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32 N.Y.U. J. Int'l L. & Pol. 243

New York University Journal of International Law & Politics


Winter 2000

Article
Antony Anghie a1

Copyright (c) 2000 New York University Journal of International Law and Politics; Antony Anghie

TIME PRESENT AND TIME PAST: GLOBALIZATION,


INTERNATIONAL FINANCIAL INSTITUTIONS, AND THE THIRD
WORLD

I. Introduction

I am very honored to have been invited by the New York University Journal of International Law and Politics to
contribute to your “Millennium Issue,” although somewhat uncertain as to how to respond to the many challenges posed
by your question. My work in the new millennium will basically continue and extend the work I have engaged in for
much of my legal career. Like many other third world scholars on whose work I have relied and to which I refer in this
article, my work has been animated by a concern which, crudely put, is to understand how international law can be used
by peoples in the third world--a problematic, anachronistic term, but one I will use nevertheless--to advance their own
interests, to protect themselves against an oppressive state, to improve their standards of living, and to make their voices
heard in the international arena. 1

*244 I am interested in two broad sets of issues arising out of this concern. First, I am interested in examining the impact
of globalization on third world peoples and, more specifically, the role that international financial institutions (IFIs) such
as the World Bank (Bank) and the International Monetary Fund (IMF) play in promoting that globalization. My simple
concern is that globalization, as promoted by the IFIs, may have adverse consequences for the vast majority of people in
third world countries. Arising from this, what I present are a series of fragments that approach this issue from a number
of different perspectives. The first fragment outlines some issues arising from the impact of globalization on international
human rights law and the ways in which actors such as the Bank are embracing and deploying the language of rights.
The second focuses on some problems that could arise from the demands made by globalization as promoted by the IFIs
on the third world state. The third focuses on the legal framework governing the IFIs: given the enormous power wielded
by the IFIs, what are the legal limits, if any, to the exercise of this power? How does the rule of law apply to IFIs?

My second area of research is somewhat removed from the contemporary immediacies of globalization. Rather than
attempt to address the challenges of the future, the factors that will shape the millennium, this project focuses on better
understanding the past. My aim is to sketch a history of international law from the time of Francisco de Vitoria through
the times of Grotius, Vattel, and the nineteenth-century jurists to the present, a sketch that examines the discipline
by focusing on the relationship between international law and colonialism at different stages of the formation and
development of the discipline. 2 The principal thesis I have been developing is that the colonial encounter is central
to the formation and development *245 of international law. We cannot understand how international law became
universal, how it extended from its European origins to encompass the societies of Africa and the Americas, Asia, and
the Pacific, without focusing on the technologies and doctrines that international law used to advance the civilizing
mission whose extension resulted in the entire globe being governed by a single international law. In exploring and

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developing this thesis, I have focused on the problem of cultural difference--the difference, in the colonial context,
between civilized Europeans and uncivilized non-Europeans. The problem of bridging this difference, I argue, has been
a major preoccupation of international law. Connected with this project is a second aim, the development of a theory
that facilitates an understanding of the relationship between colonialism and international law.

This approach to the formative influence of colonialism on international law, which draws on the path-breaking
insights developed by post-colonial scholars, focuses on how the central concepts and doctrines of international law--
concepts such as rights and sovereignty--are deployed and transformed by the colonial encounter. Issues of racial
superiority, cultural subordination, and economic exploitation played an extraordinarily prominent role in shaping the
relationship between international law and colonialism. My theory, therefore, seeks to examine how these issues affected
the relationship between international law and colonialism and, thereby, the formation and development of international
law itself. My further argument is that this civilizing mission endures over time, although it acquires different forms
as a consequence, for example, of shifts in the jurisprudence of international law-- from naturalism, to positivism, to
pragmatism.

As part of this project, I have researched the Mandate System created by the League of Nations shortly after the Great
War. In writing about the Mandate System, my purpose is to examine how international law attempted to manage the
colonial encounter in the inter-war years, a very distinctive and innovative phase in the history of the discipline, as it
witnessed the emergence of international institutions and the novel jurisprudence of pragmatism. The second section of
this article, then, focuses on the main issues I hope to research further in the context of the Mandate System. While this
historical research is a separate project from my examination of the immediate *246 problems confronting third world
countries, I also suggest how history affects the present: fundamental aspects of contemporary IFI management of third
world countries were originally established in the Mandate System of the League of Nations. The Bank and the IMF
are, in important respects, successors of the Mandate System. The broad issue that interests me here is the genealogy
of the IFIs.

It is a difficult task to try and identify the issues that will “shape the millennium.” I must stress that what follows is a
series of tentative and provisional thoughts, on very complex questions, and issues that could be important in the coming
years. Time, further thought, and more research could prove that the concerns I outline here are completely misplaced.

II. Globalization and the Third World

Despite the difficulties of generalizing about a phenomenon as complex and contradictory as globalization, 3 considerable
evidence suggests that globalization intensifies inequalities both within and between states and that, on the whole, it
further undermines the precarious position of the poorest and most vulnerable, the vast majority of whom live in third
world countries. 4 Like many other international law scholars studying the phenomenon of globalization, I am interested
in understanding how globalization is furthered, how it is controlled and managed, how it affects the distribution and
character of power, and what interests it serves. 5 More specifically, *247 I am interested in researching the role that
international law and institutions play in the promotion of a particular form of globalization in third world countries.

For me, the impact of globalization on third world countries raises two problematic and interrelated themes: first, the
relationship between globalization and human rights as it is manifested in the context of third world countries, and second,
the different pressures globalization exercises on the third world state. 6 My examination focuses specifically on the IFIs'
role with respect to these issues.

A. Globalization, Human Rights, and the Third World State

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International law and institutions have played an extraordinarily significant role in furthering the processes of
globalization. Treaty regimes such as that of the WTO/GATT and the operation of international financial institutions
such as the Bank and the IMF have vigorously and effectively promoted the economic policies and processes associated
with globalization: liberalization, privatization, and the creation of legal regimes facilitating commercial transactions
and foreign investment. Although institutions such as the WTO and IMF operate on the premise that their promotion
of specific economic activities will advance human welfare, equity and social justice are not the explicit concern of
such institutions. 7 Rather, these institutions operate on the premise that they will enhance human welfare precisely
by promoting the economic goals prescribed in their constituting documents. 8 The suggestion *248 is that proper
technocratic management will in itself better the human condition. Further, the IFI commitment to globalization must be
seen in a broader context as one aspect of a far broader project involving an alliance of a number of other extraordinarily
powerful financial actors who are also intent on furthering globalization. 9

International human rights law is the one area of international law which focuses explicitly on concerns of justice and
human dignity; thus, it plays a vital role in identifying and addressing the inequalities that globalization, powerfully
promoted by international economic law, appears to generate. Globalization poses a number of challenges to human
rights and, indeed, to the very assumptions regarding power and the role of the state, for instance, on which human
rights law is based. Given the extraordinarily widespread and transformative character of globalization, furthermore,
the future of human rights law and its compelling claims to protect the inalienable dignity of all human beings will be
significantly shaped and challenged by this encounter between human rights and globalization.

One of the major dangers globalization poses to human rights is powerfully summarized by Upendra Baxi:

I believe that the paradigm of the Universal Declaration of Human Rights is being steadily supplanted by a trade-related,
market-friendly, human rights paradigm. This new paradigm reverses the notion that universal human rights are designed
for the dignity and well being of human beings and insists, instead, *249 upon the promotion and protection of the
collective rights of global capital in ways that “justify” corporate well-being and dignity over that of human persons. 10

The different ways in which this supplanting process is taking place need to be identified and challenged if human rights
is to preserve its integrity, and this entails a detailed and ongoing examination of the intricate ways in which human
rights and globalization interact with each other in complex circumstances. 11 A number of trends are evident already.

Significantly, the human rights community appears in many respects ambivalent about globalization, seeing it as a
means by which human rights can be both furthered and undermined. Thus, while institutions and actors furthering
globalization are single-minded in their task, important international bodies whose function it is to protect human rights
and social welfare appear hesitant, more intent on placating rather than challenging globalization. Thus the Copenhagen
Declaration on Social Development, while expressing a number of reservations about the effects of globalization, also
reiterates that globalization “opens new opportunities for sustained economic growth and development of the world
economy, particularly in developing countries.” 12 From this perspective, globalization, whatever negative effects it may
have, is nevertheless essential for development. The task then is to “manage the process [of globalization] and threats
so as to enhance their benefits and mitigate their negative effects.” 13 What is required is the formation of an alliance
between globalization and its focus on economic growth and progress *250 on the one hand, and human rights and
its concern to protect human dignity on the other. Implicitly, this model of alliance suggests that human rights should
attempt to adjust the outcomes of globalization rather than determine the manner in which globalization occurs in the
first place. There is a danger that, under globalization, the promotion of the market becomes an end in itself rather than
a means of promoting human welfare and social goals.

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Proponents of globalization, by contrast, forcefully argue that it is through globalization that the principal goals of human
rights may be realized. 14 Thus, scholars argue that the best way of protecting human rights is through the actions of
multinational corporations and that the intensification of multinational activity corresponds with an enhancement in
the protection of human rights. 15 Indeed, it is further argued that there is a “right to globalization.” 16

From a third world perspective, perhaps the most elaborate and important arguments as to how globalization promotes
human rights are being formulated by institutions such as the Bank. The Bank plays an extremely vital role in fostering
globalization in third world countries and, additionally, is developing an elaborate and comprehensive set of arguments
as to how its policies further the cause of human rights. 17 A closer examination of the Bank approach suggests some
of the strategies used to establish this linkage. 18

*251 The Bank's central purpose is the promotion of international development. In recent times, the Bank has made
notable attempts to focus on the social dimensions of development rather than on economic growth alone. Nevertheless,
the Bank remains fundamentally committed to neo-liberal economic policies of privatization and liberalization as a
means of achieving development. And it is by furthering this problematic model of development that the Bank claims
it is advancing the cause of human rights: “The world now accepts that sustainable development is impossible without
human rights. What has been missing is the recognition that the advancement of an interconnected set of human rights
is impossible without development.” 19

Basically, it seems, human rights law is not an independent category of norms and principles that govern the way in which
development should take place. Rather, human rights is assimilated into development, achieved through development.
The same primacy of development is evident in the Bank's articulation of the doctrine of “good governance,” which
it uses as justification for seeking to shape the political and legal institutions of a country, arguing that proper
implementation of Bank-formulated development programs can only be achieved by accountable, transparent, and
democratic government. 20 Thus the Bank's promotion of good governance complements the efforts of human rights
law to make government accountable. As Gathii points out, however, this association between good governance and
human rights could serve another purpose: “This association has given a measure *252 of credibility to the neo-liberal
macro-economic programs of the Bretton Woods institutions and their powerful western industrial members.” 21

The basic problem here is that the neo-liberal development programs formulated by the Bank and the IFIs seem notorious
for augmenting inequality and impoverishment among the most vulnerable groups in the third world countries in which
these programs are implemented. The Bank elaborates its claim that it furthers human rights, not only by promoting
development, but also, more specifically, by providing loans for health and education. 22 While these loans may achieve
some worthwhile purposes, they are often one element of a much more far-reaching process of privatizing health and
education systems. These loans are often part of an “adjustment lending process” and are supposed to ameliorate some
of the consequences of the fundamental changes that the Bank requires countries to undertake. 23 Many scholars have
argued persuasively that Bank/IMF formulated structural adjustment programs 24 have led to a severe deterioration in
living standards *253 in countries that adopted such programs. 25 Indeed, human rights scholars have documented
in considerable detail the extent to which these programs have effectively violated economic and social rights. 26 The
assumption, then, that the economic development and structural adjustment programs fostered by the IFIs with the aim
of improving living standards will in themselves better human welfare, and hence human rights, is highly questionable. 27

Equally significant, the marketized version of human rights appears to appropriate and reverse traditional
understandings of important human rights doctrines and the uses for which they were formulated. This is evident, for
example, in the Bank's claim to further the “Right to Development.” There is a special poignancy in the invocation by
the Bank of the “Right to Development,” which was proposed by third world countries as an element of the campaign

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to establish a New International Economic Order that would attempt to bring about fundamental changes to the
international economy and that would enhance the economic sovereignty of developing country states. 28 None of those
aspirations has been realized in any significant way, and it is somewhat ironic that the Bank, which has adopted a very
different idea of the international economic order, should be invoking precisely this right. Also, economic and social rights
were created as a *254 means of achieving important social goals and balancing civil and political rights which appeared
less sensitive to questions of equity and social welfare. Within the new human rights discourse proposed by the Bank,
however, the tensions between civil and political rights on the one hand, and economic and social rights on the other,
appear to have been resolved. The market provides the answer, for the market calls into being the “good government,”
one which protects civil and political rights and provides the economic growth that is essential to securing economic and
social goods. Whereas previously, economic and social rights were criticized because these rights apparently required an
interventionary state, the economic and social rights articulated by the Bank seem to be achieved by the minimization
of the state and the expansion of the market. The market becomes the ultimate good.

Complex and troubling issues arise as to whether the fundamental goals of human rights law are being furthered
or distorted by the Bank's activities. 29 More broadly, the principal danger is that important economic actors who
are primarily concerned with profit and promotion of a problematic form of economic development are increasingly
appropriating and distorting the language of rights to justify and legitimize their own actions. These actions often
produce results completely contrary to the human rights goals of preserving and protecting human dignity. Consequently,
any alliance between human rights and globalization could result in the assimilation of human rights and its ideals by the
formidable forces of globalization. Apart from this, broader questions arise as to the validity of the existing human rights
framework in an era of globalization. Human rights is a statist discourse in that it seeks to protect the individual against
state violence. This model is rapidly becoming invalidated as a consequence of the fact that powers traditionally wielded
by states--and, hence, subject to the limits of human rights--are increasingly being transferred to non-state actors, most
notably powerful economic actors such as multinational corporations. An enormous *255 problem arises as to how
human rights, or indeed international law as a whole, can attempt to control these powers. 30

B. The Third World State and the Contradictions of Globalization

A second major issue confronting third world countries lies in the contradictory demands that globalization appears to
make of these countries. This contradiction is exacerbated by the role that the IFIs play in actively furthering globalization
by profoundly influencing the economic and political policies of third world countries.

Even scholars who assert that globalization is largely beneficial argue that globalization causes extensive social dislocation
that needs to be remedied by increased state-sponsored social welfare programs. Dani Rodrik, for example, in analyzing
the relationship between freer trade policies and government activity, points out that: “Indeed, a key component of the
implicit postwar social bargain in the advanced industrial countries has been the provision of social insurance and safety
nets at home (unemployment compensation, severance payments, and adjustment assistance, for example) in exchange
for the adoption of freer trade policies.” 31

Basically, then, “the social welfare state has been the flip side of the open economy.” 32 There are grave concerns as
to whether the states of advanced, industrialized countries can adequately meet this challenge in a situation where
globalization has limited the policy options available to states intent on maintaining “global competitiveness.” Far less
politically established, far less wealthy post-colonial states confront a much more extreme version of this same problem
which, compounded by their desperate need to attract foreign capital, often compels them to make significant financial
concessions. 33 Unlike the advanced industrialized countries, many *256 developing countries are subject not only to
the competition generated by the forces of economic globalization in general, but also to IMF/Bank structural adjustment

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programs that explicitly require them to adopt privatization and liberalization programs that further increase the powers
of capital and that also reduce social spending.

The pressures of globalization require the post-colonial state to respond to a number of complex and contradictory
demands. On the one hand, it is urged if not compelled by IFIs to create the conditions that enable globalization to
further itself: by commercial law reforms, by creating favorable investment climates, by privatizing, and so forth. Most
recently, developing countries are being pressured to allow complete currency convertibility in order to enable portfolio
capital to move in and out of countries with little restriction. 34 The effect of all these initiatives is to enhance the power
of international capital by facilitating the mobility of capital and expanding the protection granted to multinational
enterprises and their activities, even while diminishing the regulations to which capital is subjected in an attempt to
attract much needed investment in an extraordinarily competitive global economy. In all these different ways, the post-
colonial state is *257 required, first, to intensify and accelerate globalization by creating the conditions in which the
market can operate, and second, to minimize and transfer its own powers.

At the same time, it is the same post-colonial state that, using Rodrik's analysis, is expected to play the vital role of
minimizing the social impact of globalization by providing the social programs necessary to prevent immense human
suffering. On the one hand, the Bank furthers the process of globalization that undermines the third world state; on the
other, the Bank simultaneously allocates to the state the responsibility of securing the basics of social welfare for its
people and, hence, of addressing and in some measure resolving the problem of globalization. 35 Apart from this tension,
the argument that developing country states should do more to provide education and health to their people should be
seen in the context of the realities that these countries confront:

Today in Ethiopia a hundred thousand children die annually from easily preventable diseases while debt repayments are
four times more than public spending on health care. In Tanzania, where 40 percent of people die before the age of 35,
debt payments are six times greater than spending on health care. In Africa, where one in every two children of primary-
school age is not in school, governments transfer four times more to northern creditors in debt payments than they spend
on the health and education of their citizens. 36

The further irony is that the debt crises afflicting many third world countries and profoundly undermining their
development prospects has been exacerbated by the actions of *258 the same IFIs that now call upon the state to remedy
an intensifying number of social problems. 37 Debt repayment was a priority for the IFIs to the extent that “[f]lows
of finance from the IFIs, which were given on condition that countries respected their debt obligations, tightened the
debt straitjacket and delayed serious consideration of debt write-off.” 38 Furthermore, it is precisely IFI-formulated
structural adjustment programs implemented in many developing countries that significantly reduce social spending and
that have terminated or minimized social programs, generally regarded as inefficient by the IFIs, already in place in
many developing countries. 39

*259 Post-colonial states, lacking resources and abdicating the few powers they have to capital, are incapable of
addressing these contradictions. As a consequence, it is extremely likely that, in the vast majority of developing
countries, poverty will increase, social and political tensions will be exacerbated, and ethnic and class conflicts--already a
significant presence in many developing countries--will intensify. The violence that results, in all likelihood, will be seen
as originating in purely endogenous factors, in the pathology of post-colonial societies unable to govern themselves. 40

The IFIs' characterization of third world problems and their solutions to these problems are based on an analytic
framework that requires further examination. In broad terms, there is a growing tendency to argue that the problems
of social, economic, and political justice and of international inequality are to be resolved principally at the national
level and that this is best achieved by the proper implementation of international human rights law. It is possible that

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human rights, a compelling and universally accepted language in this age of rights, plays a vitally important interpretive
role. It establishes a powerful framework that can be used, sometimes inappropriately, to analyze complex questions
regarding the causes of global inequality and injustice and the relationship between national and international actions
in the generation of violence.

The creation and operation of this framework is perhaps exemplified by the Bank's use of human rights. Within this
perspective globalization is a positive force whose full benefits, however, can only be realized if third world states adopt
the proper policies. The problem, then, is the third world states' disregard for macro-economic fundamentals, faulty
economic management, self-dealing, corruption, inefficiency, lack of legal regulations, and disregard for the rule of law.
International human rights norms of democracy, public participation, and accountability, when properly applied to the
state, will not only improve the human rights of the people but also perfect globalization. Some sense of the structure
of these relationships is given in the World Bank Report on Human Rights. *260 Responding to claims that Bank-
prescribed structural adjustment programs (here apparently termed “economic reform lending”) violate human rights,
the Bank argues:

Countries that do not adopt a broad mix of outward-oriented, pro-growth policies risk being left behind in an increasingly
global economy, with the poor suffering the most severe consequences. It is not, therefore, economic reform lending that
should raise concerns about human rights, but rather, how those programs are implemented, and what measures are
taken to ensure that the needs of the poor are not neglected. 41

The Bank, then, is firmly committed to globalization; rather than causing poverty, globalization alleviates it. Indeed, it
is precisely to further the interests of the poor that globalization must proceed. 42 However, for the proper beneficial
effects of globalization to be felt, what is required is “proper implementation.” It is here that the government is wanting
and needs to be reformed in accordance with the principles of accountability, transparency, and good governance. 43
Thus, an affinity and complementarity is suggested between the Bank's activities and norms of democratic and legitimate
governance that are being powerfully embraced by the international *261 human rights community. 44 The further
suggestion appears to be that once justice has been established within the state, the task of achieving international justice
itself will be completed. If the poverty and oppression experienced by third world peoples stem from national factors,
then it follows that reform of the third world state becomes essential. Therefore, the Bank and international human rights
law appear to share this common focus: the reform of the state is necessary and the type of reform promoted by the
Bank furthers and complements the work of human rights. It is hardly surprising, then, that so many of the Bank's
publications focus in one way or another on reforming the state or its policies when examining how development should
be achieved. 45 The Bank's 1997 Report focuses on the state, while the 1999 Report, which articulates what the Bank
terms a “Comprehensive Development Framework,” focuses to a significant extent on developing country governments
and how they could respond to the dual challenges of globalization and localization. 46 It is the third world state which
must be restructured, reformed, made accountable; banking systems need to be improved, labor policies made more
flexible, macro-economic essentials put in place. The failure of development, in short, lies in the countries themselves.

This framework appears to raise two problems. First, the Bank--and the IFIs--may exacerbate rather than promote
development, even as they define that term. Second, the IFIs make little effort to recognize or reform the international
factors that third world states have to contend with. 47 For example, as Frances Stewart soberly points out, when
analyzing IFI policies relating to structural adjustment:

*262 [T]he exogenous developments that necessitated adjustment were not tackled by these institutions--the major ones
being falling commodity prices and exorbitant debt servicing. These events were taken as constraints to be accepted rather
than challenged. The policies of the institutions probably made these ‘exogenous' developments worse. Encouragement

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of adjusting countries to promote expanded production of primary commodities contributed to the continued worsening
of the commodity price situation. 48

To the IFIs, the intensification of globalization is a given to which the state must respond. According to the Bank,
“globalization is [only] a threat to weak or capriciously governed states.” 49 Thus, the IFIs generally have supported
attempts by the richer states to permit free capital flows, despite the fact that developing countries argued that they
lacked the regulatory capacity to properly manage such large and volatile capital flows. 50 Indeed, it was precisely these
flows, together with corruption, speculation, and inadequate regulation, that contributed to the collapse of the Asian
economies. 51 Both national and international factors contributed to this crisis.

The IFIs' general acceptance of the efficacy and equity of the existing international financial system and of globalization
is explicable not only in terms of their founding commitment to free markets or the Wall Street-Treasury Complex, but
also simply because their major shareholders, the wealthier industrialized countries, have little interest in changing the
international financial architecture unless their interests are directly threatened. By contrast, the IFIs wield enormous
power over third world states, a power that they exercise by requiring endless *263 reforms on the part of the third world
state that offers itself as an easy and vulnerable object for IFI ministrations.

In short, the IFIs adopt the position that an extraordinarily powerful and complex force such as globalization can and
should be managed by the third world state. This claim is made even as those same IFIs require the state to transfer
its regulatory powers to the market. According to these institutions the solution lies in more, and “better managed,”
globalization. If, however, Rodrik's analysis is correct and more government intervention is required to negate the adverse
effects of globalization, then the IFI prescriptions, which tend to minimize the state and its welfare function, could very
well intensify social and political tensions. As Anne Orford points out in her insightful work on Yugoslavia, adjustment
programs prescribed by the IFIs played a significant role in exacerbating the ethnic tensions that led to the breakup of
Yugoslavia. 52 Similarly, as Michel Chossudovsky argues, both Somalia and Rwanda, countries that epitomize “failed
states” in which massive killings have taken place, were subjected to extensive structural adjustment programs in the
1980s that could have contributed to their collapse. 53 Thus, it seems that a number of complex and important issues
could arise as to how third world states will be affected by the IFIs and by globalization.

C. The Rule of Law and International Financial Institutions

As the previous discussion suggests, the IFIs wield enormous power over developing countries and play a major role in
promoting globalization within these countries in ways which are often detrimental to their inhabitants. The exercise of
this power, together with the IFI handling of recent financial crises and the 50th anniversary of their existence--the IFIs
were founded in 1944--have raised searching questions about the efficacy and future of IFIs. Seen in a broader context,
many of the criticisms leveled against the IFIs are not entirely fair, as the IFIs are being called upon to play a number of
complex and contradictory roles that were hardly contemplated at the time of their creation. Nevertheless, it is precisely
for this reason that many of the calls for the reform of the IFIs are justified and that any discussion of this issue must
examine the *264 adequacy, effect, and validity of the legal framework governing IFIs in the context of internationally
articulated norms of accountability, the rule of law, and legitimacy. The actions taken by the IFIs raise a number of legal
questions that are especially important to the developing countries most affected by these actions. What is the legal basis
of IFI power? What are the limits, if any, to the exercise of this power? In what ways, if any, can these institutions be
held legally accountable for their decisions?

Although the Bank and the IMF perform different functions, their basic governance structures are very similar. While the
Board of Governors is the highest managing body within the Bank, the day-to-day running of the Bank is conducted by a
Board of Executive Directors. The Bank operates according to a weighted voting system, which is based on contributions

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made by members to the Bank and according to which the United States exercises roughly 17% of the vote. China and
India exercise roughly 3% of the vote each. 54 The IMF, similarly, is run by a group of Executive Directors and also
operates on a weighted voting system. 55

The Bank and the IMF serve different but complementary functions in the management of international financial
affairs. Nevertheless, the broad legal framework governing the basic structure of the IFIs--and their external relations,
for example--is quite uniform. The authors of the Articles of Agreement 56 operated on a functionalist theory of
international organization whereby specialized international organizations were to be established to perform their
particular functions within their specified jurisdiction. 57 The functionalist theory emphasized the non-political character
of these organizations *265 which were to pursue their vocation objectively and expertly. Correspondingly, the legal
framework creating these organizations sought emphatically to prevent any form of political interference. Politicization
from within the organization was protected by the requirement that the officers of the Bank exercise their voting power
according to the Articles of Agreement. 58

The importance of protecting against political forces from outside the IFIs themselves--for example, by the United
Nations or other U.N.-specialized agencies--is suggested by the Relationship Agreement between the IMF and the
United Nations which specifies that the IMF, because of its special responsibilities, “is, and is required to function as,
an independent international organization.” 59 The extent of this independence is further--and somewhat startlingly--
demonstrated by the fact that the IMF and the Bank, for example, are not strictly bound by Security Council decisions
made under Chapter VII of the U.N. Charter. Rather, the Bank and the Fund are required to have “due regard for
decisions of the Security Council.” 60

*266 The notion that specialized, technocratic functions should be performed independent of politics is extended to the
point that, in the case of the Bank, it is prevented from interfering in the political affairs of any of its members. 61

It is far from evident that the IFIs are operating in accordance with these provisions. Commentators have pointed out
that, in recent times, the IFIs are playing an extraordinarily intrusive role in establishing national economic policy. They
have expanded their mandate to deal with an enormous range of issues which seem far removed from the core functions
they are required to perform by their Articles of Agreement. Furthermore, contrary to their Articles of Agreement, the
decision-making of both of these institutions appears to be based on the interests of the majority shareholders rather
than on the technocratic considerations contemplated by the Articles of Agreement.

With regard to the interference in political affairs, the Bank, for example, prescribes policies relating to a huge range
of matters which traditionally related to the “political affairs” of a state. For example, the Bank's concern for “good
governance” raises a number of troubling issues. The Bank's argument that it can bring within its purview any activity
that affects “development” suggests that there are few limits to the activities which the Bank can seek to influence. 62
Thus, the Bank is working to “strengthen the role and effectiveness of the press,” 63 as well as dealing with a wide-ranging
set of issues *267 including environmental policy, judicial reform, public service reform, and government auditing
functions. 64 Similarly, the IMF required Asian countries to meet “50 to 80 detailed conditions covering everything from
the deregulation of garlic monopolies to taxes on cattle feed and new environmental laws” in return for assistance. 65

The Bank's assumption of jurisdiction appears to ignore the explicit prohibition of interference in the political affairs of
a country. The Bank hardly can rely on one interpretation of its Articles of Agreement--which ostensibly permits it to
undertake responsibility for governance issues, for example--when that interpretation appears to conflict squarely with
another provision in its Articles. 66

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Although the IMF's Articles do not contain a provision that prohibits political interference, it is unclear whether it is
proper for the IMF to become intimately and powerfully involved in domestic policy making. 67 For example, as Martin
Feldstein notes, in relation to IMF policies toward Korea, the IMF “demanded a fundamental overhaul of the Korean
economy and a contractionary macroeconomic policy of higher taxes, reduced spending, and high interest rates . . . .” 68

*268 Doubts arise, then, as to whether either of the IFIs is acting within the proper sphere of its mandate. 69 The
manner in which the IFIs make their decisions and the interests that are served in the process are cause for further
concern. Although decisions are required by the Articles of Agreement of both IFIs to be made on a strictly technical and
objective basis, widespread evidence indicates that this is far from being the case. The recent history of the activities of the
IFIs suggests that their policies are driven by the interests of their major shareholders. 70 It would appear that the IFIs
are a mechanism used by wealthier nations to advance their own view of the world and their own interests, in the guise
of technocratic and impartial advice which, further, is supposed to promote the welfare of third world peoples. 71 For
example, it is clear that the IFIs have, in significant ways, structured the economic programs they prescribe to countries
in such a way as to bail out and protect the interests of foreign creditors. 72 The interests *269 of the citizens of the
countries now subjected to crippling debt repayment programs as a result of private sector debt now being transferred
to the government have been regarded as secondary by the IFIs. 73 All this suggests that the power structure of the IFIs
creates fundamental inequalities which will have an enduring effect on the debtor countries that rely on IFI assistance.
In an interdependent--indeed globalized--economy, it is inevitable that powerful states would seek to advance their own
interests by shaping the international economic system to suit their purposes--and this can be achieved through the
operations of the IFIs. As Kapur points out, the mistakes made by the policy prescriptions of the IMF and the Bank are
borne by the people in the countries subjected to the programs, not by the IFIs or the Executive Directors who authorized
the policy. This system of “accountability” is hardly adequate.

The IFIs were given significant autonomy at the time of their creation to ensure that they could perform their technical
functions independent of political interference from the international community. Increasingly, however, it appears as
though political considerations are affecting the activities of the IFIs not so much from without (i.e., interference by the
international community through, for example, the other specialized agencies) but rather from within (i.e., control by
the major shareholders of the IFIs which act, not in accordance with the objective principles of the IFIs, but the policies
and interests of their particular countries). It seems inconsistent for the IFIs to insist on the importance of retaining
their immunity from international pressures in order to make vital and difficult decisions while simultaneously allowing
themselves to *270 be governed by the political and economic interests of their major shareholders.

The IFIs, and in particular the Bank, have extolled the virtues of good governance, democracy, accountability, and the
rule of law, but as a study of the governance structure and the operations of the IFIs indicates, they are fundamentally
undemocratic institutions. 74

The interference in the affairs of sovereign states, the expansion of the mandate of the IFIs to encompass a huge range of
issues, and the apparent operation of the IFIs according to the interests of major shareholders all raise complex questions
as to whether the IFIs are acting within the scope of their Articles of Agreement and, hence, as to the meaning and
interpretation of these Articles.

The Articles of Agreement of the IFIs do not contain any explicit provisions enabling independent review of the decisions
made by the IFIs. To the extent that any dispute as to the interpretation of the Bank's Articles of Agreement is concerned,
such a dispute about an essentially legal issue (i.e., the proper meaning of the constituent document of the IFIs) is referred
back to the Executive Directors. Thus, Article IX(a) of the Bank's Articles states: “Any question of interpretation of the
provisions of this Agreement arising between any member and the Bank or between any members of the Bank shall be
subjected to the Executive Directors for their decision.” 75

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This suggests that an essentially legal question is decided by a non-legal body which appears to be under no obligation
to decide the matter according to legal considerations. Furthermore, given that it is action by the Executive Directors
that *271 is most often in dispute, this system provides little remedy at all for the situation. In fact, the provision, in
light of the circumstances discussed above, represents a fundamental departure from the “rule of law”--a basic premise
of which is that executive actions should be subject to review by an independent judicial process. 76 Basically, then, the
IFIs appear not to be subject to any external scrutiny as to their adherence to the rule of law. This is at odds with, in
particular, the Bank's consistent and eloquent exhortations as to the importance of the rule of law.

In broad terms, there is a fundamental asymmetry between the efforts of the international community to control the
power of states and the attempts of the international community to control international organizations such as the IFIs,
which are no more than the creations of states, and which, in a globalized economy, exercise very significant power.
The international community is developing a set of principles, relating to democratic governance and the rule of law, for
instance, which are directed at making states more accountable for their behavior. Equal attention needs to be devoted
to the issue of how these same principles may be applied to the governance of international institutions.

The governance structures of the IFIs were formulated more than fifty years ago; they predated the United Nations,
the emergence of international human rights law, and the WTO/GATT regime. Moreover, the IFIs have been generally
very cautious in responding to developments in other areas of international law--whether these be human rights law or
international environmental law. In each case, the IFIs generally argue that they are bound to adhere to their Articles of
Agreement and can only incorporate these areas of law to the extent and in the manner permitted by their Articles. 77
This approach *272 may lead to the distortion of the principles embodied in these other areas of law, as has been
discussed here in the context of human rights. Perhaps, then, the assumptions and values underlying the creation of these
institutions are no longer valid.

Perhaps the broader point is precisely that the IFIs were created more than fifty years ago and are now being called upon
to perform functions which were never contemplated at the time of their founding. These developments have, perhaps,
significantly undermined the ideals which inspired the creation of the IFIs. The contradictory and relentless demands
made on the IFIs must inevitably affect and complicate both the coherence of their operations and the legal framework
within which they operate.

D. Overview

These are some of the complex issues arising from the relationship between the third world state and international financial
institutions. The problems confronting the third world are perhaps easier to state than to address. The marketization of
human rights needs to be contested by identifying the maneuvers used by economic actors who are intent on employing
the vocabulary of human rights to justify their actions. Human rights historically has been an arena of contestation, a
means of protecting property and preserving inequalities on the one hand, and a liberating force that insists on human
dignity on the other. Much the same issues are evident, but this time in the international rather than domestic arena.

Human rights law can, and does, play a vital role in protecting the citizens of third world states against predatory and
violent governments. 78 The question of how international law can promote good governance in these states is a major
issue confronting international human rights lawyers. The widespread presence of corruption, mismanagement, and
violence *273 in many third world states often is used as a justification for intervention by IFIs. While raising several
complex issues, the role that the IFIs played in helping protect the people of East Timor against violence sanctioned
by Indonesia is an example of how the IFIs might promote human rights. Overall, however, the neo-liberal version of
human rights promoted by the IFIs, with its emphasis on economics, its general indifference to questions of social equity,
and its promotion of market justice, is a poor alternative to the violent third world state. What is required is a third way,

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a human rights system true to the original promise of human rights to protect human dignity and advance social justice
in the face of a hostile state and/or an inequitable economic system. The challenge remains to articulate and establish
such a system as an alternative to the violent third world state, to neo-liberal versions of human rights, and to “Asian
values” type arguments.

While human rights discourse outlines a set of legal principles that further justice within states, no such principles have
been formulated in international law to achieve substantive justice between states. The major concepts we use to discuss
justice--concepts of democracy, of good governance, of legitimacy--have been developed and elaborated principally
within the context of the relationship between a state and its citizens. Notable attempts have been made, for example, by
Thomas Franck, to apply concepts such as legitimacy to inter-state relations. Nevertheless, little progress has been made
in extending these concepts to the international arena, which appears to be constituted differently, in which there is no
single sovereign, and which forms a society only in the most minimal sense despite the fact that the term “international
society” has been employed for more than a century now. Thus, the most blatant perpetration of international economic
inequalities and injustices continues to elude any sanction by international law.

To the extent that international economic law, which is the arena in which many of these inequalities arise, claims to
promote justice, it does so principally by two means. First, as discussed, is the technocratic argument that international
economic regimes of the sort embodied in and promoted by the major international institutions, the WTO, the Bank, and
the IMF, further social welfare by furthering specific economic policies--free trade, liberalization, and so forth. Second,
and *274 related, is the argument that justice is achieved by creating a system where sovereign and equal states are
permitted to bargain and negotiate with each other for the outcomes they desire. 79 Justice, here, is procedure rather
than substance.

The question of whether justice is simply the achievement of certain economic policies has to some extent already been
dealt with. Powerful arguments are being made that each of the major international economic institutions operates to the
decisive detriment of the developing countries. In relation to the second argument, if justice is based on what countries
can bargain for, rather than fundamental legal principles which must be respected regardless of the power of the parties,
it is inevitable that poorer and less powerful nations will fail in the international arena and will be compelled to make
concessions that are against their own long-term interests. 80 The inclusion of services within the WTO regime has been a
controversial issue and was resisted by developing countries. Consequently, the General Agreement on Trade in Services
provided that member states could liberalize their service sectors dealing with banking and insurance, for example,
according to a time frame they deemed appropriate. This supposed retention of national discretion to control the rate of
liberalization has been nullified by compelling economic factors. Thus, crisis-ridden Asian countries, desperate to attract
the money necessary to address their liquidity problems, have been compelled to make significant concessions. 81 It is
now widely recognized that the WTO has failed in significant ways to meet the aspirations of developing countries. Thus,
the new Director-General of the WTO, Mike Moore, has pledged to make the next round a “development round.” In
simple terms, less powerful countries are dependent on the largesse *275 or the self-interest of the richer countries to
further their own interests.

Seen in this way, the task of creating an international economic law system that promotes international justice appears
formidable. It is not simply questions of entrenched power that need to be addressed, but the whole issue of articulating
a vision of international justice that can critically examine the basic idea that the international order consists of sovereign
states and that the poverty and hardship experienced by a people is completely attributable to the inadequacies of the
state. This notion is reinforced by the basic doctrines of international law, including human rights law itself. The idea
that the well-being of a people is completely attributable to the competence or otherwise of the state is challenged by
globalization. This is because globalization appears to enhance the powers of transnational economic actors, such as
multinational corporations, whose activities cannot be easily regulated by the state, or even by international law. The
activities of these corporations, however, transcend borders and profoundly affect the lives of people in developing

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countries to whom these actors are linked primarily in economic terms, as sources of profit and loss. In the case of
international institutions such as the IFIs, I have tried to sketch out ways in which the argument can be made that these
institutions and the creation of international law should be governed by evolving norms, adapted as appropriate, of
accountability, transparency, and legitimacy that are now being developed with respect to the state.

III. History, Colonialism, and the Mandate System of the League of Nations

The next stage of my historical sketch of the relationship between colonialism and international law focuses on the
Mandate System of the League of Nations. My broad argument is that the colonial will to power manifests itself in the
field of international law in the form of the civilizing mission, a series of maneuvers which may be crudely presented
as follows. European international law, which claims in various ways to be “universal,” authoritative, and advanced,
characterizes the non-European world and non-European cultures as “particular” and backward. This characterization
suggests the need to reform, civilize, and domesticate the backward and *276 the need for the development of
appropriate doctrines and technologies for the purposes of bridging the difference, of bringing the “particular” and the
barbaric non-European within the sphere of the universal and normal. The civilizing mission is invariably justified as
being in the best interests of the natives. The construction of the backward “other” plays a key role in animating and
expanding the reach of international law, for it is the existence of the “other” that generates the doctrines, technologies,
and institutions that international law deploys for the purpose of placing, domesticating, and normalizing the “other.”
This is the broad analytic framework I wish to apply to the Mandate System. 82

Many third world countries are so much under the control of external powers that the Economist, for example, writes
matter-of-factly about “Africans whose governments are under the tutelage of western donors, the World Bank and the
International Monetary Fund.” 83 The concept of “tutelage” has a long pedigree in the history of international law. The
Mandate System of the League of Nations was created shortly after the end of the First World War for the purpose of
bringing certain territories formerly belonging to the defeated powers--Germany and the Ottoman Empire--under the
tutelage of the League of Nations. Article 22(1) of the League of Nations Covenant provided that:

To those colonies and territories which as a consequence of the late war have ceased to be under the sovereignty of the
States which formerly governed them and which are inhabited by peoples not yet able to stand by themselves under the
strenuous conditions of the modern world, there should be applied the principle that the well-being and development of
such peoples form a sacred trust of civilization and that securities for the performance of this trust should be embodied
in this Covenant. 84

*277 These mandate territories were placed under the control of mandate powers which acted under the supervision
of the League. The mandate powers were responsible for the everyday administration of the mandate territories and
were required to report back to the League on the measures they took to ensure the “well-being and development”
of the mandate peoples. The League established a body of experts, the Permanent Mandates Commission (PMC),
which monitored the progress of the mandate territory and thus ensured that the mandatories were fulfilling their
responsibilities. The broad goal of the Mandate System was to guide these backward territories toward sovereign
statehood. In short, the task confronting the Mandate System was to create sovereignty, to produce functioning nation-
states out of the unpromising raw materials of backward peoples and territories.

These are some of the essential features of the Mandate System whose creation was inspired by noble ideals. My
broad interest lies in exploring how the system represented an entirely novel way of addressing the “colonial problem,”
how the civilizing mission was reproduced by the new technologies and techniques developed by new international
actors--international institutions-- and the novel jurisprudence of the inter-war period, the “new international law”
of pragmatism. 85 Third world lawyers have long recognized that third world struggles to win political independence
achieved only a partial victory, as the acquisition of effective economic power eluded third world countries. Colonial

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relations may be furthered, consequently, through economic rather than purely political control. My broad and
provisional argument is that the operation of the Mandate System reveals in part how this transition took place,
from a formal system of colonialism based on political control to a more elusive but nonetheless powerful system of
neo-colonialism based on economic control. The mandate illustrates, furthermore, the crucial role that international
institutions play in establishing and maintaining this system of control and the different techniques, justifications, and
discourses *278 they employ for this purpose. These are some of the themes I will elaborate briefly.

The Mandate System appears to represent a radical departure in the history of international law, as its creation was an
expression of the international community's condemnation of colonial exploitation and violence. It was precisely for this
reason that the German and Ottoman controlled territories, rather than becoming colonial possessions of the victorious
Allied powers, were placed instead under the protection of the League. Furthermore, the Mandate System, rather than
seeking to keep mandate territories in a permanently dependent status, attempted instead to create functioning, sovereign
states out of the “A” and “B” mandate territories. 86

Paradoxically, however, the future of the mandate territories was conceived of principally within the framework of the
same goals that Lord Lugard had articulated with respect to African colonies. In his classic on colonial administration,
The Dual Mandate, Lugard argued that the colonies were important markets for metropolitan products. 87 Furthermore,
while “the abounding wealth of the tropical regions of the earth must be developed and used for the benefit of mankind,”
colonial powers were obliged “not only to safeguard the material interests of the natives, but to promote their moral
and educational progress.” 88 No tension was perceived between the two goals. The orderly and efficient exploitation
of native resources for the “benefit of mankind” would, in turn, benefit the native himself. Thus, humanitarianism and
the expansion of international commerce were two of the basic and related principles guiding the enlightened colonial
policy that mandatories were supposed to implement.

Therefore, the continued economic exploitation of the mandates and their integration into the international economic
*279 system, was one of the imperatives of the Mandate System. 89 Crucially, however, mandate territories were to be
integrated into the system not as dependent colonial territories but as independent sovereign states. Significantly, the
Mandate System implicitly established a dichotomy between the political and the economic. The political status of the
mandate territories was to change while their economic status was to remain largely unaltered.

The Mandate System, in other words, represented a model of how colonial territories could be transformed into
sovereign, independent states which nevertheless remained subordinate economic entities and which continued to
perform their traditional functions within the international economy of supplying raw materials to, and markets for, the
metropolis. Seen in this way, the purpose of the Mandate System was not so much to end colonialism as to change its form
and its method of implementation: to create a new set of sciences, mechanisms, and technologies for better facilitating the
transition from backwardness to advancement while ensuring that the integration of sovereign, independent mandate
territories did not seriously disrupt the international economic system. The Mandate System was linked to colonialism
in numerous ways. When seeking to formulate the specific policies that should be followed by mandatory powers, the
League sought guidance from colonial experience. Further, expert colonial administrators such as Lord Lugard himself
played a prominent role in the PMC.

Until the creation of the first major international institution, the League of Nations, sovereign states were the principal
actors in the international arena. This novel phenomenon, the international institution, developed a new set of technologies
for the management of international relations, including the relations between European and non-European peoples.
This development, combined with the new jurisprudence of pragmatism and the ability of the League to scrutinize and
shape the interior of the mandate territory, played a crucial *280 role in this metamorphosis from formal-political to
informal-economic colonialism. 90

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Guided by the basic principles of the dual mandate, the League set about the creation of a functioning nation-state.
Rather than focusing simply on the granting of a legal status, 91 the League embarked through the mandatory powers
on the massively complex tasks of educating the natives, creating political institutions, developing health programs,
establishing labor standards to ensure that the native population would work most efficiently, and embarking on large
infrastructure projects. 92 These projects, in turn, generated broad and fundamental questions concerning, for example,
the relationships between “progress” and “welfare” and between economic growth and native well-being.

These were the questions and issues considered by the PMC, which gathered an unprecedented amount of information,
unprecedented both because of the widely different territories from which this information was gathered--Papua New
Guinea and Nauru in the Pacific, Iraq in the Middle East, the Cameroons in Africa--and the enormous range of
subject matter covered--birth and death rates, labor standards, public works and services, and external trade. 93 As a
consequence of gathering, synthesizing, and analyzing this information, the PMC claimed the ability to formulate a
set of general principles regarding the best policies to adopt in developing backward peoples and territories. In short,
a new, universal science came into being, the significance of which was appreciated even by perceptive scholars of the
time: “Nothing less than a science of colonial administration based on a deductive and experimental method was here
contemplated. The discovery *281 by such a method and verification by practical application of useful principles
and standards is probably the most important contribution which the Mandate System could make.” 94 Wright was
extraordinarily prescient in identifying the most enduring characteristic of the Mandate System, for what he calls a
“science of colonial administration” is what might be called the “science of development” in these times.

The creation of sovereignty within mandate territories corresponded with a process which might be termed the
economization of sovereignty. First, as discussed, the Mandate System operated on the understanding that these
territories would continue to meet the economic needs of the metropolitan power. 95 Furthermore, the phrase
“development and well being” was principally understood in terms of economic considerations. Thus, in the final
analysis, the League's task was interpreted as that of furthering economic development within the territory. As a
consequence of this, all the complexities of the mandate societies, their social relations, and their cultural practices were
reformulated in economic terms. For example, the native was transformed into an economic asset, viewed principally
in terms of his capacity to provide labor and therefore enhance production. 96 This was merely one aspect of a
comprehensive and extraordinarily far-reaching project of transforming native political institutions and practices based
on social relations into institutions and practices based on economic considerations. 97 The League was intent not so
much on abolishing these institutions as on manipulating them in *282 such a way that they furthered the League's
economic and political goals instead of performing the institutions' traditional functions. The governance of mandate
territories was to be directed towards these purposes. This self-conscious manipulation of native political institutions is
suggested by the role envisaged for native chiefs by Mr. Yanaghita, a member of the PMC: “Scarcely aware of the fact that
their little sovereignty has been transferred to a higher group, they will assist in the work of the mandatory government
and will be content with the empty title and the modest stipend.” 98 This transmutation of mandate peoples and mandate
territories into the language of economic progress served a further, vital purpose, for economics was understood by the
PMC to be a universal discipline which transcended cultural particularities.

This was vital to the PMC, which otherwise lacked the means of making sensible comparisons between different
mandates, for example, between Togoland in Africa and Western Samoa in the Pacific. Furthermore, the entire creation
of the “science of colonial administration” required such a supposedly universal discipline. It was only if Togoland
and Western Samoa, with their radically different histories, cultures, and institutions, could nevertheless be said to be
assessable by the same criteria and progressing towards the same goal that it appeared intellectually valid to derive
from the experiences of Togoland a set of policies and principles that could be applied in some way to Western Samoa.
For the “science of colonial administration” to come into being, it was necessary not only to establish a centralized
institution which could collect the most detailed and wide-ranging information from all parts of the world, but also to

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analyze and process this information by a discipline such as economics which appeared to enable meaningful comparisons
between cultures that were otherwise entirely incommensurate. The whole contemporary “science of development,” with
its claims to be universally valid, is based on these premises and characteristics. It was in the Mandate System that
all these important factors came into place for the *283 first time, replacing the cruder, more haphazard science of
“comparative colonial policy.” 99

A number of significant consequences followed for the mandate peoples. The Mandate System, having transformed the
native and her territory into an economic entity, proceeded to establish an intricate and far-reaching network of economic
relationships that connected native labor in a mandate territory to a much broader network of economic activities which
extended from the native's village to the territory as a whole, to the metropolis, and finally, to the international economy.
Integrated in this way into a dense and comprehensive network of economic power, the native and, indeed, the entire
mandate society, became vulnerable to the specific dynamics of that network and to the parties that controlled power
within the network. Given, further, that the mandate territories were deliberately inserted into this economic network in a
subordinate role, the network's operation inevitably disadvantaged the mandate peoples. Once established, the economic
networks of power existed relatively independently of political power.

This system of power and control that came into being within the Mandate System is not, of course, confined to
the economic realm. Rather, as I have suggested, the League exercised its power by developing a systematic and
unprecedented knowledge about the most intimate details of native practices and institutions. The PMC gathered
information about health, education, land tenure, wages, labor matters, external revenue, public works, and services. 100
This vast knowledge of native life was collected, assimilated, processed, recombined, and reconstituted in ways which
pointed to new modes of understanding and, therefore, both reconstructing and managing the native-- whether it be to
better his welfare or make him more productive. The existence of the international institution, the Mandate System, not
only enabled, developed, and deployed these techniques of control and management, but also justified these activities
by the formulation of a new and comprehensive moral framework. No longer are colonial territories administered by
self-interested colonial powers intent *284 simply on increasing their power and profits. Rather, the administration
of these territories appears to be undertaken by a disinterested body of international experts, members of the PMC,
intent on acquiring the knowledge of native practices, economies, and institutions that would enable them to formulate
the policies necessary to ensure the proper development and welfare of native peoples. Moreover, these policies are
presented not as self-interested but as scientific, objective policies based on a proper understanding of the universal laws
on how “development and welfare” may be achieved. The PMC, then, becomes the ultimate arbiter and manager of
knowledge for development. 101 In developing this science and, thus, such authoritative visions of the “normal”--the
proper path of economic progress and the political institutions which would achieve this--the mandate sought to create
new systems of disciplining the native. Native obedience was to be achieved, not through the application of force alone,
but by the formulation of a compelling and authoritative vision of society, of progress and of the individual, that would
be internalized by the native and govern his actions. As Wright, once again, presciently asserted: “Human action may
in fact be directed by many methods other than coercion. The possibilities of these methods are just on the threshold
of exploration.” 102

My interest lies, then, in examining how these various developments in the Mandate System influenced each other--how
the granting of the juridical status of sovereignty was shaped by these economic considerations on the one hand, and by
the creation of a comprehensive and detailed body of knowledge regarding native life on the other. Broadly speaking,
an entirely new type of sovereignty is created by the Mandate System: a political sovereignty which is constrained, first,
by powerful economic forces, and second, by the politics of knowledge--the construction of social reality, the science of
colonial administration, and the micropolitics of normalization. 103

*285 We might see the Mandate System, then, as the predecessor of the Bank and the IMF, shaping the most intimate
details of an ostensibly sovereign state. This, in turn, may illuminate important questions about the role that such

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institutions play in managing relations between the developed and the developing and about how it is that such institutions
are in a position to exercise such enormous power over developing countries.

The dual mandate, Civilization and Commerce, was embodied in the policies of the Mandate System which, although
principally concerned with bringing about political development, ultimately sought to achieve this through economic
development. By contrast, the Bank, beginning with a concern for economic development, has now assumed increasing
authority over political matters. The circle has been completed but in the reverse direction, as the Bank also undertakes
its own version of the dual mandate.

The Mandate System reveals, then, how the basic structure of the civilizing process is reproduced by international
institutions using the new international law of pragmatism. The governing and fundamental distinction which animates
the civilizing mission is no longer made in the cultural and political realm (i.e., the nineteenth-century distinction between
the civilized and the uncivilized), but in the economic realm (i.e., the League distinction between the advanced and the
backward) which has now become the distinction in the U.N. period between the developed and the developing.

The economization of sovereignty which was evident in the League period is perhaps reproduced by the Bank
in its tendency to equate the advancement of human welfare with the advancement of the market. The Bank's
“good governance” program, with its emphasis on creating a set of political institutions which further the market,
corresponds with the League's ambition to transform native political institutions into instruments which would effect
the commercialization of native society and its integration into the international economy. In each case, the assumption
is made that the intensification of commerce furthers civilization, welfare, and human *286 rights. The League's
accumulation of knowledge and formulation of a “science of colonial administration” represents, in significant ways,
the origins of the contemporary “science of development.” The Bank appears intent on becoming the foremost authority
on this science, the creator, manager, arbiter, and transmitter of knowledge for development. 104 In creating the PMC,
the League established a particular system of power which was manifested in the way that information was gathered,
that knowledge was created and deployed. A study of the Bank's approach may suggest that the basic structure of
this international division of intellectual labor persists. The developing countries, the peripheries, provide the raw
materials--the raw information that is gathered from all parts of the world. It is processed by the Bank into theories of
development, of best practices, which are then promoted as authoritative, scientific truths and used as such to identify
and discipline deviations by the peoples of the third world from these norms. As in the mandate, it is the native's own
experience, gathered, synthesized, and transformed by the international institution, that is used to assess and subordinate
the native. 105

Viewed from this historical perspective, the current calls by the IFIs for more transparency and better governance (in
order to enable markets to function better and more efficiently) *287 may be seen as repeating the themes found in
the Mandate System. First, once again, the project of perfecting the market is the basis of the whole initiative. Second,
the market is characterized as inherently beneficial, the problem once again being that third world governments are not
transparent enough. Third, we see again the will of the IFIs to acquire an even greater body of information that will create
new sciences and that will, in turn, generate a new set of concepts that will create new techniques of management and
new interventionary initiatives extending from plan to market, to government regulation and corruption, to social safety
nets, to health, to education, and to infrastructure. As this dynamic suggests, IFI intervention in the third world appears
endless. Let us suppose that the causes of poverty are located, not simply at the national but also at the international
level. If this is the case, the IFI policy of focusing on reform at the national level in order to resolve the problems
of poverty is inherently problematic. 106 Indeed, it gives rise to an endless dynamic of intervening in, and reforming,
the recalcitrant third world state in all its dimensions. While these initiatives--whether they be anti-corruption or good
governance--may very well have some beneficial effects, they will not resolve those important and persistent structural
problems which exist at the international rather than national level. Instead of recognizing this, 107 the IFI tendency has
been to draw strategically on human rights in recent times, to allocate responsibility for the inevitable failure to the state.

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This calls forth a new initiative, a new program/product, that will in time replace the current projects of anti-corruption,
participation, transparency, and governance. The third world country and its peoples could then be subjected to an
endless process of reconstruction. Each initiative creates new objects of scrutiny, of management, *288 and of control
and requires for its proper implementation the contributions of new and different disciplines--not merely economics and
law, but anthropology, gender studies, and public relations--all rendered in economic terms to further the market. The
civilizing process is endless and self-reproducing, however, for if the causes of poverty are inherently misdiagnosed, then
each initiative will be only a partial success at best, each act of arrival will reveal further horizons. But this in itself is
central to the reproduction of the IFIs. The IFIs seem to be engaged in an endless task of defining new deficiencies
which they purport to resolve but cannot. However, it is precisely the existence of these deficiencies, accompanied by
the inevitable failure of the redeeming project--of enhancing welfare, of bringing about development--which justifies an
enormous extension of the scope and reach of the IFIs. As Balakrishnan Rajagopal argues, however, these attempts
to bring about development are always resisted. 108 Contesting these claims to knowledge and the exercise of these
mechanisms of power is a major challenge for third world peoples.

The achievements of the Mandate System are considerable. Had it not been for the Mandate System, for example,
South Africa would have annexed Namibia, and the people of Nauru would have lost their island and their sovereignty.
Clearly, then, international institutions can play an important protective role. Nevertheless, ambiguities arise, for the
colonial will to power endured and, indeed, reproduced itself through the Mandate System. The Mandate System created
a new type of sovereignty: a subordinate sovereignty constrained by economic power on the one hand, and the science
of administration and of development on the other. The two constraining factors are closely interlinked in that the
science of administration is hardly neutral and technocratic. It promotes economic policies that serve a set of interests
that need to be identified and contested. This model of subordinate sovereignty is peculiar to the third world and, more
recently, the countries emerging from communism--for it is crucially connected with the concepts of backwardness or
underdevelopment that are applied to these countries. In broad terms, I am interested in examining the unique character
of the “Third World State,” to the extent such generalizations are possible, *289 under conditions of globalization and
all that entails. The theme of my historical research, then, is to examine how international institutions, beginning with the
League and continuing with the IFIs, play a crucial role in developing, refining, reinforcing, reproducing, and managing
this model of statehood and sovereignty. It seeks to understand how a certain pattern of attitudes and structures of
power, which are founded on concepts of racial superiority and economic domination, are embodied and reproduced by
international law, and what resources international law offers to limit and resist these expressions of power.

V. Conclusion

These are the issues that will preoccupy me in the years to come and will perhaps shape, in some manner, the international
relations of the coming millennium. Globalization will be a major challenge to third world peoples and to the international
institutions whose operations have a significant impact on these peoples. International institutions could have a vital role to
play in advancing third world welfare, but the question of how this can be achieved, given the political and legal structures
which appear currently to govern their operations, generates additional important questions and areas of inquiry.

My interest lies in examining the processes of globalization, not only in terms of the immediate problems it clearly
presents, but also from an historical perspective. Given that my perspective is shaped by the phenomenon of colonialism--
the reproduction of power and the intensification of inequalities--mine may not appear a particularly optimistic outlook.
But I do not wish to suggest that international law is, and always has been, an instrument of colonialism. Rather, my
approach is informed by the belief that history is important and that a study of history suggests certain themes that offer
an important framework of analysis.

How should the colonial history of international law be written? What new techniques must be developed for this purpose?
What are the enduring effects of that history on the present? Is the discipline of history itself in some way ineluctably
European? These are difficult questions, and yet it is only perhaps through a study of history that we can identify the

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*290 cunning of colonialism, the different forms in which it reproduces itself even while seeking to conceal its presence,
and the role that international law plays in this process. My hope in attempting to write this alternative colonial history
of international law is not to prove that we are condemned to repeat the past or that time is unredeemable, but rather
that in identifying and understanding the workings of colonialism, we can seek to end rather than replicate them. This
is surely a crucial task for any discipline that claims, however problematically and tenuously, to be concerned about the
promotion of justice.

Footnotes
a1 Associate Professor of Law, University of Utah; S.J.D., Harvard Law School, 1995; LL.B., Monash University, 1987; B.A.,
Monash University, 1986. Many thanks to Karen Engle, James Gathii, Balakrishnan Rajagopal, and Rhee Zha Hyoung, and
my Third World Approaches to International Law Colleagues. I would also like to thank Professor Martti Koskenniemi and
Jan Klabbers of the Law Faculty, University of Helsinki, Finland, and Ms. Kanongnij Sribuaiam and Dr. Sakda Thanitcul of
the Law Faculty, Chulalongkorn University, Thailand, for giving me the opportunity to present some of the ideas discussed
in this article in their respective universities. As always I am indebted to David Kennedy for his guidance and support over
many years. This work was supported by the Summer Stipend Program of the College of Law, University of Utah. This article
is respectfully dedicated, with my gratitude and admiration, to my teacher, C.G. Weeramantry.
1 For important recent examinations of the use of this term in contemporary international relations, see Karin Mickelson,
Rhetoric and Rage: Third World Voices in International Legal Discourse, 16 Wis. Int'l L.J. 353 (1998); Balakrishnan
Rajagopal, Locating the Third World in Cultural Geography, B.C. Third World L.J. (forthcoming 2000). In this essay I
have used the terms “third world countries” and “developing countries” interchangeably. See also Ministerial Declaration,
Group of 77, 23rd Annual Ministerial Meeting (visited Oct. 4, 1999) <http://www.g77.org/Docs/Decl1999.html>. For a recent
examination of the tradition of third world scholarship, see Christopher Weeramantry, Grotius and International Law, 14 Am.
U. Int'l L. Rev. 1515, 1562-65 (1999).
2 Works connected with this project include Antony Anghie, “The Heart of My Home”: Colonialism, Environmental Damage
and the Nauru Case, 34 Harv. Int'l L.J. 445 (1993); Antony Anghie, Francisco de Vitoria and the Colonial Origins of
International Law, 5 Soc. & Legal Stud. 321 (1996); Antony Anghie, Finding the Peripheries: Sovereignty and Colonialism in
Nineteenth Century International Law, 40 Harv. Int'l L.J. 1 (1999).
3 For very different treatments of globalization, see, e.g., William Greider, One World, Ready or Not: The Manic Logic of
Global Capitalism (1997); Thomas L. Friedman, The Lexus and the Olive Tree (1999). “Globalization” is inevitably a contested
term. By “globalization” I refer broadly to the economic phenomenon--the internationalization of production, of financial and
banking services, and of neo-liberal economic policies promoting privatization and liberalization, all of which are facilitated
by advances in technology that have completely transformed traditional understandings of time and space.
4 For evidence of this trend, see Nancy Birdsall, Life is Unfair: Inequality in the World, 111 Foreign Pol'y 76 (Summer 1998).
5 For important critical examinations of globalization, see Anne Orford, Locating the International: Military and Monetary
Interventions After the Cold War, 38 Harv. Int'l L.J. 443 (1997); B.S. Chimni, Marxism and International Law: A
Contemporary Analysis, Econ. & Pol. Wkly., Feb. 6, 1999; David Kennedy, Background Noise?: The Underlying Politics of
Global Governance, Harv. Int'l Rev. Summer 1999, at 52; Richard Falk, State of Siege: Will Globalization Win Out?, 73 Int'l
Aff. 123 (1997); Philip Alston, The Myopia of the Handmaidens: International Lawyers and Globalization, 8 Eur. J. Int'l L. 435
(1997); Benedict Kingsbury, Sovereignty and Inequality, 9 Eur. J. Int'l L. 599 (1998). For an important historical perspective
on some of these issues, see Nathaniel Berman, In the Wake of Empire, 14 Am. U. Int'l L. Rev. 1521 (1999).
6 I have used the terms “third world state” and “post-colonial state” interchangeably for the purposes of this essay. My general
argument is that the characters of the states of developing countries were shaped powerfully by colonialism--hence the term
“post-colonial state.”

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7 Thus tensions could arise between trade and human rights. For an insightful argument on this theme, see Frank J. Garcia,
The Universal Declaration of Human Rights at 50 and the Challenge of Global Markets: Trading Away the Human Rights
Principle, 25 Brook. J. Int'l L. 51 (1999).
8 The activities of the IMF can thus be seen as an attempt to promote employment. One of the purposes of the IMF is
“[t]o facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and
maintenance of high levels of employment and real income and to the development of productive resources of all members
as primary objectives of economic policy.” Articles of Agreement of the International Monetary Fund, Dec. 27, 1945, art. 1,
para. 3, 2 U.N.T.S. 39 [hereinafter IMF Articles of Agreement].
9 The respected economist Jagdish Bhagwati calls this alliance the “Wall Street Treasury Complex.” See Jagdish Bhagwati, The
Capital Myth: The Difference Between Trade in Widgets and Dollars, Foreign Aff., May-June 1998, at 7, 10-12. He argues
that there exists a power-elite, “a definite networking of like-minded luminaries among the powerful institutions--Wall Street,
the Treasury Department, the State Department, the IMF, and the World Bank.... This powerful network, which may aptly,
if loosely, be called the Wall Street-Treasury Complex is unable to look much beyond the interest of Wall Street, which it
equates with the good of the world.” Id. at 11-12.
10 For a powerful examination of the challenges facing human rights law in the years ahead, see Upendra Baxi, Voices of Suffering
and the Future of Human Rights, 8 Transnat'l L. & Contemp. Probs. 125, 163-64 (1998). See also Robert McCorquodale &
Richard Fairbrother, Globalization and Human Rights, 21 Hum. Rts. Q. 735, 753-54 (1999); Symposium on Human Rights
and the Challenge of Global Markets, 25 Brook. J. Int'l L. 1 (1999); and Yash Ghai, Rights, Social Justice, and Globalization
in East Asia, in The East Asian Challenge for Human Rights 241 (Joanne R. Bauer & Daniel A. Bell eds., 1999).
11 It cannot be assumed that the “unmarketized” version of human rights is in some way unpolitical and unproblematic. The
political character of human rights is tellingly examined by Makau Mutua, The Ideology of Human Rights, 36 Va. J. Int'l
L. 589 (1996).
12 Copenhagen Declaration on Social Development art. 14 (visited Jan. 23, 2000) <http://www.un.org/esa/socdev/
wssdco-2.htm>.
13 Id.
14 For an eloquent argument to this effect, see Mark A. Warner, Globalization and Human Rights: An Economic Model, 25
Brook. J. Int'l L. 1, 99 (1999). Indeed, it can be argued that human rights itself is a manifestation of globalization in that it is
a universal language that creates communities and affiliations which transcend borders.
15 See William H. Meyer, Human Rights and MNCs: Theory Versus Quantitative Analysis, 18 Hum. Rts. Q. 368, 368-97 (1996).
16 See Michael Pendleton, A New Human Right--The Right to Globalization, 22 Fordham Int'l L.J. 2052 (1999).
17 See International Bank for Reconstruction and Development, Development and Human Rights: The Role of the World Bank
(1998) [hereinafter World Bank Report].
18 My discussion on the relationship between the Bank and human rights is indebted to the extensive and important work done by
James Gathii on this subject. See James Thuo Gathii, The Limits of the New International Rule of Law on Good Governance,
in Legitimate Governance in Africa 207 (Edward K. Quashigah & Obiora C. Okafor eds., 1999) [hereinafter Gathii, Rule of
Law]; James Thuo Gathii, Good Governance as a Counter-Insurgency Agenda to Oppositional and Transformative Social
Projects in International Law, 5 Buff. Hum. Rts. L. Rev. 107 (1999) [hereinafter Gathii, Counter-Insurgency Agenda].
19 World Bank Report, supra note 17, at 2 (emphasis in original). It must be noted that the Bank, arguably, is confined to taking
this approach by its Articles of Agreement.
20 The Bank links the promotion of good government and the advance of human rights as follows:
The World Bank helps its client countries build better governance. This assistance in improving the efficiency and integrity of
public sector institutions--from banking regulation, to government auditing functions, to the court system--has a singularly
important, although indirect, impact on creating the structural environment in which citizens can pursue and continue to
strengthen all areas of human rights.

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World Bank Report, supra note 17, at 11 (emphasis in original).


21 See Gathii, Rule of Law, supra note 18, at 230.
22 For example, the Bank has lent $1.9 billion for health, population, and nutrition and $1.7 billion for education. World Bank
Report, supra note 17, at 6-7.
23 For studies on the adverse impact of structural adjustment programs on health and education, see generally Michel
Chossudovsky, The Globalisation of Poverty (1997). The Bank itself acknowledges: “First, economic reform lending in some
form will continue to be a necessary step in the development process for many countries. But it will also continue to be difficult,
in particular for the poor and otherwise vulnerable groups of people.” World Bank Report, supra note 17, at 27. See also
Enrique Carrasco and M. Ayhan Kose, Income Distribution and the Bretton-Woods Institutions: Promoting an Enabling
Environment for Social Development, 6 Transnat'l L. & Contemp. Probs. 1 (1996).
24 The character of structural adjustment programs can be summarized as follows:
Structural adjustment consists of reforms aimed at stabilizing developing countries' external and internal balances and
promoting their growth by devaluation, producer price increases, trade liberalization, privatization and supporting
institutional changes. Its adoption has usually (but not always) occurred in a context of economic crisis and on the basis of
promises of resources from donors, led by the two foremost international financial institutions, the IMF and the World Bank.
The latter are also largely responsible for the design of adjustment programmes.
Limits of Adjustment in Africa, at ix (Poul Engberg-Pedersen et al., eds., 1996).
25 For a series of country studies, see Chossudovsky, supra note 23.
26 See, e.g., J. Oloka-Onyango, Beyond the Rhetoric: Reinvigorating the Struggle for Economic and Social Rights in Africa, 26
Cal. W. Int'l L.J. 1, 20-29 (1995); Bharati Sadasivam, The Impact of Structural Adjustment on Women: A Governance and
Human Rights Agenda, 19 Hum. Rts. Q. 630, 641-43 (1997).
27 Using the Bank's approach that their promotion of certain economic policies will, in and of itself, enhance human welfare, the
IMF could argue that its policies are directed towards promoting the right to employment, as suggested in the IMF's Articles
of Agreement. See IMF Articles of Agreement, supra note 8, at art. 1, para. ii.
28 World Bank Report, supra note 17, at 2. On the “Right to Development,” see Declaration on the Right to Development, G.A.
Res. 41/128, U.N. GAOR, 41st Sess., Supp. No. 53, at 186, U.N. Doc. A/41/53 (1987). There arises a further vital question
of whether the concept of development adopted by third world countries operates in the interests of third world peoples. See
Balakrishnan Rajagopal, International Law and the Development Encounter: Violence and Resistance in the Margins, 93
A.S.I.L. Proc. (forthcoming 2000) [[[hereinafter Rajagopal, Resistance].
29 For a good discussion, see McCorquodale & Fairbrother, supra note 10, at 742.
30 This is one aspect of the larger problem Alston identifies: “insufficient attention has been given to the implications for
international law of the changing role of the state, as opposed to the implications of the changing international context for the
state's external relations.” Alston, supra note 5, at 436.
31 Dani Rodrik, Sense and Nonsense in the Globalization Debate, Foreign Pol'y 19, 23 (1997).
32 Id. at 26.
33 Distinctions need to be made between the challenges confronting advanced industrialized countries, the focus of Rodrik's
concern, and third world countries. Nevertheless, it is clear that globalization has a massively disruptive impact on third world
countries, and this can only be countered by protective institutions and policies such as ensuring stability in employment--
whether provided by the state or by private industry. These policies are generally opposed by the IFIs.
The comment made by the Dutch scholar J.H. Boeke in 1942 on the effects of introducing capitalism to the colonies applies
acutely to the effects of globalization on the third world:
[T]here is materialism, rationalism, individualism, and a concentration on economic ends far more complete and absolute
than in homogenous western lands; a total absorption in the exchange and market; a capitalist structure, with the business

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concern as subject, far more typical of capitalism than one can imagine in the so-called “capitalist” countries, which have
grown up slowly out of the past....
J.H. Boeke, quoted in J.S. Furnivall, Colonial Policy and Practice 312 (1956).
34 See Robert Wade, The Coming Fight Over Capital Flows, Foreign Pol'y 41, 42-45 (Winter 1998-1999). Developing countries
are being pressured by the United States and the IMF to lift all restrictions on the flow of capital despite the fact that it is
recognized that this would result in increased volatility and instability in developing country economies.
35 Thus James Wolfensohn, the President of the Bank, asserts: “The message for countries is clear: educate your people; ensure
their health; give them voice and justice, financial systems that work, and sound economic policies, and they will respond....”
James D. Wolfensohn, The Challenge of Inclusion, Annual Meeting Address Before the Board of Governors of the World
Bank (Sept. 23, 1997), in World Bank Report, supra note 17, at epigraph. Bank ambivalence about the role of the state is
reflected in its report, infra note 46.
36 David Ransom, The Dictatorship of Debt, World Press Rev., Oct. 1999, at 6, 7. For an account of the Bank/IMF-sponsored
structural adjustment programs in Tanzania, see Limits of Adjustment in Africa, supra note 24, at 217-304.
37 Susan Strange argues that:
[T]he Bank and the Fund actually created a debt trap even worse than the one they purported to remedy. What happened
was that the multilateral organisations in the aftermath of the debt crisis of the 1980s lent debtor governments new money
to pay off or reschedule private or bilateral debts. But the terms on which this money was lent was much harsher and the
sanctions against non-payment much stricter than for the debts they took over. Then, between 1986 and 1988, the IMF started
withdrawing funds from debtor countries, exacerbating the effect of commercial withdrawals.
Susan Strange, Mad Money: When Markets Outgrow Governments 115 (1998).
38 Frances Stewart, Adjustment and Poverty: Options and Choices 213 (1995). The IFIs have recognized that structural
adjustment programs often have severe social consequences and have developed specific schemes to address these problems.
However, even in Uganda, which is widely regarded as a Bank/IMF success story and in which these relief schemes were
implemented, the situation remains dire. Regarding the “Highly Indebted Poor Countries” scheme developed by the Bank, it
is reported that “[n]early three years later, the sole African recipient of this relief continues to spend more on repaying its old
debts than on its schools and health services combined.” Nick Davies, Africa Aid Game is All Snakes and Adders, Manchester
Guardian Weekly, June 20, 1999, at 19, reprinted in World Press Rev., Oct. 1999, at 10. Uganda's gross national product per
capita is $325 annually, while its debt owed per capita is $183 annually. See id. For further information on how the 1980s debt
crisis arose, see Jerome Levinson, The International Financial System: A Flawed Architecture, Fletcher F. World Aff., Spring
1999, at 23. It is clear that the current Wall Street-Treasury Complex is not a new phenomenon, as the Federal Reserve and
the U.S. Treasury found themselves protecting the interests of the private banks to protect the international financial system.
39 For a study of the impact of structural adjustment programs on many countries, see Chossudovsky, supra note 23.
40 See Anne Orford's perceptive analysis of the way in which international factors contribute to a violence that is seen as purely
local in origin, supra note 5.
41 World Bank Report, supra note 17, at 8.
42 The plight of the poor is continuously invoked as animating the Bank's work. Thus, a strong, independent judiciary is required,
not only because “contracts must be enforced, property rights must be protected, and foreign and domestic investors must
have confidence,” but also because “[a] country's system of justice should be the ultimate guarantor of equality under the law
between the rich and poor, the powerful and weak....” Id. at 15.
43 The Bank acknowledges that it bears some responsibility for implementation, but it suggests that it is reforming its own
methods of implementation by, for example, extending its consultative role. Thus, the burden falls squarely on governments:
The Bank has learned, however, that at least as important as the policies and resources for development are the efficiency and
transparency of the institutions that carry out the policies.... This theme is strongly supported by World Bank research, which
suggests the strong link between economic performance with accountability and the openness of governance.
Id. at 11 (footnote omitted).

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44 See Gathii, Counter-Insurgency Agenda, supra note 18. Gathii further notes that “human rights are not effective because they
do not challenge the underlying distribution of wealth and power in national and international society.” Id. at 107.
45 For a telling analysis of the Bank's approach to questions of redistribution and economic justice, see Kerry Rittich,
Recharacterizing Restructuring: Gender and Distribution in the Legal Structure of Market Reform (Feb. 1998) (unpublished
manuscript on file with author).
46 See The World Bank, World Development Report 1997: The State in a Changing World (1997); The World Bank, World
Development Report 1999/2000: Entering the 21st Century (1999).
47 For a discussion of the impact of structural adjustment programs, see Chossudovsky, supra note 23.
48 Stewart, supra note 38, at 213. It should be noted that Stewart was writing in 1995. The Bank, together with the IMF,
established the Heavily Indebted Poor Countries Initiative in 1996. This program seeks to address the debt problem. See
World Bank Report, supra note 17, at 9. Many questions remain after the recent meeting in Cologne as to how the problem
will be resolved.
49 The World Bank, World Development Report 1997: The State in a Changing World, supra note 46, at 1.
50 See Wade, supra note 34, at 43-49. It must be noted that the Bank is less enthusiastic than the IMF in relation to this policy.
51 See Nicholas D. Kristof & David E. Sanger, How U.S. Wooed Asia To Let Cash In, N.Y. Times, Feb. 16, 1999, at A1.
52 See Orford, supra note 5, at 451-59.
53 See Chossudovsky, supra note 23, at 101-22.
54 See Articles of Agreement of the International Bank for Reconstruction and Development, Schedule B.
55 See Richard Gerster, Proposals for Voting Reform Within the International Monetary Fund, J. World Trade L., June 1993,
at 122-24. China and India, the two most populous countries in the world, each have just under 3% of the voting power. See
id. at 129.
56 The IMF and the Bank are governed by their respective constituting documents, each titled “Articles of Agreement.” See
Articles of Agreement of the International Bank for Reconstruction and Development, Introductory Article; IMF Articles of
Agreement, Introductory Article.
57 The functionalist theory of international organization was classically formulated by David Mitrany in his work, David
Mitrany, A Working Peace System (1966). Bartram Brown summarizes functionalism as follows:
Functionalism is a theory of international organization which holds that a world community can best be achieved not by
attempts at the immediate political union of states, but by the creation of non-political international agencies dealing with
specific economic, social, technical, or humanitarian functions. Functionalists assume that economic, social and technical
problems can be separated from political problems and insulated from political pressures.
Bartram S. Brown, The United States and the Politicization of the World Bank 14-15 (1992) (footnote omitted). Brown's
important work has a special relevance to the current operations of the IFIs.
58 See Articles of Agreement of the International Bank for Reconstruction and Development, art. 5, §5(c):
The President, officers and staff of the Bank, in the discharge of their offices, owe their duty entirely to the Bank and to
no other authority. Each member of the Bank shall respect the international character of this duty and shall refrain from all
attempts to influence any of them in the discharge of their duties.
The same provision is found in the IMF Articles of Agreement. IMF Articles of Agreement, art. XII, §4(c). In the IMF Articles,
the term “Managing Director” is used instead of President.
59 Protocol Concerning the Entry into Force of the Agreement Between the United Nations and the International Monetary
Fund, Apr. 15, 1948, art. I, 16 U.N.T.S. 326, 330 [hereinafter U.N.-IMF Agreement].
60 U.N.-IMF Agreement, supra note 59, art. IV, 16 U.N.T.S. at 332; Protocol Concerning the Entry into Force of the Agreement
Between the United Nations and the International Bank for Reconstruction and Development, Apr. 15, 1948, art. VI, 16

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U.N.T.S. 342, 350. This contrasts with the explicitly binding quality of Chapter VII decisions on states. See U.N. Charter art.
25 (“The Members of the United Nations agree to accept and carry out the decisions of the Security Council in accordance
with the present Charter.”).
61 According to its Articles, the Bank and its officers “shall not interfere in the political affairs of any member; nor shall they be
influenced in their decisions by the political character of the member or members concerned. Only economic considerations
shall be relevant to their decisions.” Articles of Agreement of the International Bank for Reconstruction and Development
(Bretton Woods Agreements), Dec. 27, 1945, art. IV(10), 2 U.N.T.S. 134, 158 [hereinafter Bretton Woods Agreements].
62 This is the argument used by the Bank in formulating its notion of “good governance.” See discussion supra Part II.A.
63 World Bank Report, supra note 17, at 17. The Bank argues that “[i]n the absence of regular explanation and analysis of
critical economic issues affecting their lives, people will have difficulty understanding and participating in changing economic
structures....” Id.
64 See id. at 11.
65 Devesh Kapur, The IMF: A Curse or a Cure?, 111 Foreign Pol'y, 114, 123 (1998). By contrast, as Kapur further notes, “[t]wo
decades ago fund programs typically imposed a dozen or so requirements or strictures.” Id.
66 The argument could be made that since countries agree--willingly or unwillingly--to the Bank playing such a role in domestic
policy, no question of violating this Article arises. Alternatively, however, it could be argued that the agreement on the part of
the country is irrelevant. It cannot validate the inherently invalid action by the Bank--invalid because the action is a violation
of the Bank's constituent document.
67 This is perhaps because, at the time of its creation, the IMF was envisaged as a short-term financing institution with no real
power to lend large amounts of money to developing countries. For an illuminating discussion of this issue, see Balakrishnan
Rajagopal, Crossing the Rubicon: Synthesizing the Soft International Law of the IMF and Human Rights, 11 B.U. Int'l L.J.
81, 92-95 (1993). As Rajagopal persuasively suggests, furthermore, a number of the IMF's Articles imply that interference
is improper. Id.
68 Martin Feldstein, Refocusing the IMF, Foreign Aff., Mar.-Apr. 1998, at 26. Feldstein argues that the IMF should only do that
which is necessary to enable a country seeking its assistance to deal with a funding crisis: “It should not use the opportunity
to impose other economic changes that, however helpful they may be, are not necessary to deal with the balance of payment
problem and are the proper responsibility of the country's own political system.” Id. at 27.
69 Kapur, supra note 65, at 123.
70 Thus, it seems that the IMF required Korea to open up its automobile and financial sectors in response to pressures exerted
by major IMF shareholders, Japan and the United States. See id. Feldstein makes the same point. Feldstein, supra note 68,
at 28. Furthermore, as Kapur points out, many U.S. officials have made it clear that the IMF serves a very useful purpose
as a “battering ram” of U.S. policy. Kapur, supra note 65, at 115. It was stated before the U.S. Senate that the IMF “is in
fact one of the best possible deals we could ever imagine: its programs cost us nothing yet it provides enormous benefits for
our economy and foreign policy.” Id. at 127.
71 Extensive testimony has been given to the U.S. Congress as to why the IMF is vital to American national interests in an
attempt to secure more U.S. funding for the IMF. The Fight to the Fund, Economist, Feb. 21, 1998, at 25. As the Economist
further notes, “[i]n recent years, the Fund and the Bank have been hijacked by their major shareholders for overtly political
ends. Whether in Mexico in 1994, Asia in 1997, or Russia throughout the 1990s, the institutions become a more explicit tool
of Western, and particularly American, foreign policy.” Sick Patient, Warring Doctors, Economist, Sept. 18, 1999, at 81.
72 The IMF, for example, has been described as “the creditor community's enforcer” (by Professor Karin Lissakers of Columbia
University who went on to become the U.S. Executive Director of the IMF) and as “being used by the commercial banks in
the collection of their debts” (by Jacques Polak, a Dutch executive director of the IMF). See Kapur, supra note 65, at 118.
The recent IMF bailout of South Korea replicated this pattern as the government of South Korea basically undertook to
protect the loans made by foreign lenders and banks to South Korean enterprises. As Levinson notes in relation to the deal
worked out between foreign banks and the South Korean government, “[t]he creditors, in effect, are substituting a government

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guaranteed security for an unsecured credit to debtors of dubious financial capacity.” Jerome Levinson, The International
Financial System: A Flawed Architecture, Fletcher F. World Aff., Winter-Spring 1999, at 37. The IMF has attempted to
modify its stance in recent times, seeking to ensure that private creditors are required to bear more responsibility. See Bail
In, Bail Out, Economist, Oct. 2, 1999, at 19.
73 The Cologne Debt Initiative suggests a new approach. However, it is unpromising that countries that will receive this assistance
will have to submit to stringent IMF conditions.
74 As Teivainen argues in relation to the IMF: “A more democratic IMF need not imply that its operational decisions would
be made through complicated democratic procedures, but rather that the everyday decision-makers would bear at least some
accountability to a more democratically representative body than at present.” Teivo Teivainen, Globalization of Economic
Surveillance: The International Monetary Fund as Modern Priest, 1 Passages: J. Transnat'l & Transcultural Stud. 84, 85 (1999).
See also Gerster, supra note 55. It is illuminating, furthermore, that a national of a developing country has never been the
head of one of the three major economic institutions, the Bank, the IMF, and the WTO. Additionally, the recent campaign
by Thailand's Dr. Supachai Panitchpakdi to become the head of the WTO was bitterly opposed in a campaign instigated by
Western countries.
75 . Bretton Woods Agreements, supra note 61, art. IX(a).
76 The Bank's words on human rights are applicable here: “No human rights can be guaranteed without a strong, accessible, and
independent judiciary.... A country's system of justice should be the ultimate guarantor of equality under the law between the
rich and the poor, the powerful and the weak, the state and the citizen.” World Bank Report, supra note 17, at 15.
77 This is a curious and problematic argument, for it suggests that the Articles will prevail against all other developments in
international law. It is notable that the IFIs are, more explicitly than states, creations of international law. For a detailed
analysis of some of these issues, see Günther Handl, The Legal Mandate of Multilateral Development Banks as Agents for
Change Toward Sustainable Development, 92 Am. J. Int'l L. 642 (1998); Daniel B. Bradlow and Claudio Grossman, Limited
Mandates and Intertwined Problems: A New Challenge for the World Bank and the IMF, 17 Hum. Rts. Q. 411 (1995).
78 For an example of a perceptive and wide-ranging set of views on the importance of legitimate governance to Africa, see
Legitimate Governance in Africa: International and Domestic Legal Perspectives (Edward Kofi Quashigah & Obiora Chinedu
Okafor, eds., 1999).
79 The doctrine of good governance is important to this model as it ensures that the state represents the people and that, therefore,
what the state bargains for benefits the people.
80 Whatever the limitations of the notion of formal and equal sovereignty, it does serve very important purposes. See Benedict
Kingsbury, Sovereignty and Inequality, 9 Eur. J. Int'l L. 599 (1998).
81 As Robert Wade points out, “[b]y December 1997, Asian leaders had dropped their objections and signed on to an agreement
that commits them to open their banking, insurance, and securities markets to foreign firms. They saw no choice. Either they
signed or U.S. and IMF help in dealing with the crisis would be less forthcoming.” Robert Wade, The Coming Fight Over
Capital Flows, 113 Foreign Pol'y 41, 47-48 (Winter 1998-1999).
82 These themes will be explored in detail in my forthcoming article, Antony Anghie, Colonialism and the Birth of International
Institutions: Sovereignty, Economy and the Mandate System of the League of Nations (unpublished manuscript on file with
author).
83 A Failed State that is Succeeding in Parts, Economist, Aug. 28, 1999, at 33.
84 League of Nations Covenant art. 22, para. 1.
85 As authorities of the time recognized, although the Mandate System applied to only a few territories, it represented an entirely
novel way of conceptualizing and addressing colonial questions and, thus, the relations between European and non-European
peoples in general. As a result, the significance of the Mandate System extends far beyond its specific application.

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86 The mandate territories were classified as “A,” “B,” or “C” mandates depending on their level of civilization. It was uncertain
as to whether “C” mandates were destined to become independent states. See Quincy Wright, Mandates Under the League
of Nations 327-34 (1930).
87 Lugard argued that “[t]he democracies of to-day claim the right to work, and the satisfaction of that claim is impossible
without the raw materials of the tropics on the one hand and their markets on the other.” Lord Lugard, The Dual Mandate
in British Tropical Africa 61 (Archon Books 1965) (1922).
88 Id.
89 Thus, Wright states that the Mandate System would “more effectively secure the opportunity of all states of the world to equal
participation in the trade and resources in the area.” Wright, supra note 86, at 64.
90 The Mandate System was unique in its access to the interior of a territory which was to be transformed into a state. This
novel situation arose because of the complex legal structures creating the system. The question of where sovereignty over the
mandate was located remained problematic.
91 Under the now-discredited international law of positivism, sovereignty was understood principally as a formal set of rights
and duties. With the emergence of the “new international law” of pragmatism in the inter-war era, however, jurists sought
to conceptualize sovereignty not merely in formalist legal terms, but in sociological terms. Hence, a sovereign state could be
envisaged as a complex entity in all its detail--its political institutions, its labor policies, its infrastructure needs, etc.
92 See generally Wright, supra note 86.
93 For further examples of issues addressed by the PMC, see id. at xi-xvi.
94 Id. at 229.
95 For a detailed examination of how this system operated, see, e.g., Christopher Weeramantry, Nauru: Environmental Damage
Under International Trusteeship (1992).
96 Thus, commenting on mandate labor policy in a passage which traces how policies become focused on economic
considerations, Wright asserts that “it began to be seen that the native was an important economic asset. Without his labor
the territory could not produce. Thus the ablest administrators like Sir Frederick Lugard in Nigeria began to study the native
and cater not only to his material but to his psychological welfare with highly gratifying economic results.” Wright, supra
note 86, at 10 (emphasis added).
97 See generally John Sydenham Furnivall, Colonial Policy and Practice: A Comparative Study of Burma and Netherlands India
(1948) (analyzing in depth the transformation of native political institutions based on social relations into native political
institutions based on economic considerations).
98 M. Yanaghita, The Welfare and Development of the Natives in Mandated Territories, League of Nations Perm. Mandate
Comm., 3rd Sess., Annex 6, at 283 (1923).
99 This is the sort of enterprise engaged in by Furnivall. Furnivall, supra note 97.
100 See Wright, supra note 86, at 549-79.
101 I borrow the term “knowledge for development” from World Bank, World Development Report: Knowledge for Development
(1998).
102 See Wright, supra note 86, at 269.
103 My interpretation of the Mandate System is extremely indebted to the work of Edward Said and Michel Foucault. See Edward
W. Said, Orientalism (1978); Edward W. Said, Culture and Imperialism (1993); Michel Foucault, Power/Knowledge: Selected
Interviews and Other Writing 1972-1977 (Colin Gordon ed. and trans., 1980); Michel Foucault, The Foucault Effect: Studies
in Governmentality (Graham Burchell et al., eds., 1991).

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104 These ambitions are evident in one of the Bank's latest reports. See World Bank, supra note 101. Furthermore, as Robert
Wade observes, “[t]he World Bank enjoys a unique position as a generator of ideas about economic development. Around
the world, debates on development issues tend to be framed in terms of ‘pro’ or ‘anti’ World Bank.” Robert Wade, Japan, the
World Bank, and the Art of Paradigm Maintenance: The East Asian Miracle in Political Perspective, New Left Rev., May
1996, at 217. As Wade notes, the Bank's research and policy budget far exceed that of any other development organization.
Furthermore, the Bank's ability to influence developing country access to international markets often requires these countries
to adopt the Bank's views. Id.
105 I draw here on Marx's insights regarding the alienation of labor:
This fact simply indicates that the object which labor produces, its product, stands opposed to it as an alien thing, as a power
independent of the producer. The product of labor is labor embodied and made objective in a thing.... In the viewpoint of
political economy this realization of labor appears as the diminution of the worker, the objectification as the loss of and
subservience to the object and the appropriation and alienation, as externalization.
Karl Marx, Feurbachian Criticism of Hegel, in Writings of the Young Marx on Philosophy and Society 289 (1967) (italics
in original).
106 I am not suggesting, of course, that the IFIs ignore the international dimensions of complex economic issues. But their
examination of the international framework is conditioned, first, by a concern to maintain rather than reform the system--
unless major economic powers require such reform--and second, by the fact that the IFIs exercise considerable power over
borrower countries and little power over the wealthy industrialized countries in whose interests the system largely operates.
107 Witness the IFIs' approach to the debt problem, discussed supra. It remains to be seen how the Cologne initiatives on debt
relief address and resolve this problem.
108 See Rajagopal, Resistance, supra note 28.

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