting system of one-country, one-vote by virtue of Article 27 (1) of the Charter, which states that, “Each member of the Security Council shall have one vote.” Under Article 24 (1) of the Charter, the Security Council is endowed with the primary responsibility of maintaining international peace and security, in order to ensure prompt and effective action by the United Nations. This is an extensive mandate, the purpose for which is to avoid time consuming bureaucratic procedures and expenses involved in gathering the General Assembly so as to discuss and resolve an impeding or on-going conflict that needs urgent attention. The Security Council should be credited for preventing another major war on the scale of World War, thereby doing what the League of Nations singularly failed to do.^[54] To this extent therefore, the Council has fulfilled its mandate; although it faces unique challenges like the ongoing war of Russia against Ukraine (alluded to earlier) where Russia has ignored Security Council resolutions urging it not to attack or to cease hostilities against Ukraine.

However, the biggest controversy surrounding and challenge facing the Security Council is in respect to the veto power of its five permanent members. Using the veto, any one of the “big five” (as they are commonly known) can block a Security Council decision on any substantive matter – however important it is to all the other members and the world at large! Veto power comes from Article 27 (3) of the UN Charter, which provides that, “Decisions of the Security Council on all other matters shall be made by an affirmative vote of nine members including the concurring votes of the permanent members …”. The other matters excluded from this rule are procedural matters, which by their nature are minor, not going to the root of the issue. Veto power was given to the five major powers at the San Francisco Conference in 1945 as a compromise to get them to agree to form the United Nations.^[55] Hence, according to William N. Gianaris,

The main reason that the Security Council is effective and even exists is that the voting system reflects the reality of the members' strength by giving the five nations with the most military and political strength the right to veto matters with which they disagree. Without the veto power in the Security Council, the only U.N. body that has the power to make obligatory decisions that the member states must carry out, the United Nations would probably not have come into being.^[56]

The veto is a challenge and is a controversy for the UN because it is widely perceived and said to be undemocratic, illegitimate and defies common sense.^[57] Veto power, as is held today, is challenged in such manner for many reasons, including that it excludes the rest of the globe since all the permanent veto holders are only from Europe and North America. African leaders in particular have been very vocal in demands for a permanent seat on the Security Council, reasoning that the lack of such representation denies the UN legitimacy and undermines Africa’s role in a changed world since 1945 at the end of World War II, when the five victorious allies assumed permanent status on the Security Council with veto power.^[58]

4.                  Weighted Voting in World Bank and IMF

The World Bank and IMF are well known for their one-dollar, one vote approach to voting (as opposed to the one-nation, one-vote system of the United Nations). This is known as the economic weighted voting method of voting. This method is premised on the idea that members who provide "credit" to others, through the institutions, should be given a larger voice in the conduct of the institutions; and a smaller voice should be to members enjoying the benefit of that "credit.”^[59]

 It is enshrined in Article V, Section 3 (a) of the IBRD Articles states which that, “The voting power of each member shall be equal to the sum of its basic votes and share votes;” and in Article XII, Section 5 (a) of the IMF Articles which provides that, “The total votes of each member shall be equal to the sum of its basic votes and its quota-based votes.” Under the economically weighted voting system, quotas are used to determine voting power for each country, access to IMF and World Bank resources and financial contributions to the Bank and Fund.^[60] The quotas are related to economic criteria, considering such relative economic strength factors as gross domestic product, external reserves, and variability of exports.^[61] According to Brahima Sangafowa Coulibaly and Kemal Dervis,

Each country first gets the same number of basic votes expressed as a fixed percentage of total votes, then receives additional votes based on the quota system …. Basic votes can be thought of as representing “nationhood,” while quotas represent a country’s economic size as well as balance-of-payments related variables. For countries with small quotas, the basic votes make up a larger proportion of their total votes and the reverse is true for large quota countries such as the United States.

Basic votes represent nationhood because they were introduced in the World Bank and IMF systems in order to entice less developed member states with very small quotas and attract them to participate in the organizations' functions.^[62]

Like Brahima and Kemal who assert that a system of weighted voting makes sense,^[63] William N. Gianaris is of the same view contending that the current system of weighted voting is essential for the efficient operation of the IMF and the World Bank.^[64]

But economically weighted voting is attacked and questioned as undemocratic by especially developing countries which have small voting shares in the World Bank and IMF. They complain that their interests are not adequately expressed within the world bodies that ironically exist to help them.^[65] The concern is that developed nations have too much of the voting strength while having less of the world population.^[66] This is believed to result in disproportionate representation and decisions which are not truly in the interests of the developing countries.^[67]

The impact of disproportionate representation was experienced in 1979-1980 when developing countries tabled a controversial proposal to invite the Palestine National Fund of the Palestinian Liberation Organization (PLO) officials to participate as official observers at the Annual Meetings of Governors of the IMF and World Bank, invoking Article X of the IMF Articles and Article V, Section 8 (a) of the IBRD Articles, both of which require the Fund and Bank to, “cooperate . . . with any general international organization and with public international organizations having specialized responsibilities in related fields.” Since the PLO enjoyed observer status at the UN and had the support of the General Assembly for similar status in all UN specialized agencies, it (PLO) was generally assumed to fit the Articles’ requirement. This was a controversial proposal because while many countries regarded the PLO as a legitimate movement of national liberation and was recognized by the UN as the representative of the Palestinian people, some very powerful countries regarded it (PLO) as a terrorist organization. As such therefore, the Fund’s and Bank’s Board of Governors’ response to this request had important implications for the institutions’ relationships with other international organizations and member countries. When the matter was voted on by the respective Boards of Directors, they decided not to invite the PLO as an observer to the 1979 Annual Meetings. Seven directors, all from developing countries and holding 27% of the voting power, supported the proposal to invite the PLO, while nine directors, all from industrial countries and holding 56% of the vote, opposed the proposal. Five directors abstained from taking part in the vote.^[68] The disproportion here is in the 7:9 correspondingly juxtaposed with 27:56, showing that the former is far outweighed.

It is therefore suggested that the solution to this disproportionate representation is to increase the voting shares of developing countries by factoring population and basic principles of democracy in the equation of determining quotas. But William N. Gianaris does not think this is right, believing instead that, “The solution lies in involving developing countries more in the decision-making process and working harder to resolve their current problems, most particularly the third world debt crisis.”^[69] For his part, David Woodward states that if developing countries are to succed in their quest for reform, “… solidarity, and a common position among [them] as a whole is imperative if substantial reform is to be secured. Resolving this dilemma will therefore be critical to their success.”^[70]

5.                  Joint Meetings and Committees of IMF and World Bank

The IMF and World Bank have a framework for cooperation in which they, “… collaborate on a routine basis and at many levels to assist member countries, including joint participation in several initiatives,”^[71] as guided by the 1989 concordat and subsequent frameworks that set out the terms for their cooperation to ensure effective collaboration in areas of shared responsibility.^[72]

(a)                Joint Meetings

The World Bank and IMF in particular have a collaborative mechanism where their Boards of Governors normally meet once a year, in September or October, during the IMF-World Bank Spring and Annual Meetings, to discuss the work of their respective institutions.^[73] The Boards of Governors hold joint meetings to consult with one another and present their countries' views on current issues in international economics and finance.^[74] In the joint meetings, the Boards of Governors also make decisions on how current international monetary issues should be addressed and approve corresponding resolutions.^[75] The joint meetings are chaired by a Governor of the World Bank and the IMF, with the chairmanship rotating among the membership each year.^[76] The fact that decisions are made in the IMF-World Bank Spring and Annual Meetings makes the joint meetings a governance mechanism of the two institutions.

The joint meetings mechanism is in line with and fulfills the mandates of the World Bank and IMF to relate with other international organizations. Article 5, Section 8 (a) of the IBRD Articles enjoins the Bank to, “… cooperate with any general international organization and with public international organizations having specialized responsibilities in related fields.” Similarly, Article X of the IMF Articles enjoins the Fund to, “… cooperate … with any general international organization and with public international organizations having specialized responsibilities in related fields.” Therefore, the IMF-World Bank Spring and Annual Meetings enable the World Bank and the IMF to stay true to their mandates as defined in their constitutive Articles of Agreement.

(b)               Joint Committees

The IMF and World Bank have a joint Development Committee tasked with advising their Boards of Governors on issues related to economic development in emerging and developing countries.^[77] The Committee has 24 members (usually ministers of finance or development), representing the full membership of the IMF and the World Bank and mainly serves as a forum for building intergovernmental consensus on critical development issues.^[78]

The Development Committee enables the IMF and the World Bank to achieve their shared goal of raising the standard of living in member states, which is the first and cardinal purpose of the two institutions as mandated in Article I of both the IMF Articles and IBRD Articles.

6.                  Liaison and Coordination

The United Nations has a liaison and coordination mechanism through which it engages with its specialized agencies like the World Bank and IMF. Historically, relations between the UN and its specialized agencies, “… have been limited primarily to liaison functions for the purpose of sharing information and providing occasional assistance in areas of mutual concern.”^[79] The UN formed the Administrative Council on Coordination to serve as a principle forum for coordinating work among its specialized agencies.^[80] The Council meets at least twice a year at the senior (agency head) level, chaired by the Secretary General.^[81]

In 1947, the UN and IMF reached a basic agreement to guide their relations.^[82] The basic agreement categorizes the Fund as a specialized agency within the United Nations and functions as an independent international organization.^[83] The agreement also provides that the Fund shall give due consideration to the inclusion in the agenda for meetings of its Board of Governors of items proposed by the UN.^[84] The basic agreement was followed by the IMF appointing a Special Representative to the United Nations in 1950 and the UN providing an office for the Fund at its headquarters in New York to serve as a liaison with the Secretary General, his staff, other UN bodies located in New York, plus monitoring and reporting on the activities of the UN General Assembly.^[85]

The liaison and coordination mechanism of the UN and IMF enables these institutions to stay true to the core and essence of their mandates i.e. bettering the living conditions of people around the world. The Administrative Council on Coordination facilitated a wide variety of staff contacts and collaboration on an ad hoc but regular and ongoing basis, for instance throughout the 1980s, during which even the IMF Managing Director actively participated in the Council’s meetings and made annual addresses to the UN’s Economic and Social Council (ECOSOC).^[86] The ECOSOC is the UN organ responsible for studying and reporting on, among others, international economic matters, which the IMF and World Bank are also principally interested in.

3.                  Conclusion

The relevance and importance of international organizations, despite their challenges and limitations, is now a given since, “…it is indisputable that none of the world's challenges can be confronted without effective international organizations and without the show of political will that must go hand in hand with belonging to them.”^[87] The United Nations, World Bank and International Monetary Fund are key actors in the world today and will remain so for the foreseeable future. There is general consensus that they have been extremely effective in fulfilling their mandates.^[88] This is testimony that their governance mechanisms remain crucial to the attainment of the institutions’ mandates – although those mechanisms can be improved upon slightly as situations necessitate and permit, to achieve development and raise the living conditions of people in the world.

 

REFERENCES

1.                  Julie Davoren, ‘Three Types of Corporate Governance Mechanisms’ CHRON. Accessed online at https://smallbusiness.chron.com/three-types-corporate-governance-mechanisms-66711.html#top, on 6 April 2022, at 17:37 GMT.

2.                  Ibid.

3.                  Ibid.

4.                  Ibid.

5.                  Amitav Banerji, ‘Global and National Leadership in Good Governance’, UN Chronicle. Accessed online at https://www.un.org/en/chronicle/article/global-and-national-leadership-good-governance, on 8 April 2022, 09:10 GMT.

Banerji adds that, “Furthermore, [good governance] seeks to ensure that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive both to the present and future needs of society.” Ibid.

6.                  For a detailed study of the concepts, see United Nations Development Programme, Towards Human Resilience: Sustaining MDG Progress in an Age of Economic Uncertainty (2011), at 279-283. Accessed online at https://www.undp.org/sites/g/files/zskgke326/files/publications/Towards_SustainingMDG_Web1005.pdf, on 8 April 2022, at 10:09 GMT.

7.                  United Nations, ‘About Us’. Accessed online at https://www.un.org/en/about-us, on 6 April 2022, at 20:20 GMT.

8.                  World Population Review, ‘Countries Not in the United Nations 2022’ (2022). Accessed online at https://worldpopulationreview.com/country-rankings/countries-not-in-the-un, on 6 April 2022, at 20:43 GMT.

9.                  Ibid.

10.              Ibid.

11.              United Nations, supra note 8.

12.              International Monetary Fund, ‘The IMF and the World Bank’ (2021). Accessed online at https://www.imf.org/en/About/Factsheets/Sheets/2016/07/27/15/31/IMF-World-Bank, on 4 April 2022, at 10:20 GMT.

13.              Ibid.

14.              Ibid.

15.              The World Bank, ‘The World Bank Group and the International Monetary Fund (IMF)’ Accessed online at https://www.worldbank.org/en/about/history/the-world-bank-group-and-the-imf, on 4 April 2022, at 10:04 GMT.

16.              International Monetary Fund, supra note 12.

17.              The World Bank, supra note 15.

18.              International Monetary Fund, IMF and World Bank, supra note 12.

19.              Ibid.

20.              The World Bank has since expanded into a group known as the World Bank Group, which comprises five institutions that, “… share a commitment to reducing poverty, increasing shared prosperity, and promoting sustainable development.” See The World Bank, World Bank Group and IMF, supra note 13. The other three sister organizations of the World Bank and members of the World Bank Group are:

1.                   International Finance Corporation

The International Finance Corporation (IFC) is constituted and governed by the International Finance Corporation Articles of Agreement, which were drawn up by the Bank's Executive Directors and came into effect on 20 July 1956.  IFC's governing document has been amended four times: 21 September 1961, 1 September 1965, 28 April 1993 and 27 June 2012.

The IFC is the largest global development institution focused exclusively on the private sector in developing countries.  Driven by its motto of Creating Markets, Creating Opportunities, IFC believes that, “A strong and engaged private sector is indispensable to ending extreme poverty and boosting shared prosperity.”  IFC investments and advice help the private sector create jobs, improve basic services and foster small enterprises across the world.

2.                   Multilateral Investment Guarantee Agency

The Multilateral Investment Guarantee Agency (MIGA) is constituted and governed by the Convention Establishing the Multilateral Investment Guarantee Agency, which was discussed by the Bank's Executive Directors on the basis of draft conventions prepared by Bank staff.  The Convention came into force on 12 April 1988.

The MIGA provides political risk insurance and credit enhancement for cross-border private sector investors and lenders.  These are guarantees that protect investments against non-commercial risks and can help investors obtain access to funding sources with improved financial terms and conditions.

3.                   International Centre for Settlement of Investment Disputes

The International Centre for Settlement of Investment Disputes (ICSID) is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States.  It is an autonomous, multilateral specialized institution to encourage international flow of investment and mitigate non-commercial risks. The ICSID is constituted and governed by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which was established by a multilateral agreement and entered into force on 14 October 1966, 30 days after ratification by the first 20 States.

21.              The World Bank, ‘International Bank for Reconstruction and Development’. Accessed online at https://www.worldbank.org/en/who-we-are/ibrd, on 7 April 2022, at 7:20 GMT.

22.              The World Bank, ‘Articles of Agreement.’ Accessed online at https://www.worldbank.org/en/about/articles-of-agreement, on 7 April 2022, at 09:17 GMT.

23.              Ibid.

24.              The World Bank, IBRD, supra note 21.

25.              The World Bank, Articles of Agreement, supra note 22.

26.              The World Bank, World Bank Group and IMF, supra note 15.

27.              Ibid. It is this key difference that explains the difference in membership of the IBRD and IDA. The former has 189 members, while the latter has 174 members.

28.              James M. Boughton, Silent Revolution: The International Monetary Fund 1979–1989 (2001), at 995. Accessed online at https://www.imf.org/external/pubs/ft/history/2001/ch20.pdf, on 9 April 2022, at 14:30 GMT.

29.              International Monetary Fund, ‘Articles of Agreement of the International Monetary Fund.’ Accessed online at https://www.imf.org/external/pubs/ft/aa/index.htm#:~:text=The%20Articles%20of%20Agreement%20of,total%20of%20190%20Member%20countries., on 7 April 2022, at 12:44 GMT.

30.              Ibid.

31.              The World Bank, World Bank Group and IMF, supra note 15.

32.              Ibid.

33.              Ibid.

34.              International Monetary Fund, IMF and World Bank, supra note 12.

35.              Ibid.

36.              Ibid.

37.              James M. Boughton, supra note 28.

38.              Brahima Sangafowa Coulibaly and Kemal Dervis, ‘The governance of the International Monetary Fund at age 75’ Future Development (2019). Accessed online at https://www.brookings.edu/blog/future-development/2019/07/01/the-governance-of-the-international-monetary-fund-at-age-75/, on 5 April 2022, at 12:54 GMT.

39.              William N. Gianaris, ‘Weighted Voting in the International Monetary Fund and the World Bank’ 14 FILJ (1990-1991) 910, at 934.

40.              Ibid., at 910.

41.              David Woodward, ‘IMF Voting Reform: Need, Opportunity and Options’ (2007), at 1. Accessed online at https://unctad.org/system/files/official-document/gdsmdpbg2420077_en.pdf, on 12 April 2022, at 01:25 GMT.

42.              Ibid.

43.              William N. Gianaris, supra note 39.

44.              Brahima Sangafowa Coulibaly and Kemal Dervis, supra note 38.

45.              Ibid.

46.              United Nations, ‘70 Ways the UN Makes A Difference’. Accessed online at https://www.un.org/un70/en/content/70ways/index.html, on 4 April 2022, at 09:40 GMT.

47.              Article 1 (1) of the UN Charter.

48.              According to the United Nations, ‘General Assembly Adopts 51 Resolutions, 13 Decisions Forwarded by Fourth, Sixth Committees’ (2021), Ukraine introduced a draft resolution titled, “Problem of the militarization of the Autonomous Republic of Crimea and the city of Sevastopol, Ukraine, as well as parts of the Black Sea and the Sea of Azov,” to the General Assembly at its Seventy-Sixth Session, 48^th & 49^th Meeting. By the terms of the resolution, the Assembly would urge the Russian Federation, as the occupying Power, to immediately, completely and unconditionally withdraw its military forces from Crimea and end its temporary occupation of the territory of Ukraine without delay. The General Assembly adopted the resolution by a recorded vote of 62 in favour to 22 against, with 55 abstentions. See GA Res. A/76/L.22. Accessed online at https://www.un.org/press/en/2021/ga12394.doc.htm, on 11 April 2022, at 12:05 GMT.

49.              Al Jazeera, ‘UN General Assembly demands Russia end Ukraine war’ Al Jazeera (2022). Accessed online at https://www.aljazeera.com/news/2022/3/24/un-general-assembly-demands-russia-end-ukraine-war, on 1 April 2022, at 11:50 GMT.

50.              United Nations, 70 Ways, supra note 46.

51.              Allegations of Genocide under the Convention on the Prevention and Punishment of the Crime of Genocide (Ukraine v. Russian Federation) (2022).

52.              Ibid., at 3.

53.              Ibid., at 19.

54.              Amitav Banerji, supra note 5.

55.              William N. Gianaris, supra note 39, at 932.

56.              Ibid., at 933.

57.              Brahima Sangafowa Coulibaly and Kemal Dervis, supra note 38.

58.              United Nations, ‘African leaders call for permanent Security Council seat for the continent’ UN News (2010). Accessed online at https://news.un.org/en/story/2010/09/352872, on 11 April 2022, at 18:29 GMT.

59.              William N. Gianaris, supra note 39, at 923.

60.              David Woodward, supra note 41, at 38.

61.              William N. Gianaris, supra note 39, at 921.

62.              Ibid., at 922.

63.              Brahima Sangafowa Coulibaly and Kemal Dervis, supra note 38.

64.              William N. Gianaris, supra note 39, at 911.

65.              Ibid., at 942.

66.              Ibid., at 943.

67.              Ibid.

68.              For a detailed discussion of this matter, see James M. Boughton, supra note 28, at 1014, 1022-1027.

69.              William N. Gianaris, supra note 39, at 944.

70.              David Woodward, supra note 41, at 43.

71.              International Monetary Fund, IMF and World Bank, supra note 12.

72.              Ibid.

A copy of the Concordat on Fund-Bank Collaboration can be found in the Appendix to Chapter 20 of James M. Boughton, supra note 28.

73.              International Monetary Fund, ‘Governance Structure’. Accessed online at https://www.imf.org/external/about/govstruct.htm, on 5 April 2022, at 11:23 GMT.

74.              Ibid.

75.              Ibid.

76.              Ibid.

77.              Ibid.

78.              Ibid.

79.              James M. Boughton, supra note 28, at 1009.

80.              Ibid.

81.              Ibid.

82.              Ibid.

83.              Ibid.

84.              Ibid.

85.              Ibid.

86.              Ibid.

87.              Amitav Banerji, supra note 5.

88.              But William N. Gianaris, supra note 39, at 918 expresses reservations about the effectiveness of the UN compared to the World Bank and IMF, saying that, “The United Nations, while being as important if not more important an organization than the IMF and the World Bank, has not been nearly as effective as the IMF or the World Bank.”