Bretton Woods Institutions

In the world today the global income is more than $31 trillion a year. In some states in the Global North the average income is $40,000 a year per person. In comparison, 2.8 billion people in developing states live on less than $700 a year per person, and 1.2 billion of these people earn less than a dollar a day, which is less than $400 a year per person. Some places are in so much poverty that there are no hospitals or schools. Institutions such as the World Bank and the IMF come in to play when states form the Global North adopt the role of helping to raise the level of income and erase poverty in developing states.During World War Two, most of Europe was devastated and the world had to figure out a way to fund the rebuilding of the states that were affected. To avoid another huge recession after the war, the allies held the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. The deliberation lasted for three weeks and consisted of 730 delegates from the allied states. Finally on the 22nd of July 1944, the Bretton Woods Agreements were signed. The agreements set up a system of rules, procedures, and institutions to regulate the international monetary system. The International Bank of Reconstruction and Development (IBRD) and the International Monetary Fund (IMF) were created in 1945 as institutions to help monitor the international monetary system. A complex system of IGO’s work mutually to monitor the international financial system and to fund loans.The World Bank is IGO that consists of 5 other IGO’s. The idea of the World Bank is to give out loans to less developed countries at a low interest rate, in order to help develop them. The 5 IGO’s include the International Bank of Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). The IBRD was formed in 1945 in order to fund the rebuilding of Europe after World War Two. Currently the IBRD’s focus is to fight poverty by financing states through low interest loans. The IDA was founded in 1960 to provide interest-free loans and grants to the poorest of developing countries (LLDC). The IFC was formed in 1956 to promote sustainable private sector investment in developing countries. The MIGA was founded in 1988 to promote Foreign Direct Investment by insuring investors with political risk insurance and by mediating disputes between investors and governments. Lastly, the ICSID established in 1956, is an administrative council that provides facilities for the conciliation and arbitration of investment disputes between member countries and individual investors.The IMF is the other main Bretton Woods Institution that was formed during World War Two and still functions today. The IMF was created specifically to “monitor” the international monetary system in order to prevent further economic recessions after World War Two. The primary mission of the IMF is to provide financial assistance to states with serious financial difficulties. States with that cannot pay their loans on time may request loans and/or organizational management from the IMF to help their national economies. In return the state is required to launch certain reforms in order to cut costs or generate more revenue. Generally the IMF requires these reforms so that states avoid fixing exchange rates that lead to fiscal, monetary, and certain political practices, and which eventually leads to economic crisis. Regardless of how these reforms are justified, these policies violate sovereignty and the IMF is one of the most criticized Bretton Woods Institutions.The World Bank is viewed like a “one-stop shop” super bank, where states can go to handle all of their finances. Within the World Bank, The IBRD and IDA are the “loan desk”, the IFC is the “stockbroker”, the MIGA is the “insurance agency”, and the ICSID is the “court” (or mediator). With the World Bank as the “super bank”, the IMF is the “credit-counseling firm” (like Debt Relief of America), except the IMF also provides loans. The IMF may also similar to the “secret service” because they monitor international currency. These Bretton Woods Institutions collectively have immense power as they essentially handle all of the states’ monies.The Bretton Woods Institutions have been successful in preventing huge economic recessions; there has not been a recession in the United States since they were formed. However, there is a lot of corruption within these institutions. The World Bank and the IMF are both based in the United States (in Washington, D.C.) and are also primarily funded by the United States. Also since the voting system is weighted based on the percentage funded by states. This gives the United States and IMF-finding states more power; and this may be the reason that the Unites States has not had a recession. The IMF has also been observed taking away states sovereignty, as it dictates states’ economic policies. Arguably, these institutions could operate like non-profit organizations, and send in managers to help manage states’ budgets and funds. The primary goal should be to resuscitate these states, and offering loans to them will not help as loan recipient states do not always use this money in the most economically effective manner. Instead, the IMF and World Bank could send in their accountants to states that ask for help and suggest economic reform. The Bretton Woods Institutions have met their goals from the World War Two era, and today there are new goals that have to be met. How soon will it be before 1.2 billion people earn closer to $40,000 a year per person is a question that The Bretton Woods Institutions should answer.

Foreign Policy Factors

In this exam I am supposed to explain which factor is the most important in determining foreign policy. I have thought about this for some time now and I researched various factors that I think are important, but I couldn’t narrow it down to just one factor. The reason that I believe this is that there are three levels of factors that effect foreign policy; each level is (generally) independent of the others. I want to start by talking about the “Peace of Westphalia”, then I will talk about different factors that effect foreign policy (which I think are most important), lastly, I will talk about the future of foreign policy and what I believe should be done.The modern system of states started in 1648 after the Thirty Years’ War (1618-1648), with the Peace of Westphalia, which was a treaty between various European Countries. The reason that it is important is that there were four main ideas that formed, which didn’t officially exist before. They are as follows; (1) the principal of sovereignty of nation-states and the fundamental right of self-determination; (2) the principal of legal equality between nation-states; (3) the principal of internationally binding treaties between states; and (4) the principle of non-intervention of one state in the internal affairs of other states. This was the first time that state was given the notion of sovereignty, it was this treaty that established a system that respected peoples rights and that relied on international law, rather that the right of the strongest to regulate interactions between states. This is the inception of international relations in the modern world.I could not say that just one factor was the most important one in determining foreign policy. I actually have formed a theory, based on observation of history, on this matter. I think that most scholars would argue that the most important factor is the type of government in a state; this is based on the democratic peace theory. The first notion of the democratic peace theory came from Immanuel Kant, a great philosopher in the 18th century. The theory states that democracies never (or almost never) go to war with each other. I think that the foundation of this theory is right, but I think that the theory is a little flawed; it should state that governments of the same type don’t go to war with each other. The reason that I think this is if you look at any other government type, they don’t really go to war with the same type of government in a different state. I think that this theory is dangerous because it promotes world domination, there have been many wars in the name of democracy and peace, we say that we are “liberating” the people of the state that we go to war with, but are we really doing that, or are we just trying to make other states into the same type of state that we are? This is a question that I have asked my self my whole life. I am going to explain my theory in the next paragraph.I came up with this theory while I was in a movie theater, waiting for the movie to start, all of a sudden eureka phenomenon occurred, and my theory came to me. So, I would like to look at the “big picture” here. In political science, there are three “levels” of factors that effect foreign policy; the first is the “systemic” level (I call this the “International” level); second is the “state” level (domestic level); and finally, third is the individual level (the leader). Each of level is independent (mostly) of the other levels. I would like to bring one other factor into the equation, the factor is weather or not the state is a superpower, this might not sound very important, but I think that it is because it really determines what international and domestic policy will be made. This is my theory: If the state is a superpower then the domestic (state) source of foreign policy is most important; if the state is not a superpower then the most important source of foreign policy is international (systemic) source of foreign policy. The reason that I say this is, superpowers push their policy onto weaker states and try to make them have compatible or similar governments, if a weaker state rebels then the superpower will simply reprimand (overthrow, invade, or instill trade embargos) the weaker state. Also, a non super power must make it’s foreign policy based on what the superpower wants otherwise it will not prosper, and will actually start to decline (I believe that this is a remote cause of poverty in most poor states). The irony is that the thing created to control strong nations and help weak nations (the united nations) actually works the opposite way, it empowers the strong even more and limits the weak. The individual level is also important because the leader of a state makes most of the important decisions, and therefore forms actual policies, making the leader the “trigger” or actor in the equation. I good leader will know their state’s place in the hierarchy of states, and will act accordingly. The future of the world will be made by the decisions and policies of today.I believe that peace can be achieved if the world’s superpowers invest in it. They must not use violence in order to make weaker countries succumb to their policies, the old saying is “violence begets violence”, so in order to have peace, things must be done in a peaceful manner. That means no more waging wars against “ideas” (i.e. war on terrorism), no more invading states if you don’t like their policies, and create a truly free market between all states. I like to say that they [superpower’s] should lead by example, and then others will take note and follow. I think of my self as a realist, although I recognize that this is quite an idealistic idea, I think that this is a way to “regulate” the world (per se) without the “illusion” of [unenforceable] international law, therefore there is true [actual] freedom through out the world.