Limited mandates and intertwined problems: a new challenge for the World Bank and the IMF. (International Monetary Fund)

I. INTRODUCTION

The sovereign states that participated in the establishment of the post-Second World War international order had a specific vision of how international organizations should function. This view was based on two premises. The first premise was that the sovereign state was the most significant actor in the international order. Consequently, only states could join and participate in the affairs of the new international organizations. Furthermore, international organizations were limited in their ability to interfere in the internal affairs of their member states.(2)

The second premise was that, with the exception of the United Nations, which has general powers within a constitutional framework, most of the organizations should have mandates that are limited to specific and defined sets of problems.(3) The founding states expected each organization to confine its activities to its specific responsibilities and to leave other issues to other international organizations. For example, the International Bank for Reconstruction and Development (IBRD) would deal with issues of "economic development," but would leave monetary questions to the International Monetary Fund (IMF) and health issues to the World Health Organization (WHO).

Since that time, the world has undergone such substantial change that the validity of these two premises has been called into question. The international organizations, which are based on exclusive state membership, are being challenged by the increasing number of actors on the international stage. Today, the ability of nonstate actors such as individuals, peoples, corporations, nongovernmental organizations (NGOs), and national liberation movements to influence international affairs has grown dramatically.(4) Concurrently, the sovereign power of all states has declined in that, because most problems transcend national boundaries, states have a diminished ability to manage behavior within their borders.(5) This means that the resolution of most problems requires collaborative efforts that involve both state and nonstate actors.

The effective functioning of international organizations with limited mandates has also been compromised by the growing complexity of the problems they face. In particular, the jurisdictional boundaries between international organizations have become blurred as the intertwining of the world's multiple problems has become more apparent.

International organizations have not adequately responded to the challenge that these developments pose: how to effectively deal with only those aspects of intertwined problems that fall within their mandates while, at the same time, avoiding ultra vires action. These organizations have not developed effective mechanisms for coordinating policies and operations in areas of shared jurisdiction. Furthermore, the decisionmaking bodies and operating rules of these organizations are still premised on the primacy of the sovereign state.(6) This results in most international organizations seeking to solve the problems of the late twentieth and early twenty-first centuries with institutional arrangements that were designed for a bygone era.

The international organizations that have been most forcefully confronted with the challenges posed by these changes are the IMF and the World Bank Group (hereinafter "the Bank") (collectively the IFIs).(7) This paper discusses the forces that are challenging the IFIs and their responses thereto. The second part of this paper discusses the specific developments shaping the world in which the IFIs must operate. Part three discusses the challenges facing the IFIs and the responses they have made to date. The last section proposes specific actions the IFIs could take in order to respond effectively to the demands of the modern world.