China’s contested placement from 85th to 78th in the World Bank’s 2018 Doing Business ranking gained a lot of attention throughout the fall months of 2021 as news outlets highlighted how networks and net worth can be leveraged to have the odds fall in one’s favor.
Speculations mounted as to who was involved and Kristalina Georgieva, the chief of the IMF, came under pressure for the suspicious data points. While some were quick to speak on Georgieva’s behalf (such as the former World Bank chief economist Joseph Stiglitz), and her name was eventually cleared, the Doing Business reports have lost their credibility and publication has been suspended.
Situations such as this call into question reporting mechanisms for intergovernmental organizations (IGOs), along with the purpose and purse strings of those involved.
Over the past two decades IGOs have grown in size and influence as the financial resources from private actors have proliferated. The financing of IGOs bulged in the 1990s when the attainment of earmarked contributions (featuring conditional lending terms) became an encouraged practice for the UN, IMF, and World Bank.
Accordingly, the operational activities, under the UN system, saw an increase in donors with special interests from 1994 to 2009 by a rate of over 200 percent. And yet the involvement of multinational corporations and politically inclined ‘philanthropists’ has received little attention.
Currently, the World Bank is aiming to leverage of earmarked resources for sustainable development goals (SDGs), but the manner in which these goals should be achieved are unclear and the means for reporting progress are lacking. As reported by the International Institute for Sustainable Development, “only 44% of SDG indicators have sufficient data for proper global and regional monitoring” – and so one could assert that the misappropriation of resources is likely.
Actually, given that IGOs are comprised of rent-seeking agencies, vying for external funding, efficacy and efficiency tend to not be prioritized – since a problem solved or resources going unused may lessen the ability for requesting future disbursements.
The concept of rent seeking gained prominence in the 1970s and, as defined by Robert Tollison, it is “the expenditure of scarce resources to capture an artificially created transfer.” Given that IGOs are not creators of wealth, nor operate in a for-profit manner, they are left reliant on external contributions – and an ever-present need must be assured to secure larger budget allocations for the future. This is why agencies aim to have far-reaching policies or seek out broad range problems (even when outside of their area of competency).
Take for example the PFAS Action Act which seeks to ban use of polyfluoroalkyl substances (PFAS). Concerns for PFAS use arose when it was found that it was being discarded in a manner that was polluting waterways. This environmental concern has attracted the attention of IGOs and global leaders as it gives them something to work toward and champion related to the climate crisis.
Yet, it needs to be pointed out that the problem is the disposal of PFAS, not necessarily its use. To illustrate this point, it would be like banning campfires for fear that someone won’t put one out properly. As with this example, misuse is clearly a substantial and warranted concern, however, the focus should be on education and mitigation not a blanket ban. Indeed, although a fire can be dangerous, it is also sometimes needed and of great value, such as prescribed burns for forest maintenance.
Similarly, despite any risks involved, PFAS compounds have benefits related to use, which is why it is prevalent in consumer products, building materials, hydraulic fluids, medical equipment, among many other items related to both safety and productivity.
Preventing use of PFAS compounds could result in bigger problems, as noted in research conducted by the Consumer Choice Center given its necessary application for life saving medical equipment. Prohibiting use seems counterintuitive if harm reduction is the goal – particularly when studies are showing the adverse effects to be limited if present at all.
Actually, due to increased awareness and expectations for PFAS use and disposal, “industrial releases have been declining,” according to a 2018 Toxicological Profile for Perfluoroalkyls by the Agency for Toxic Substances & Disease Registry. And recent reports are noting that only minimal traces of PFAS are now present within water supply networks, and even these trace amounts are dwindling.
So, although common sense would say that this problem has been becoming less and less of a problem, calls for banning PFAS globally are currently gaining traction after concerns were raised at a 2019 UN meeting whereas over 180 countries jumped on board the banning bandwagon.
IGOs are now hard at work amplifying concerns, calling for policy change and coordinating coalitions (within the US alone, eight agencies are being tasked with PFAS concerns). And new initiatives will require new funding streams. The Biden Administration announced in November 2021 that $10 billion would be allocated for PFAS water-related matters.
The phasing out of PFAS would require a diversity of monitoring and reporting mechanisms which, as noted above, has not been strong suits for intergovernmental agencies. Even when initiatives relate to the core mission of an IGO, effectiveness is still lacking (see the World Bank’s large track record for failed foreign aid programming and development-based debacles).
Truly, the inability to trust reporting mechanisms for global initiatives has been a problem for quite some time as back door dealings and the abusive use of power continue to persist within IGOs and their affiliated agencies. Yet, the size and scope of these organizations continue to expand and the issues they can latch on to seem to never cease. And when incentives and interests collide, there is no denying that those with power will wield it for having the odds fall in their favor and according to their agendas, agencies, and funding needs.
Without question, an important axis of political conflict in international relations is that of economic roles, and this is why centralized governance and top-down dictates should be met with a hefty level of skepticism.
In the meantime, let’s hope the lyrics of Jimi Hendrix’s ring true – “And so castles made of sand, fall into the sea, eventually.”