Rethinking Multilateralism: Some Reflections

In her recent book The Gun, the Ship, and the Pen, Linda Colley tells us that many national constitutions emerged from threats of invasion and actual warfare. Several multilateral institutions were also born in similar circumstances (Colley 2021). The International Bank for Reconstruction and Development, or the World Bank (the Bank) and the International Monetary Fund (IMF or Fund) were created at the Bretton Woods conference held just after D-Day in July 1944. A year later, the United Nations Charter was adopted in San Francisco even before Japan surrendered.

Institutional multilateralism does not require a big-bang moment like Bretton Woods or San Francisco. Some functionalist institutions, such as the United Nations High Commissioner for Refugees and the United Nations Development Program, are products of regular General Assembly resolutions. Other organizations were conceived by technical experts who deliberated without involving any political principals. In 1955, the Bank’s Executive Directors debated and finalized a charter for its first affiliate, the International Finance Corporation (IFC). They then invited Bank member countries to join IFC by signing the charter. No international conference was convened. This model was used to establish the Bank’s other affiliates. IFC’s creation is, perhaps, an extreme example of the principal-agency paradigm, which posits that states delegate their authority to an international bureaucracy to solve collective-action problems.

As the international relations theory suggests, organizational multilateralism is often the consequence of motivated unilateralism. The United States and the United Kingdom were the principal sponsors of Bretton Woods. Japan championed the Asian Development Bank’s formation in the 1950s. Nigeria led efforts to create the Economic Community of West African States (ECOWAS) in 1975. More recently, as Roy’s article in this special collection describes, China was the moving force behind the Asian Infrastructure and Investment Bank and the New Development Bank.

It surprises many that two or more multilateral organizations may parent another institution. A relevant precedent is the Joint Vienna Institute established by the Bank, the IMF, and other institutions to train officials from planned economies transitioning to open markets. Nongovernmental groups can also play a role in instigating institutional multilateralism. After all, private groups such as the League to Enforce Peace in the United States and the League of Nations Society in England actively lobbied for the formation of the League of Nations.

Large multilateral institutions have hard foundations in international law. They are constituted by treaties that confer international legal personality upon them. Several regional organizations are also formed through constituent agreements signed by their founding members. Yet a growing number of state-based multilateral entities are not established by a treaty. Examples include the G20 and G8 groupings as well as the Paris Club of official sovereign creditors. Decisions taken by these informal, yet influential, entities can have profound consequences for nonmembers and global geopolitics.

A growing number of nongovernmental organizations display multilateralist tendencies. They are registered or incorporated under national law and lack a founding international agreement. Some of these entities eventually claim the status of a treaty-based organization. A case in point is the International Committee of the Red Cross (ICRC), which is an association under Swiss law. The ICRC’s humanitarian mandate is derived from the universally ratified Geneva Conventions. In many countries, therefore, the ICRC is treated as an international organization with attendant privileges and immunities. Another example is the Inter-Parliamentary Union, the global organization of national parliaments. Private endowments or charitable trusts, such as the Gates Foundation, can also exhibit multilateral characteristics. Through its financial might and acquired expertise, the Gates Foundation exercises considerable influence over global priorities and national policies.

As they age, international institutions often struggle for relevance. Some fail, but most manage to survive and adapt. A good illustration is the Bank, which has greatly evolved since it first opened more than seven decades ago. The Bank’s first loans supported postwar reconstruction in Europe. But the Marshall Plan’s advent forced the institution to quickly pivot to development financing. Through the 1950s, the Bank focused primarily on infrastructure loans to creditworthy borrowers such as Australia and Japan. In the early 1960s, it began offering concessional financing to lower-income countries. By the late 1960s, the Bank had forayed into health and education projects, and in the early 1970s, it made its first loan for pollution control.

In the 1980s, the Bank promoted structural adjustment loans with controversial conditionality and mixed results. Heeding growing concerns about environmental and social impacts, the Bank began mainstreaming safeguard requirements in the 1990s. Since 2000, the Bank has focused on supporting countries in achieving the Sustainable Development Goals, financing climate adaptation and mitigation measures, and assisting countries with conflict-affected situations, humanitarian crises, and natural disasters.

Several factors influenced the Bank’s changing priorities. Progressive interpretations of its charter, the Articles of Agreement, were a primary reason. The Bank’s versatility was also aided by frequent revisions to its operational policies, which spurred financial innovations and enhanced its thematic and sectoral engagements. Moreover, as Ferreira argues in this collection, the Bank evolved by gradually acquiring expertise over specific subject matters (such as inequality).

An instance of the Bank’s policy evolution relates to its activities in fragile, conflict, and violence-affected situations. Recalling its early reconstruction loans, the Bank formulated a framework for assisting postconflict countries in 1997. This framework drew heavily on the Bank’s experience with postconflict reconstruction in Bosnia and the West Bank and Gaza in the early 1990s. Elements of the postconflict assistance framework were codified in Operational Policy (OP) 2.30 (Development Cooperation and Conflict), which the Bank’s board of executive directors adopted in 2000.

OP 2.30 provided the legal and policy underpinnings for Bank engagements in Afghanistan, Iraq, Somalia, Libya, South Sudan, and Yemen. In 2021, OP 2.30 was revised, updated, and reissued. The updated policy provides a new authorizing framework for the Bank’s involvement across a spectrum of fragile, conflict, and violence-affected situations. Among other things, the updated policy outlines principles and parameters for Bank engagements with refugee and forced displacement situations, humanitarian crises, security and military forces, and armed nonstate actors. The updated policy reflects advances in knowledge and research, operational innovations, the need to better manage risks, and the changing needs of Bank members (World Bank 2021).

As an in-house lawyer, I am often asked, “What is the World Bank’s mandate?” This question isn’t peculiar just to lawyers at the Bank or other international financial institutions. Every multilateral entity, whether large or small, grapples with mandate issues in some form or other.

An international organization’s mandate has at least two distinct elements. The first involves expectations or perceptions about the organization’s role or functions. The second element is derived from the organization’s stated purposes and responsibilities in its charter. It can also relate to an institution’s comparative advantage or technical competence in a specific area. An international organization’s institutional and operational effectiveness depends on clarity and convergence between these defining elements of its mandate (IMF 2010).

As to the first element, expectations regarding an organization’s proper role may vary sharply among member states as well as the general public. Social media can greatly magnify these divergences or create entirely new expectations that may be impossible for the organization to fulfill. During the COVID-19 pandemic’s early months, social media amplified criticism of the World Health Organization for its perceived failures, wounding the institution’s public credibility.

Under the second element, a multilateral organization’s mandate is primarily derived from its charter’s broad description of its purposes and responsibilities. A charter’s wording may invariably reflect negotiating compromises and perceived priorities at the organization’s founding. A literal interpretation could significantly constrain the organization’s long-term effectiveness and viability. For this reason, international institutions adopt progressive charter interpretations particularly with respect to their mandates and authorizing frameworks. Such interpretations are typically teleological or purpose-driven in nature. They can be expressed through formal decisions adopted by an organization’s governing body or informally inferred from its institutional and operational practice.

Charter amendments are an alternative means to revising or clarifying an institution’s mandate. But amendments are challenging and cumbersome to accomplish. At most organizations, amendments must be approved by a special majority of members. In some cases, they must be ratified by national parliaments to become effective (Shihata 2000). After the Nixon administration ended the US dollar’s convertibility in 1971, the IMF adopted the Second Amendment to its Articles of Agreement, which made Special Drawing Rights the Fund’s numeraire. The Bank also grappled with the consequences of the Nixon administration’s decision as its Articles denominate its capital relying on dollars with a defined gold content. Rather than adopting an amendment like the Fund, the Bank chose to deal with the problem through a formal Articles interpretation of its capital value (Shihata 1989).

A third approach to mandate renewal or expansion is to invoke an international organization’s implied powers. The Bank’s Articles prescribe detailed requirements for loans but are silent about technical assistance. Yet the Bank has provided members with technical assistance since its early days. To do so, the Bank relied on its implied powers that are essential to its effective functioning as an international organization.

To operate effectively, multilateral organizations must adhere to certain constitutional rules and institutional principles (OECD 2019). These rules and principles are derived from an organization’s charter. They are particularly important for international financial institutions and development banks with complex shareholding patterns and weighted voting structures (Lichtenstein 2018).

Besides its charter, an organization’s governance is also regulated through bylaws, regulations, institutional procedures, and board committees. These often-ignored elements are not just critical to an organization’s institutional effectiveness; they may also significantly impact its member states. For instance, the Credentials Committee determines whether a de facto regime or authority has the legal standing to represent a member at the General Assembly. At this writing, the committee has yet to accept the Taliban’s claim to represent Afghanistan, which has severely affected the group’s ability to obtain international recognition.

An organization’s rules and principles are also derived from its financial, administrative, and operational policies as well as from institutional precedents and operational practice. At the Bank, operations are regulated by a host of financial, legal, fiduciary, and safeguard policies. These policies spell out mandatory rules and principles for designing, appraising, processing, approving, and supervising Bank financing. The sources of these rules and principles vary. Some rules and principles give effect to specific Articles’ requirements. Others reflect accepted or emerging norms in international law as well as generally accepted fiduciary standards. Still others codify the Bank’s accumulated operational practice and development experience. Most Bank operational policies are supplemented by management directives as well as detailed procedures for decision-making. The Bank also issues guidance and good-practice notes to staff on how to effectively implement relevant policies and directives.

Most operational policies are approved by the Bank’s executive directors, who represent its universal membership. As Haug, Gulrajani, and Weinlich explain, however, the Bank and other international organizations commonly accept donor contributions for various operational activities. Devesh Kapur argues that these contributions give donors leverage to shape or influence an organization’s policies and programs (Kapur 2019).

Rules and principles also animate informal multilateral groupings such as the Paris Club, the Organization for Security and Cooperation in Europe, and the Financial Action Task Force. Although they lack constituent treaties, each of these entities has statutes and procedures, which govern and regulate its operations (Klabbers 2017).

The globalization of trade, travel, and societal exchange has spawned a diverse range of global regulatory regimes (Kingsbury, Krisch, and Stewart 2005). These subject-specific regimes include international accounting and auditing standards, air-traffic control protocols, customs and immigration regulations, anti-doping rules in sports, health and food-safety requirements, and pollution control and environmental and social principles.

Some of these regimes are administered by multilateral institutions such as the International Civil Aviation Organization. Others emanate from transnational networks of national regulators, such as the International Organization of Securities Commissions. And still others are produced by private entities such as the International Organization for Standardization. These global regimes have a direct impact on government policies and decisions. They also profoundly affect the lives of billions of ordinary persons. They represent a real, but diffused, form of multilateralism.

A multilateral organization’s relationship with members is an evolving, yet fascinating, topic. Much ink has been spilled on whether and how such relationships impact state sovereignty. Can an institution created by states impose binding obligations without their consent? An overlooked aspect to this discussion is the so-called “political prohibitions” in the Bank and other development banks’ charters. These prohibitions bar the development banks from interfering in their members’ political affairs. They have not affected the ability of development banks to advocate governance, legal and judicial, and public administration reforms to their members. But they have limited the development banks’ engagements with human rights whose relevance to development can no longer be seriously contested.

The European Bank for Reconstruction and Development (EBRD) is the only multilateral development bank whose charter does not include a political prohibition. That is because its founders ordained that the EBRD must assist its members in applying “the principles of multiparty democracy, pluralism and market economics.” Lately, however, the EBRD’s commitment to its political mandate has been criticized as it has made large loans to autocratic governments (Pitel and Fleming 2022).

The EBRD’s charter does, however, share a common feature with the World Bank’s Articles. Both constituent documents admonish staff and employees to owe their loyalty and allegiance only to the institution. Member states are called upon to respect this obligation, which is the fountainhead for an international civil service. Staff autonomy is important not just for political institutions such as the United Nations but also for international financial institutions and development banks, which depend on financial markets for resources.

Atal’s paper in this special collection discusses how South Africa’s government defended its black empowerment policies before international tribunals in moral rather than economic terms. This fact provokes the question whether morality, as an ethical precept, applies to international institutions. It also invites us to think critically about how international organizations may be held accountable for their actions or omissions. According to the high-level Pandemic Panel, COVID-19 is the twenty-first century’s Chernobyl moment. While there were failures at every level, a proper inquiry into the role and record of international organizations is essential to restoring trust and confidence in them.

A few years ago, the International Law Commission began studying whether and how international organizations could be held responsible for internationally wrongful actions. Most international organizations were ambivalent about this project. Some actively resisted it. Yet in 2011, after years of debate, the Commission finalized a set of articles on the subject. These articles outline principles to establish and attribute responsibility to international organizations. It remains to be seen whether the articles meaningfully advance institutional accountability and responsibility.

A deafening drumbeat for greater accountability and transparency has led many multilateral organizations to establish independent internal mechanisms. These accountability mechanisms include ombudspersons, supreme audit offices and comptrollers, integrity departments, and administrative tribunals. Most institutional charters do not provide for such mechanisms. They are constituted by resolutions and decisions of the relevant governance organs.

As a case in point, in 1980, the World Bank established an administrative tribunal as its staff lacked effective legal remedies in labor or HR matters. Similarly, the Inspection Panel was constituted in 1993 to handle complaints from project-affected persons about the Bank’s failure to adhere to its operational policies when financing projects. And in 2001, the Bank created an institutional integrity department to investigate complaints of fraud and corruption in projects. The Bank’s accountability mechanisms have influenced the emergence of similar entities at other institutions. The IMF’s Evaluations Office, for instance, is patterned on the Bank’s Independent Evaluation Group.

Accountability mechanisms have varying institutional mandates and jurisdictional competence. Most focus on addressing complaints regarding violations of their institutions’ administrative or operational policies, procedures, and rules. In resolving these cases, the mechanisms invoke remedies authorized by their constituent resolutions or fashion solutions relying on operational experience and practice. While the findings of accountability mechanisms primarily relate to the actual cases before them, their decisions can have a much wider impact. By pointing out specific failures and shortcomings in projects, the mechanisms contribute to improving operational design, public consultation, grievance redressal, risk mitigation, and implementation support. Their rulings and recommendations can also instigate reforms and revisions to institutional and operational policies, procedures, and practices.

A somewhat understudied dimension of multilateralism involves cooperation arrangements between and among international institutions. In 1947, the Bank and the United Nations signed a relationship agreement to better define their institutional and operational collaboration. Among other things, the agreement recognizes the Bank’s independence and commits it to pay due regard for Security Council decisions for the maintenance of international peace and security. Similar cooperation and relationship agreements exist between the United Nations and the World Trade Organization, the Fund, and the International Organization for Migration.

There are less-formal approaches to interinstitutional cooperation. In 1989, the Bank and the Fund adopted a joint concordat to clarify their respective mandates and avoid functional and operational overlap. International organizations execute memoranda of understandings (MoUs) with each other on a range of topics (Hollis 2021). A good example is the 2018 MoU between the Bank and ICRC. While recognizing that the two institutions have distinct mandates, the memorandum identifies entry points for operational partnerships, knowledge and expertise sharing, and joint efforts to shape the global agenda.

As Bowen and Broz argue in their contribution to this special collection, an influential member can disrupt even powerful institutions, such as the World Trade Organization. In some cases, as Borzyskowski and Vabulas suggest, a member’s threat to walk out provokes institutional change. Yet exit barriers at most organizations are formidable. At the Bank, for instance, a withdrawing member’s shares must be repurchased and its accounts settled, which can be a tedious process.

Big multilateral institutions rarely expel members. There are, of course, historic exceptions. In 1953, the Bank suspended Czechoslovakia from membership for its failure to make subscription payments. A year later, Czechoslovakia ceased to be a Bank member. Around this time, the country’s Fund membership was also terminated. Since then, no further suspensions or membership terminations have taken place at either international financial institution. And the United Nations has never suspended or expelled a member, although there have been several attempts to do so.

There has, however, been an uptick in member suspensions at regional organizations. Under the Lomé Declaration and its charter, the African Union may suspend states whose elected governments are deposed by unconstitutional means such as a military coup. Invoking this power, the African Union suspended Madagascar in 2009 and Guinea-Bissau in 2012. For similar reasons, ECOWAS recently suspended Guinea, Mali, and Burkina Faso after coups in those countries. The Organization of American States may also suspend a member for an unconstitutional change in government, and it exercised this authority with respect to Honduras in 2009.

In his closing speech at Bretton Woods, John Maynard Keynes complimented the conference lawyers for their hard work. But he also blamed them for introducing too much complexity in the Bank’s and the Fund’s charters. They had included, Keynes complained, “very detailed provisions for burial service, hymns and lessons and all” (Proceedings and Documents of the United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1-22, 1944 1948, 2:1241). Keynes was probably referring to the Bank Articles’ provision on temporary and permanent suspension of operations.

A charter’s terminal provisions are understudied and overlooked. But they are a reminder that multilateral institutions die (Eilstrup-Sangiovanni 2020). According to a study, nearly one-third of the international organizations that existed in 1981 were defunct barely a decade later (Shanks, Jacobson, and Kaplan 1996). Some organizations end their operations because their charters come with expiry dates. A notable instance is the United Nations Relief and Rehabilitation Administration, which was established in 1943 for postwar relief. It largely wound up its work by 1947 and concluded activities in 1948.

Multilateralism remains alive and well after the COVID-19 pandemic even if it has emerged somewhat bruised. The devastating pandemic underscores the fact that international institutions must innovate to stay responsive, resilient, and relevant to global crises and needs. To remain effective in a postpandemic world, international organizations must carry out fit-for-purpose assessments. Such assessments must examine whether the organization’s mandate is adequate and clear, its functions and responsibilities are relevant and appropriate, and its deliverables are within its comparative advantage and technical competence.

Multilateral institutions must make deeper investments in technology, review staff hiring and retention practices, improve knowledge harvesting and information sharing protocols, and strengthen arrangements overseeing interinstitutional coordination. Organizations must also rewire their legal and policy frameworks to reflect global best-practice principles on transparency, accountability, equity, participation, and data protection and privacy. Such rewiring is essential to ensure continuing acceptance and public legitimacy of multilateral institutions.

At this writing, Russia is engaged in military hostilities with Ukraine. Reacting to this news, Martin Kimani, the Kenyan ambassador, told the Security Council that multilateralism had been assaulted and was on its deathbed. Deadlocked by a veto, the Council was unable to take any enforcement action although most international organizations, including the Bank, expressed serious concerns over the conflict. Retaliatory actions, in the form of sweeping sanctions, were mostly undertaken by individual countries and regional groupings such as the European Union.

It is particularly noteworthy that the conflict has generated a global tidal wave of social media reactions. Analysts, commentators, activists, hackers, athletes, entertainers, and ordinary citizens have taken to Twitter, Facebook, and Instagram to express their views. Many have called for greater international coordination to resolve the crisis. Indeed, if Twitter hashtags are any indication, the crisis has unleashed a vast, diverse, and noisy legion of new champions for multilateralism. Diplomats and officials may no longer be the dominant arbiters of multilateral solutions and approaches.

The author has no competing interests to declare.

I am especially grateful to my colleagues Aristeidis Panou, Esperanza Lopez Rodrigues, Jessica Buchler, and Walter Abah for their feedback.

Vikram Raghavan is Lead Counsel, Legal Vice Presidency, World Bank.