World Bank Reprint Series: Number Ninety-three Ravi Gulhati A Mandate on Behalf of the Poor? Reprinted with permission from The Rounyid Table, no. 268 (October 1977), pp. 351-64 A MANDATE ON BEHALF OF THE POOR? INTERNATIONAL AGENCIES AND THE NEW WORLD ORDER RAVI GULHATI THIS essay is prompted by two recent discussions. In the first I was T impressed by the scepticism of senior managers of private transnational firms about the role of international agencies (.A.s), mostly associated with the United Nations, in promoting socio-economic development of Third World countries. In the second discussion, on the New World Order, there was disagreement on the extent to which I.A.s can play a role independent of the great powers and the newly established governments of ex-colonial areas. Having spent many years working in one of these organisations and also for the government of my own country, I wish to offer an analysis of the following issues: (1) What are the distinguishing organisational characteristics of I.A.s? What functions have been entrusted to them, and why? (2) What have been the successes and problems of I.A.s during the past twenty-five years? (3) What role can I.A.s play in the New World Order? Organisations operating across national boundaries can be placed in two broad categories. The first would consist of private transnational corporations producing and marketing in many countries, private business enterprises producing in only one country but exporLing to many nations, and single or multi-nation public-sector commercial firms-all of which strive to make as much profit as possible consistent with law, standards of good practice and a reasonable time perspective. MTanagers of these organisations must evolve a strategy which fully exploits their advantages, allows them to cope with the vagaries of the international environment and secures a satisfactory rate of return on investments made by shareholders. Firms of this sort predominate in mining and manufacturing as well as in certain service activities, e.g. bank- ing, hotels, etc. The second group consists of priva,.> foundations such as Ford and Rockefeller, oflicial bilateral foreign-aid agencies such as the Ministry of Overseas Development of the United Kinigdom and IJA.s linked to the United Nations system. These organisations pursue a hierarchy of objectives within The views expressed in this article are the author's own. 351 A MANDATE ON BEHALF OF THE POOR? which profit-making does not occupy a dominant place, as it does in firns included under the first group. Organisations in the second group perform functions many of which would not normally attract profit-oriented enter- prises obeying the signals of the market place. In a sense, concerns in the second group are repeating at the worlk level the hiistory of capitalist develop- ment within nations. They are taking on functions performed by national government agencies or by the voluntary non-profit sector within the territory of single countries. The following are the major activities of the second group: (1) Supervisioxi and regulation of international communication and trans- port. Examples are Universal Postal Union which relies mainly on multilateral negotiation; the International Telecommunication Union which has emphasised technical expert regulations; the International Maritime Consultative Orgarnisation which produces conventions with binding force on those who ratify them; and the International Civil Aviation Organisation which sets standards and maintains them by frequent inspection. assistance and pressure on members. (2) Supervision and regulation of financial, balance of payment and trade policies of member governments. An example is the International Monetary Fund whiclh conducts researclh, codifies the tenets of good policy, assembles up-to-date information on relevant topics, regularly consults with go%ernnments and provides them withi short-term funds on stipulated coniditions. (3) Provision of a framework for exploiting technology at the global level. This is the case with the World Mleteorological Organisation wlhich started out as a mechanism for exchanging information but became the basis for using a sophlisticated, expensive tcclinology subject to economies of scale and necessitating international operation. (4) Promotion of socio-economic development of low-income countries. Examples are United Nations agencies focusing on health, food and agriculture, education. labour, industry, etc. providing technical assistance and documentation. plus the World Bank and the regional development hanks supplying long-term capital. Few will dispute either the importance of tlhese functions or the fact that profit-miaking firms would not be suitable organisations to supervise and regulate activities of governments. However, views are divided onl the last enumerated function, namely the promotion of development; critics claim that the cause of development has not been advanced by forcign ai(d in general or by I.A.s in particular, and that t!le free play of market forces would have brouglhL abouL better resuLlb. The reader will recall the hiistory of this topic, The nineteenthi century saw the cxpansion of private foreign investment, particularly British investment in the Ncw World as well as what are today the low-income countries. There was very little by way of foreign aid 352 A MANDATE ON BEHALF OF THE POOR? either bilaterally by governments or multilaterally through I,A,s. This situa- tion was scarcely changed after the First World War and the establishment of the League of Nations. Also, during the early phase of the United Nations there was little emphasis on promoting development of low-income nations. The major bilateral effort was the Marshall Plan designed by the United States to reconstruct Furope. It is only during the last fifteen to twenty years that official foreign transfcrs have supplemented external private investment in low-income countries. On average, these transfers lhave been 50 per cent of the overall flow of external resources during 1970-74. Limitations of the Profit Motive TNDERLYING the decision to give foreign aid, thiere are three reasons L whichl touch on the limitations of profi-oriented enterprises, given the aim of promoting the socio-economic development of low-income countries. First, overseas private investment has been drawn mainly to those Third World countries which are well-endowed with mineral resources or which have fairly high per capita incomes. This trend is hardly unexpected and makes very good sense as far as the profit-making firm is concc. ned. But it does mean that exclusive reliance on these firms will result in the inexcusable negloct cof the most backward and unlucky countries, suclh as Bangladesh. Secondly, even countries wlhich attract private foreign invcstment find that it does not enter large and important sectors of their economies such as education, health or rural development. Againi, this is not surprising; condi- tions in these sectors are not condUcive to the search for private profit and yet balanced socio-economic advance requires that these activities should not be starved of funds or managerial talent, Foreign investors seeking a profit tend to focus on narrowly defined projects rather than on the longer-term, more diffuse. and more complex task of building instilutions witlh capacity to learn from experience and adapt to the changing environment. Thirdly, forcien investment cannot be the instrument for redistributing income or wealhlh as between riclh and poor countries. The relation between the enter- prise making the investment and the host country is a business one and under ideal circUmstances botth parties will profit by the deal. This is a very different situationl from that in whieli the modern welfare state seeks to help the liandicappe.1 citi7en or the world community extends coincessionial assist- ance to thie under-prkivilced nieniher state. To the exicnL that socio-economic development of low-income countries requires an element of redistribution. it will be necessary to forge instrumients and organisations other than the proifit-seeking firm. The bulk of concessional a.sistlance in the post-var period has been trans- ferred bilaterally. Even as recently as 1Q607, nearly 90 per cent of foreign aid to low-income countries was cliannclle(l by organiisations such as the United States Agency for Interniationlal Development or the United Kingdom Ministry of Overseas Development. The strong preference for bilateral 353 A MANDATE ON BEHALF OF THE POOR? channels over I.A.s reflected the fact that in many cases foreign aid was intended by metropolitan powers to go to their former colonies where they wished to preserve their sphere of influence. Also, the rich counitries wished to link their aid to their own exports, to protect their investments and to maintain strategic relati ; iips. The last few years ha- f witnessed a relative increase in the role of I.A.s. They dispensed 15 per cent of foreign aid in 1974, compared to 10 per cent in 1967. This trend is consistent with the recommendation made by the Commission on International Development in 1969 urging donor countries to raise the proportion of their aid going to I.A.s to 20 per cent by 1975. It would be too much to claim that the Commission (oin whose staff I served) actually engineered the course of events but it might be useful to recall the rationale for its recommendation. A bigger role was assigned to I.A.s because: (1) they could offset the glaring bias in allocation decisions of bilateral aid agencies; (2) they could place the.nselves between the rich and poor countries and thereby avoid the frictions inherent in a bilatcral aid relationslii); (3) they could provide a measure of participation in international decision- making to the Third World; (4) they could facilitate regional integration among T'hird World countries. The Record of I.A.s THE record of I.A.s in the development field is mixed. Not only have these organisations survived the tumultuous period since the end of the Second World War; many have increased substantially the size of their operations. Nevertheless, their output remains inadequate in rclation to the needs of mankind. Some have demonstrated a capacity to learn from experi- ence and to cope creatively with clhangcs in the environment, but this has not always been the case. New institutions have been established with astonislhing rapidity and wlhile each has been a response to an identified problenm, the total system has lost its colherence. The history is one of considerable achieve- ment and yet there remains considerable discontent which is reflected, for esaample in demands for a new world order. We cannot examine the record of I.A.s in much detail here, but it is useful to sumrnnarise the major aspects in terms of growth of numnber of institutions; expanision in scale of operation; degree of flexibility and capacity to learn from experience; and the troublesome question of eflicienicy and co-or-dination. Seven I.A.s were estzblished in the development field during the late 1(940s. Each had a relatively narrow functional purposc-agriculture, health, etc.-rathcr than a comprchensive development mandate. The premise under- lying this organisational design was thiat sovereign governments would find it easier to recognise concrete conmm on interests in well-defined areas ilhan to 354 A MANDATE ON BEHALF OF THE POOR? agree on a more general transfer of their authority to international bodies. Each of these seven organisations was intended to be universal in scope, i.e. all nations big and small, developed and under-developed, capitalist and communist, were expected to become members. In fact, the U.S.S.R. and East European countries opted to stay out of some of these I.A.s. The increase in the number of I.A.s during the last quarter of a century was, in the first place, an elaboration of the functionial idea. The idenitifica- tion of the constraints of existing I.A.s led sometimes to the modification of their charter or to the creation of new institutions. The recognition of new problems (population and environmental pollution are examples) also led governments to construct new I.A.s. However, there was nothing automatic about this process. Each new institution was preceded by a long history of debate, consultation and negotiation and there were instances in which an international consensus could not be reached. A good example was the International Trade Organisation proposed by the United States executive branch of government, to avoid the recurrence of " beggar my neighbour" policies widespread in the inter-war period. However, no agreement could be reached on the scope of the organisation and the Havana Charter negotiated in 1947-49 was still-born; even the United States Senate failed to ratify it. The second stimulus underlying the establishment of I.A.s was the desire to supplement world-wide organisations by regional ones. Some global I.A.s such as World Health Organisation made considerable use of their regional bureaux and decelntralised many activities in this manner. However, others such as the International Bank for Reconstruction and Development main- tained a unified pattern with most staff located at headquarters. In response to pressure for geographic specialisation, there came into existence a number of regional and sub-regional development banks. A related factor was the desire of Third World government to participate in the process of inter- national decision-making. In many I.A.s they commanded large majorities and could influence the outcome of voting in assemblies and executive boards. However, the scale and character of activities performed by I.A.s depended heavily on their budgetary resources and these were largely outside the control of Third World countries. In the case of the IBRD, voting power was proportional to capital subscriptions and developing countries were in a minoritv, Their voting strengthi in the regional banks is somewhat higher but in most cases control remains with governments of rich countries. Scale of Operation TqHE record showed not only a very rapid expansion in the numbcr of I.A.s but also a sizeable increase in the scale of operationi of most of them. The grc;s flow of capital plus tcclinical assistance destined for Third World countries increased from $12 billion in 1965 to nearly $5 billion in 1974. Even allowing for inflation, these figures indicated that I.A.s trans- ferred growing amounts of real resources to low-income countries. Managers 355 A MANDATE ON BEHALF OF THE POOR? of these organisationis succeeded in ra:ising funds either frorm rich-country government or from the financial markets of the world. The International Development Association, the UInitecl Nations aguncics and the sort-loan windows of regional development banks have to decp, sd on grant or conces- sional assistanice from rich-country governments. By contrast, the IBRD and several of the regional institutions sell bonds more or less on commiinercial terms. Their success in tapping privatc savings in rich countries for invest- ment in poor ones must be regarded as a major innovation against the background of the breakdown of international portfolio investment in the 1920s and 1930s. To summarise the specific accomplihmcnts of IA..s during the past quarter century is not easy. T'lhe World Bank Group has made loans amount- ing to $43 billion for close to 1.900 projects (these figures exclude the Inter- national Finance Corporation). It has convinced institutionial investors in major capital markets that money can be lent profitably to governments in all parts of the world for a wide variety of purposes. Completed projects have turned out, by and large, to be technically viable and economically productive, Each of the major United Nations specialised ageicies has taken a lead in their respective fields in disseminating av;ailable knowledge and techniques; assembling authoritative statistics and documents; and establishing training facilities at the international level. In 1974 they sent more than 12,000 expierts to the Third World to advise governmnents. make studies, help establish institutions and respo)nd to other requests nmade by members. The IUnited Nations also enabled selected individuals from member couLntries to improve their know-how by financing 9,000 fellowships in 1974. The WHO mounted a world-wide campaign to eradicate smallpox and seems to have succeeded. A similar campaign against malaria has made progiress. despite setbacks. The UINESCO is leading a campaign against illiteracy and has made available to governments the results of pilot projects it has cotidLucted in the field of adult education. The UNCTAD has provided a forum at wvhich new con- cepts and approaches to development have been aired, studied and legitimised. These examples are illustrative; they do not purport to present a comprehen- sive or balanced picture of I.A. activ ities. The Element of Flexibility SOMBE I.A.s hiave demonstrated a capacity to learn from thleir experience S and to innovate. The history of the WVorld Bank Group (WBG) is a case in ptoint. During the IQSOs. the Bank set otut to raise standards of living based oIn a concept of econonmic developmierit wlhich appears in retrospect to be rudinienlary. D)evelopncnt was tlouight of mainly as repetition in the ex-colonies of the historical process that nito(lerniise(d Furope and the Americas. A key role was assigned in this pirocess to the mazrket mnechanism and ilhereby to foreign and local private invshtmnenL. By contrast, governmentl were expected to play a rather limited part; t'key were to ptirsue sound oniilletary 3 5 6 A MANDATE ON BEHALF OF THE POOR? and fiscal policies "; build plhysical infrastructure complementary to private investment; raise public siaJings necessary for inrrastruCture investment; and avoid interfering in or entering "directly productive activities". Given this view of developmncnt policy, the WBG could assist by financing the foreign c.%change cormponcnl of gov-ernnment infrastructure pro jects and the relatively large industrial 1)rojects in the private sector. Its clharter did not permnit lending to private firms without government guarantee or the naking of equity investmnents and it was felt that these constraints icdLuccdl the Ba3nk's effectiven%:. Managieircnt reacted to this expericnce by pro)posinlg the establislhment of a new organiRatiolli-tc Inter;tional Finance Corporation. The central premise continUed to he tllhL high quality simuli in the form of 'lected projects embodying careful preparation and expert skills would launchi low-incone countries before long into a process of self-sustained economic growth. Once these countries had " taken-off ", they WoLild gain acce.ss to international capital markets and cease to depend on the WBG. Thiis notion of a relatively quick and easy solution to the developmnent problenm was buried towards the end of the 1950s. Even the relatively Prosperous Third World countries in Latin America lhad not succeeded in emerging from the condition of economic backwardness, innlation and acute balance of payment difficulties. In India the implementation (1f the Second Five Year Plan had precipitated an unexpected foreign e.xchlinge crisis. African countries wverc just emcrging from the colonial period and seclimed very far belhind. Fawced by these roalities, the managenment of the WBG recognised the complexity of the issues-inadequacy of the institutional frame- work in Third World countries, acute slhortage of indigenous human skills, adverse international demand conditionlvs encountered by traditional exports and the instabilitv of world markets whiclh undermined effoits of govern- ments to plan systematically. It was clear thaLt sucCessfull deVellopnent required miiassive structural changes wlhich could only be brought about over the ' long- latul " and through a great deal of governnient intervclntion in many parts of the economy. The new perspective caused the Bank management to reverse itself on mnany issues and from this process of learning from experience enmerged a new operational programnme. Perhaps the most important departure was the eNtabli\lnment of IDA aLinmcd at tranlsferring resources to very poor countries on conce,sional tetrms-near 7ero interest rate and fifty-)ear maturity. From hcing, ,pponents of "soft " lending. Bank presidents becanme its major champnioins andi they have p)ressed the case not only for generous replenishment of IDA resources by rich-country gov,ernments but also for a large expansion in total oflicial aid froim all sourecs. A second departure was the nmairked clhane in the Bank's approach to its business. In the early years, the Bank hiad tendIed to wait for pmroj?ct applications to come to its doors and liad explainledL the small volume of operations in terms of the limited capacity of memnber governnients to undertake investment p)rojects. This pnsture was replaced in time by one of vigorous promotion as the Bank began to a.ssist 357 A MANDATE ON BEHALF OF THE POOR? governments in identifying and formulating projects, conducting pre-invest- ment and sector studies, establishing investment institutions and training key staff. A third departure was the Bank's decision to supplement lending for physical infrastructure and private industry by loans for agriculture, public sector industry, education, drinking water, sites and services in urban areas and family planning prograrnmcs. Even today, the Bank is striving to probe further the (developnment process and to adjust its operations accordingly. The 1970s have witiiessed a major questioning of development goals and assumptions underlying policy. The expansion of GNP is no longer regarded as the only objective because higher GNP can go hand in hand with widespread and persistent poverty. The economies of Third World countries are so hiighly segmented that macro- analyses and general policies fail to get to the heart of the matter. Instead, it is essential to draw up profiles of poverty groups in rural and urban locations and to design projects which wvill directly benefit these groups. The Bank's mnanagement has been quick to recognise the new imperative of development; whether or not it can make good its promises, and to what extent, remains to be seen. Efficiency and Co-ordination JT is not easy to apply the concept of efficiency to I,A.s. Even in the case of profit-making firms, the subject bristles with difficulties. Problems of definition and nmeasurement are compounded greatly in the context of organisations, such as I.A.s operating largely outside the commercial market framework. The COeSts of I.A.s can be established fairly readily; they consist very largely of staff salaries, consultants and travel, The outputs-services, training, research, forums for discussion. regulatory framework-are difficult to evaluate. Tthere can be honest difTorences of opinion about the quality, relevance or impact of ihese outputs. The very meaning of development, which is the main aim of these enterprises, is not a constant. Moreover, there is no well-tested technology for promoting development and this rr kes the notion of efficiency even more elusive. Neither management science nor economics can provide unequivocal guidelines for decisions. To obtain funds from governments and private investors, I.A.s must be financially prudent, but the practical implications of this goal are controvcrsial. For examnple, what does timancial prudenco mean for salary policies of I.A.s who conipcte for pro[cNsional manlpower with civil services and private firms of rich counltries as well as poor? If they pitch their rates of remuneration at a competitive level, they are open to criticism from governments with lower scalcs and if they cease to offer attractive salaries they run the risk of staff denmoralisation and inability to recruit quality personnel from high-income areas. It follows that managers of ILA,s face an unstructUred reality and their task is complex. They need teclhnical expertise plus political acumen and leadership qualities to cater to several " stake-holders "; governments of rich 358 A MANDATE ON BEHALF OF THE POOR? countries who control the purse-strings; recipient member govCrnments who demand resources and services that fit into their own scheme of priorities; highly professional international staffs drawn from many nations and diverse cultures; rival organiisations in the United Nations system; and private-sector concerns anxious to safeguard their special interests. The minimum aspira- tions of all these groups must be satisfied, for each can damaniage the organisa- tion. However, these groups have unequal power and individual groups seldom speak with one voice. After describing I.A.s as '. . . an undisputed achievement of the last decades and one of the strongest assets in the search for the future ", the Commission on International Development (1969) underscored fouir hasic shortcomings: (1) absence of a definitive review of progress, prospects and problems; (2) multiplicity of agencies and their lack of co-ordination; (3) the present structure neglects to link foreign aid plus technical assist- ance with trade flows, private capital and monetary questions; (4) the system lacks coherence and presents a picture of confusion. Some improvements have taken place since the Commnission reported but they are patchy in character. According to Evan Luard (1977), ". . . there has perhaps been more progress in improving coordiniation in the last few years than in all the previous history of the U.N. ". First, much progress has been made in avoiding -wasteful overlap and duplication. However, I.A,s tend to insist on writing their own economic reports and oni conducting their own project feasibility studies despite the existence of basically similar assessments made by sister agencies. Not only is this practice wasteful of I.A. staff/ consultant time, but it tends to monopolise the scarce high-levcl nianpo%vcr resources of Third World governments. Secondly, the United Nations agencies now use common standards (e.g. salaries, promnltions, peillmiMS, classification of statistics) and common services (e.g. computer). thereby re- ducing costs and facilitating inter-agency communications and personnel transfers. Thirdly, several I.A.s have introduced procedures for long-term programming, functional budgeting and monitoring of implementation which have improved co-ordination within those organisations. Fourtlhly, the WBG attempts to co-ordinate aid from difTerent s(urces to selecte(d recipient nations thrOLugh consortia and consultative groups which meet to (discuss analyses prepared by Bank stafi. Fifthly, the United Nations D)eveloprnent Progranmne has built up capacity to co-ordinate technical assistance activities of all specialised agencies who dlepend on it for funding. In principle, this ena;zbles UNDP assistance to be closely tailored to priorities established by recipient governments. However, the exercise is not a comiprelhensive one; it cxcludes technical assistance fiILnced by reguLlar a-ency budgets and earmarked funds. Despite some progress, the Conimission's basic crilicismn of I.A.s remains valid even today. A Group of Experts reporting to tlle ITnited Nations in 1975 put it thus: "It must be recognized that the system is niore a prodUCt 359 A MANDATE ON BEHALF OF THE POOR? of historical circumstances than of a rational design . .. the prolifcration of inter-governmental bodies and secretariats represents an increasing burden on Governments in terms of toth cost and physical capacity to participate. Moreover the diffusion of responsibility among so many institutions, Imany of which are dealing with the same or related subjects. inevi!ahly reduces the impact of all of them." I.A.s and the New World Order IVEN this assessment of I.A.s, what can reasonably be expected of tlhem G3 in t ie context of the New World Order? Ever since the sixth session of the General Assembly of the United 'Nations in 1974, discussions have focused on NWO, and gradually the agenda for basic reform of policies and institutions in many fields-transfer of resOurces. monetary, food, energy, research and development, trade, industry, environment, transnational cnter- prises and, ocean management-has been defined. These recommendations are addrcsscd to governments in rich and poor countries, I.A.s, transnational corporations and other parties. MvIajor proposals relevant for I.A.s are the following: (1) New I.A.s should be establislied for debt settclemients and additional liquidity; financing buffer stocks; raising Tlhird World participation in processing. storage. banking, transport and marketing of export itenms; increasing bargaining power of priimary commodity producers; establishing countervailing power of governments hosting transnational enterprises; development of technologies and high-level manpower in agriculture, marine, energy and industry geared to Third World needs; and exploitation of " intcrnational connmmons " (oceans, space) in the interest of the world's poor. (2) Resource transfers throLugh I.A.s shiould be put incrcasingly on an automatic basis by linking them with creation of international liquidity and by introducing international taxes on undesirable forms of con- sumption in rich countries and on armaments. This would provide a measure of genuine autonomy to I.A.s and avoid uncertainty and costly disruptions in their programmes resulting from delays in agree- ing on voluntary contributions. (3) The role of the Tlhird World and of centrally planned economics in the management of I,A.s should begreatly increased. (4) I.As should direct their resources in support of anti-poverLy pro- granmnies aimed at salisfying minimum human need.s in ihc poorest nations. Proposal. to establish new 1LA.s are controversial and in some case there is a long history of debate and lack of consensus, even among econormists. Theire are some who remain confident of the efficacy of the free market and deeply sceptical of public interventions at local, national or international 360 A MANDATE ON BEHALF OF THIE POOR? levels. Other economists are aware that international markets are constrained by immigration laws, tariffs and quotas, oligopolistic structures and captive transactions between subsidiaries and head oflices of transnational corpora- tions. Thesc economists do not throw out of court the possibility of effective action in the public sector. For example, a Task Force of the Trilateral Commission (consisting of scholars from rich countries) visualises new I.A.s to oversee the international rdgime for oceans: regulate transnationial corpora- tions (" GATT for investment "); assure consumers access to overseas supplies of materials; and conduct buffer stock and income stabilisation operations for primary commodities. Nevertlcless, the economic profession does not speak with one voice on these issues and it is scarcely surprising that positions adopted by governments tend to be coloured by ideologies and perceptions of national interest. Proposals to make resource transfers automatic and to increase the managerial role of Third World governments would change the character of I.A.s enormously. The last twenty-five years show that control of the purse strings provided the ultimate sanctions held by the United States and major Western European governments over managers of I.A.s as well as over recipient Third World governments. In addition, the elite of most I.A.s was drawn predominantly from rich countries and they set the cultural and ideological tone of these organisations. This double dominance of I.A.s through money and key people enabled rich coulitries to manage the inter- national economy in an orderly and sensitive manner withlout significantly changing the basic power structure. I.A.s could act independently but within the margins of tolerar.2e established by key world powers and these margins varied, depending on the topic and the kind of decision involved. At the bottom of the decision hierarchy were the individual operations-C.g. to provide technical assistance or loans-in which international staffs elli yed a large measure of discretion and in which interventions by rich governments were rare. Next in order of importance were changes in programme emphasis; these decisions. too, were largely made within I.A.s as a result of interaction among clients, staff and management. The role of the big powers was somewhat more conspicuouLs in the context of major programme departures such as WHO's malaria eradication campaign. Decisions bearinlg on mandates or the scale of operation of individlual I.A.s involved the big powers; these issues could not be resolved inter nally in most instances. Finally, decisions on constitutional questions, memberslhip and senior appoint- ments were made prinmarily by the big powers. The NWO proposals are tantamount to rcquesting the big powers to rclinquish their pre-cminence in the face of new trends-the rise of OPEC, the sOlidiauitV of the (Group of 77 and the espousal of egalitarian ideas by several small rich countrics such as Scandinavia and Holland, If the big powcrs agrce to relax the purse strings and accept bigger management control by others, there will take place a virtual revolution in North-South relations, 361 A MANDATE ON BEHALF OF THE POOR? A New Deal for the Poor? Sn UPERIMPOSED on this North-South turnabout are proposals which involve a new deal for the poor inhabitants of Th'llird World c5untiies. In fact, the two issues are linked; the redistribution of income and power from the rich governments to the governments of the Third World cannot be justified in terms of economics or ethics unless the benefits accrue to people who are victims of underdevelopment and injustice. The I.A.s are asked, therefore, to support directly efforts to alleviate poverty. The implementa- tion of this part of the NWO will require massive changes in operations of most agencies. Two kinds of problems can be foreseen in this context. First, there will be formidable technical difficulties in translating the general in- junction to serve the poor into specific projects and programmes. Not much is known about the poor-their numbers, location, personal characteristics, occupation, time use, behaviour in households, factor markets, commodity marl;cts and political organisation-and the manner in which they are linked to other parts of the economy and polity. This knowledge gap is a relectioni of past neglect and poses a serious obstacle in designing relevant and effective interventions. I.A.s are even more handicapped than indigenous planners: the former have to contend not only with a scarcity of facts but also with distance-physical, socio-economic and cultural. While quick, airborne missions of international staffs were very appropriate when the focus was on modern organised. high technology segments of Third World societies, they may prove quite ineffective in the context of designing poverty re-dressal schemes requiring long and patient study. These international officials are drawn from the elite of many countries, including Third World countries, and they are well qualified in the conventional sense. It may be that their status, education and conceptual apparatus will make it caifficult for international staffs to comprelhend the universe of poverty and to prescribe suitable remedies. These technical issues are not unimportant, but given determination and time they can be resolved. Much more fundamental are the second category of problems faced by I.A.s, which raise deep constitutional questions. Except for the ILO, which has three kinds of members-governments, employer organisations, trade unions-membership in I.A.s is confined to governments. It follows that I.A.s can redirect thecir operations to benefit the poor, only to the extent that Third World governments wish it. Poverty groups do not have an important political voice in many national governments and they certain!y do not have any votes to cast in the councils of I.A.s. Judged on the basis of the rhetloric of leaders, the progressive legislation in the statute book or the aims of policy in plan documents, Third World governments seem determined to eradicate poverty. Hlowever, the hiistory of the last quarter century does not support the optimisnm, except in a few cases. Much of the progressive laws have not been iniplem. nted and the cgalitarian policies have not been put into practice. Loopholes in the law, laxity in adnministration 362 A MANDATE ON BEHALF OF THE POOR? and widespread evasion make tax systems regressive in many instances. On the public expenditure side, the picture is not dissimilar; elite groups already enjoying incomes far above the poverty line, siicceed in capturing the benefits of government schools, hospitals, housing, water supply systeimis, credit as well as technical assistance. Even specially designed projects aimed at generating incomes and employment for the rural poor turn out to have large leakages and tend to "mutate" in favour of elite groups during the irnplenmentatic'n phase. These stylised facts of history must be understood in terms of the power structure within Third World societies. In most cases, power is in the hands of the landed and piopertied groups while the poor are politicallyJ unaware and disorganised. From Zeal to Ardour THE discussion has now come full circle. Ever since the Geneva UNCTAI) of 1964, governments of the Third World have drawn attention to defects in the post-war system of international economic relations and have suggested a series of reforms. In fact, not many of these proposals have found favour with rich countries. Inspired by OPFC, the frustrated reformkt zeal of the Third World has been transfoi-ncd into revolutionary ardlolur and the demand now is for profound changes in the international order. If this demand is also ignored by the established powers, what will happen? W\ ill the Third World resort to unilateral solutions such as expropriation of foreigni investment and repudiation of external debt; withholding of key raw materialN from world markets; repudiation of agreements on patents and trademarks; simultaneous boycott of selected J.A.s judged to be unresponsive to Third World needs; trade preferences and payments unions among Third Worldl countries; and joint Third World planning and operation of in(dustries. river basins, shipping and organisations for R & D? Are Third World deniarnld for revolutioniary change likely to be backed up by credible measures of self-reliance? The answer depends on the relative strength of North-South links as again.st South-South connections. The former are firmly rooted in history, both in the sphere of trade and investment. Ruling groups in the South frequenitly have intimate commercial, economic and C.ultural ties with the North wlhich are extensions of the erstwhile colonial connection. The.e arc formidable obstacles against the strategy of collective self-reliarnce. Super- imposed on all these structural impediments are the inherent diIliculliCi. of collaboration among Third World countries., given their di%ecr.sity and inl perfect understanding of each othier's intcrc.sts. 3cnefits of co-ollperiion withinl the Third World are not likely to accrue equally to all partner". PRt, e.xperirnen'i, such as the central Anmerican Common Nfarket ard the lKilf African Comnmon Market, broke down partly because there was the failure to oreanise a fair distribution of costs and benefit,s. Thle solid.trilt of tlh, Th;rd World will not be easy to sustain in the face of internal snain,- and 363 A MANDATE ON BEHALF OF THE POOR? external blandishments. The task is difficult but perhaps not impossible; much depends on the behaviour of OPEC. Will it succeed in containing its internal problems during the 1970s and 1980s? Will it continue to challenge the existing centres of power? Is it prepared to use its new wealth to buttress the solidarity of the Group of 77? What happens to the New World Order will depend primarily on the dynamics of inter-governmental relations and these in turn will reflect the balance of internal political forces in nations of the North and the South. No large independent role can be played by I.A.s in restructuring power relations among states. These organisations have been useful in carrying out a number of functions which could not be handled equally well by other means. Their effectiveness has improved during their relatively brief history. They can be instrumental in implementing the New World Order if major governments agree to do so. I.A.s can be influential in building a consensus for change through their research, field work, dissemination of new ideas, discussions with governments and in other ways. Alternatively, if major governments are agreed on perpetuating the existing order, I.A.s can equally well serve this purpose. In the final analysis they are the creation of govern- ments. If there is disagreement among key governments, this will be reflected in the work of I.A.s and can undermine their effectiveness. New I.A.s can be established to carry out mandates agreed on by small groups of govern- ments or by members of the Group of 77. For these reasons it is best to view I.A.s as useful international machinery rather than as major actors on the world historical stage. 364 THE WORLD BANK Headquarters: Y(rT 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. European Office: 66, avenue d'Iena 75116 Paris, France Tokyo Office: Kokusai Building, 1-1 Marunouchi 3-chome Chiyoda-ku, Tokyo 100, Japan The full range of World Bank publicationis, both free and for sale, is described in the VVotrld Banik CataIlq of Pitblicaliliis, and of the continuing research program of the World Bank, in lVoi'Id Banik RcscarcIl Prograin: Abstracts of Currenit Studies. The most recent edition of each is available without charge from: PUBLICATIONS UNIT THE WORLD BANK 1818 H STREET, N.W. WASHINGTON, D.C. 20433 U.S.A.