The Role of Key Groups in Globalisation and Internationalism

1. The Role of Key Groups in Globalisation and Internationalism

2. This week… • Role of key groups (IMF, World Bank, WTO, UN) • Case studies • Assess the theoretical and actual implications of the activities of WTO, IMF, World Bank • Evaluate the effectiveness of these bodies in carrying out their functions.

3. Next Week (maybe this week): • We will start looking at the impact of globalisation and internationalism on: • International Trade • Environment • Human Rights and Refugees • Technology and communications • Politics

4. Week 5: • I will be on camp Monday 1st of March – Wednesday 3rd of March. • We will miss two periods of class. • I will leave you work. • You get out of the period 0 and period 7 for Tuesday the 2nd of March! 

5. Reminder: Objectives • World Bank: • Strengthen economies and expand markets to improve the quality of life for people everywhere, but especially the poorest • Use first rate financial standing and access to the world’s capital markets to invest in health, education and the environment, and to assist with economic reforms • Advise globally on the investment of private capital in development projects

6. Reminder: Objectives • IMF • Promote international monetary cooperation • Facilitate the expansion and balanced growth of international trade • Promote high employment and sustainable economic growth • Reduce poverty

7. Reminder: Objectives • WTO • Liberalise world trade • Promote economic stability • Lay down the rules for world trade

8. Background: GFC • Global Financial Crisis • Caused by bursting of US housing bubble • High default rates on ‘subprime’ lending • Has been called ‘worst financial crisis since the Great Depression of the 1930s’

9. Case Study: Iceland • 2008-2009 • Collapse of all three major banks in Iceland • Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history

10. Case Study: Iceland • Commenting on the need for emergency measures, Prime Minister Geir Haarde said on 6 October, “There was a very real danger that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy”

11. OMX Iceland 15

12. Case Study: Iceland • A team of experts arrived in Iceland at the start of October 2008 for talks with the government. • On 24 October, the IMF tentatively agreed to loan €1.58 billion. • There loans were held up by the UK and the Netherlands as the ‘Icesave’ dispute had not been resolved.

13. Case Study: Iceland • The IMF-led package of $4.6bn was finally agreed on 19 November. It consisted of: • IMF loaning $2.1bn • $2.5bn of loans and currency swaps from Norway, Sweden, Finland and Denmark. • Poland has offered to lend $200M • Faroe Islands have offered 300M Danish kroner ($50M, about 3% of Faroese GDP) • The Icelandic government also reported that Russia has offered $300M • Germany, the Netherlands and the United Kingdom announced a joint loan of $6.3bn

14. Articles Read the articles about Iceland’s bailout. • Outline the way the IMF has acted in Iceland. • How do the actions of the IMF fit with their objectives? • Is it the responsibility of the IMF to ‘bail out’ states the way they have in Iceland? Why or why not? • Should they bail out Greece as well? Why or why not? • How is this bailout linked to Globalisation and Internationalism?