6 - Financing Flashcards
What is a paradox regarding the financing of IOs? (2)
1/ members do not like to pay contributions
2/ members really want to pay contributions (‘he who pays the piper calls the tune’)
Why is the study of the financing of IOs relevant? (2)
1/ better understanding of IOs
2/ better understanding of law & practice IOs
What are the 2 main types of costs of IOs?
1/ administrative (running the IO)
2/ operational (substance IO, carrying out operations)
What are costs of IOs mainly made up of and what does this illustrate? (2)
1/ administrative costs
2/ IOs are fora for consultation, policy coordination (‘talkshops’)
What are some exceptions to IOs as ‘talkshops’? (3)
1/ EU
2/ financial organizations
3/ etc.
Characteristics of zero growth policies? (5)
1/ popular in politics & finance ministries
2/ not a legal principle
3/ substance = no automatic growth of budget
4/ understandable in times of financial crisis
5/ but members must put their money where their mouth is as IOs are mandate driven (not resource driven)
Various types of income of IOs? (2)
1/ compulsory contributions by members
2/ voluntary contributions (members and other entities)
Various examples related to IOs’ income? (3)
1/ US and UNESCO after admission of Palestine in 2011
2/ sponsoring of EU presidency by private companies, such as Coca Cola & Romania in 2019
3/ Interpol & increase in voluntary contributions which led to adoption of new financial rules
What are 2 important considerations regarding voluntary contributions?
strike a balance between :
1/ need for money
2/ guarantee reputation, independence, transparency
What are various ways to share expenditure between members? (3)
1/ equal contributions
2/ optional classes
3/ scales of assessment
Examples of IOs using scales of assessment? (2)
1/ IMO, share of each member divided in 3 parts (minimum, basic and tonnage assessment)
2/ other IOs have scales of assessment related to the interest of the member in the work of the IO (see lecture notes for list)
What are the 2 main functions of the budgets of IOs?
1/ estimation of expenditure and income
2/ authorization of making expenses and collecting contributions
Which organ usually adopts the budget and why? (3)
1/ general congress (plenary organ)
2/ legitimacy (‘no taxation without representation’)
3/ for scope of powers, see Effect of Awards (1954) and Certain Expenses (1962) AOs
=> substance first
What are the 2 main types of budgetary periods?
1/ 1 year
2/ 2 years
What were 2 main problems of the LoN regarding financing?
1/ which organ decides?
2/ rigid scale of assessments
What are some of the lessons learned by UN from problems LoN? (5)
1/ Article 17 UN Charter : clear definition on which organ decides (UNGA)
2/ in practice, there are separate accounts
3/ financial regulations adopted by UNGA, financial rules adopted by UNSG
4/ there are criteria for apportionment (esp. capacity to pay)
5/ there are also minimum and maximum contributions
Since 1971, EU income from own resources. What do these include? (3)
1/ traditional own resources
2/ % of MS Value Added Tax
3/ % of MS GNP
What the tension between theory and practice in relation to income of IOs? (2)
1) Theory/law: distinction between compulsory and voluntary contributions
2) Practice: much more blurred
How may the distinction between compulsory and voluntary contributions be blurred? (2)
1) compulsory contributions: but MS cannot/will not pay
2) voluntary contributions: but schemes are made with an expectation to pay so and so much over a given period
What were implications of US refusing to make compulsory contributions to UNESCO? (5)
1) US lose right to vote in General Conference (Art IV(8)(b) Constitution)
2) US maintain right to vote in Executive board
3) UNESCO lose 22% of budget
4) UNESCO make budget adaptations and seek income from voluntary funds
5) US however maintained financial support for certain UNESCO affiliated NGOs
How has Interpol’s sources of income changed? (3)
1) 1995: 5% voluntary contributions
2) 2013: 32% voluntary contributions
3) these come from esp. EU, CAN, QAT (also FIFA and Tobacco Industry)
Why are equal contributions rarely used in practice?
because States are very unequal in practice (in terms of finances, interest in the IO etc)
What are IOs using equal contributions? (3)
1) OPEC
2) East African Community
3) Mercosur
What are the Optional Classes mode of contribution? (3)
1) comes from old IOs
2) each MS choose their contribution class
3) EX: UPU, PCA
What are the scales of assessment mode of contribution? (2)
1) the IO decides what each MS must pay
2) Most IOs have this
What are the reelvant factors in assessing the correct contribution under scales of assessment? (4)
1) Ability to pay (UN)
2) Interest in IO’s work
3) Flexibility of the scale
4) limits to contirbutions (Max/min contributions)
What considerations go into setting the flexibility of the scale of assessment? (2)
1) too rigid: not reflect ability to pay/interest in work of IO
2) too flexible: difficult for MS to plan national budget
What are justifications for setting maximum contributions? (3)
1) to reflect sovereign equality (voting and IO’s functioning)
2) not make IO too dependent on single MS
3) easier for MS to justify domestically joining the IO if not v expensive
what are disadvantages of setting maximum contributions? (2)
1) Leaves a greater burden per capita on poorer states
2) leaves IO with less money in absolute terms (unless increase for other states)
what are justificatiosn for setting minimum contributions? (2)
1) a price to be paid for sovereign equality (voting parity etc) - they get better money for value
2) otherwise some delegations might receive more in travel costs for delegates than what they contribute
What are disadvanatages of minimum contributions? (2)
1) might force poor states to neglect domestic development bc no money
2) may mean some poor states cannot afford to join (denying them ability to influence Int’l community - maintain poverty)
What are 2 reasons that IOs might not have zero growth policies despite MS wanting it?
1) Ind. MS cannot choose unilaterally how much to contribute - this is decided at IO level
2) IOs are mandate driven: they were given certain functions that must be performed and financed
