chapter 6 Universality
- International Monetary Fund
- Published Date:
- October 1985
Evaluation of Criteria
In applying the criterion that an applicant must be able to perform the obligations of membership, the Fund has not made a detailed examination, provision by provision, of the applicant’s ability to observe the Articles without strain. The proposition can be put in another way. The Fund has not regarded an applicant as ineligible for membership because it deviates from the norm contemplated by the provisions of the Articles. An applicant has not been debarred from membership because it had a common currency with other countries or with the dependent territories of another member and had little or no control over that currency, or because it relied on the currency of another member as the main medium of circulation, or even because it had no domestic currency. The Fund has been satisfied, in connection with some applicants in these circumstances, that the currency was subject to the provisions of the Articles because another country or group of countries was bound by the Articles, even if the applicant taken alone could do little or nothing to ensure that the obligations would be observed in relation to the currency. This rationalization does not explain all the cases in which applicants have been admitted when their currencies differed from the norm. For example, on some occasions the Fund has acted on the applications of some countries in a group that had a common currency even though not all of them had applied for membership or given notice that they intended to, although the membership committees may have assumed that this intention existed.
It cannot be pretended that membership in the circumstances that have been described is without difficulties in relation to the obligations that deal with conduct in monetary matters or with the financial operations of the Fund. For example, it might be desirable that there should be a change in the par value of a common currency because of the balance of payments of a member, but the change might be undesirable for other members sharing that currency. When one member uses the currency of another member as its domestic currency, a change in par value by the issuer affects the other member as well. If the issuer decides not to maintain margins for exchange transactions involving its currency, the decision affects both members, and difficult questions arise as to legal responsibility. In connection with some applications, it was obvious that it was going to be difficult to determine whether a member was suffering from a balance of payments problem that would enable it to use the Fund’s resources if it should request a transaction at some future date. Possible problems in connection with the code of conduct that binds members under the Articles and in connection with the Fund’s financial activities were left for solution in a practical way at such time as they might arise.
The question of the precise meaning of the criterion that the obligations of membership can be performed is raised by the admission of countries with state-controlled economies. The propriety of admitting these countries cannot be doubted in view of the inclusion of the U. S. S. R. in Schedule A and the statements about potential membership that were made before and at the Bretton Woods Conference. These countries have no inherent difficulties with some obligations of the Articles, but they can avoid failures to perform some of those related to the code of conduct only by taking care to apply their controls directly to trade and other transactions and not to payments and transfers for current international transactions, or by obtaining the Fund’s approval of restrictions on payments and transfers, multiple currency practices, or discriminatory currency arrangements. Qualifications such as these, however, mean that the Fund must accept the likelihood or even the certainty that some countries admitted to membership will not have exchange rates for their currencies that perform the functions they perform for other currencies, and that these members will not have currencies that are part of a multilateral system of payments for current international transactions.
Although the Fund does not make a meticulous investigation in order to determine whether all the obligations of membership can be performed by an applicant, there have been detailed discussions of the obligations between the staff and the officials of some countries that were considering whether to apply. The interest of the officials has been to see precisely what their country’s commitments would be. In these discussions the ability and willingness of the country to perform particular obligations, such as the duty to supply information and to consult, have been of particular interest to the staff. Increasing emphasis has been placed on information and consultation so that the Fund could be assured that there would be no foreseeable impediments to collaboration after the country had become a member. The assurance of collaboration has seemed important because it gives the Fund an opportunity to convince the country of the desirability of putting into practice the purposes of the Articles. This has been the motive for stressing the obligations to supply information and to consult, and not the withdrawal of Czechoslovakia, which was based on the failure to fulfill these obligations.
Even the criterion that an applicant must have the control of its foreign relations has to be qualified in order to be a correct reflection of practice, because the Fund concluded, in connection with some early applications, that the existence of the legal right of another country to control the applicant’s foreign relations would not prevent membership if it was unlikely that the right would or could be exercised. The reverse of this proposition has not been a limiting factor. That is to say, the fact that a formally independent country was subject to considerable influence by another country in the conduct of foreign relations has not been taken into account as an impediment to membership.1
The Fund’s experience can be summarized by saying that it has shown great readiness to accept as wide a membership as possible. This conclusion seems to be valid for other international organizations as well. The author of a report on new states and their relations with international organizations, published under the auspices of unesco, makes the following observations:
Vague as all these categories and criteria seem to be in principle, they are vaguer still as interpreted in practice, and not always can the placing of a State in one or another of them by various international organizations be taken as a reliable guide for the State’s precise international status. What determines a State’s admission or non-admission to membership in an intergovernmental organization is, as a matter of practice, not its conformity or otherwise to the criteria stipulated, but the action taken by the members and agencies of the organization upon the State’s application, an action often motivated by considerations of an altogether different nature.2
These observations in relation to the Fund can be stated in another way. Most applications do not raise difficult problems. If a prospective application is likely to provoke political or other difficulties, it will be the subject of diplomatic or informal negotiations. If the difficulties are not easily resolved, the application is not made or is postponed, but if they are resolved and the application is made, the organization will be disposed to find that the application is compatible with the criteria for membership.
Although no international organization has a universal membership, some organizations are in principle open to all states, whereas the constitutions of others limit membership in some way. Regional organizations are an obvious example of organizations that are necessarily limited in membership. It has been said that organizations open to all states desire universality and that their effectiveness increases the more closely their membership approaches universality:
… A desire for universality is a feature of all universal organizations and distinguishes them from all regional organizations.
The closer an organization comes to universality, the stronger its position will be. Rules made by a universal organization would be rules of world law. By marshalling more States the organization obtains a greater control over dissident Members of the world community. Participation on a wide scale would minimize the opportunity for non-Members to band together to thwart the purpose of the organization. Universality, on the other hand, excludes the possibility of imposing conditions for admission to membership. It also excludes the sanction of expulsion.3
There can be no disagreement with much of this statement, but some reservations are possible. An organization may not have adopted a conscious policy of encouraging the expansion of membership, and if it has the power to establish terms for membership it may be more interested in maintaining traditional terms than in adapting them so as to eliminate the difficulties that would face some potential applicants. Whether or not the organization is dedicated to the maintenance of traditional terms, it may be apprehensive about extending membership to certain states. Moreover, it may be necessary to examine more closely what is meant by the “organization” that is said to have the desire for universality. The management may have one view, an executive organ a different view. Within the executive organ, or among the members of the organization, there may be a diversity of attitudes.
Similarly, it is possible to question the assumption that the strength of an organization grows the closer it approaches universality. Much depends on the purposes of the organization. It is not necessarily true that nonmembers, even powerful ones, whether banded together or not, can thwart the purposes of an international organization. On the contrary, they may be more effective in bringing about this result as members, even if they do not possess enough voting power to veto the adoption of important decisions. The effect of “dissident” members, to borrow an expression from the passage that has been quoted, cannot be measured in terms of voting power alone. The refusal to abide by obligations can have a demoralizing effect on members that would be assiduous in observing their obligations if not confronted with the example of malefactors. Even if “dissident” members do not violate their obligations, they may inhibit the effectiveness of the organization by preventing consensus on proposed decisions.4
Finally, the broader the membership of an organization, the more diverse the interests of its members may be. Differences in interest among members may promote the formation of groups with a debilitating or disturbing effect on the organization. This consequence is not inevitable, however, because the formation of groups with common interests helps to refine views, which are then coordinated within the organization.
Within the Fund, the main industrial members concluded at one time that they shared interests that differentiated them from the nonindustrial or less industrialized members, and the main industrial members then formed the Group of Ten outside the Fund for the discussion of issues that had to be resolved in the Fund. This development worried other members. The reason may have been not so much the formation of the Group as its preponderant voting power in the Fund. When the issue of reform of the international monetary system arose, it was decided to avoid the procedure that had been followed in connection with the negotiation of international agreement on special drawing rights as a supplement to reserve assets. Much of that negotiation had been conducted in the Group of Ten, but it was decided that reform would be negotiated in a new Committee of the Board of Governors on Reform of the International Monetary System and Related Issues (the Committee of Twenty) and in the Deputies of the Committee. The composition of both bodies was based on the full membership of the Fund, but before these bodies could be established, developing members had formed their own Group of Twenty-Four on the precedent of the Group of Ten.5
The simplicity and flexibility of the Fund’s criteria for membership have been compatible with a policy of universality even though the Fund’s practice does not rest on any announced policy of this kind.6 In one respect, however, the Fund’s practice has been untested. Members have made the maximum effort to avoid the intrusion into the Fund of the political disputes that have troubled international affairs. If the Fund has been relatively free of the main international political struggle of the last quarter of a century, the Cold War, the explanation may be that the membership of the Fund has not included, during most of its life, countries that belonged to one of the two factions. The decision to compel Czechoslovakia to withdraw 7 has been regarded by some observers as a phenomenon of the Cold War. Whether the character of the Fund would change with a membership that was broader in the range of its political philosophies cannot be foreseen. If it should change, the provisions establishing high majorities of the total voting power for some decisions might produce unexpected effects in the future.
There has been discussion of the relationship between universality and withdrawal from international organizations. The omission from the constitutive treaties of some international organizations of an express right of withdrawal has stimulated debate of the question whether members are nevertheless able to withdraw.8 In these debates, the principle of universality has been relied on as an argument for denial of the right. In the Fund, the right to withdraw cannot be questioned because it is expressly assured by the Articles,9 and the right was thought to be so fundamental that any amendment modifying it requires the acceptance of all members.10
Right to Membership
The Fund has criteria for membership and is liberal in its practice of admission, but must it admit applicants? There is a peremptory ring to the words “[m]embership shall be open to the governments of other countries” in Article II, Section 2, and an applicant might argue, therefore, that it was entitled to be admitted if it satisfied the Fund’s criteria.
After the delegate of the U. S. S. R. to the UN Security Council had postponed his vote on the admission of Italy and Finland to the United Nations because he was not sure that three other ex-enemy states, Bulgaria, Hungary, and Romania, would be admitted, the General Assembly in 1947 requested the International Court of Justice to give an Advisory Opinion on the following question:
Is a Member of the United Nations which is called upon, in virtue of Article 4 of the Charter, to pronounce itself by its vote, either in the Security Council or in the General Assembly, on the admission of a State to membership in the United Nations, juridically entitled to make its consent to the admission dependent on conditions not expressly provided by paragraph 1 of the said Article? In particular, can such a Member, while it recognizes the conditions set forth in that provision to be fulfilled by the State concerned, subject its affirmative vote to the additional condition that other States be admitted to membership in the United Nations together with that State?
The Court considered that the request was for an interpretation of paragraph 1 of Article 4 of the Charter: “Membership in the United Nations is open to all other peace-loving states which accept the obligations contained in the present Charter and, in the judgment of the Organization, are able and willing to carry out these obligations.” The Court concluded by nine votes to six that there were five conditions for membership in the United Nations. An applicant, to be admitted, must (1) be a state; (2) be peace-loving; (3) accept the obligations of the Charter; (4) be able to carry out these obligations; and (5) be willing to do so. These conditions were necessary and sufficient, and therefore exhaustive. Any other view would mean that members had an unlimited discretion to impose additional conditions, but that conclusion would be incompatible with both the letter and the spirit of the provision. This construction did not prevent the Organization from taking into account any facts that could enable it reasonably and in good faith to determine whether the conditions were satisfied.11
As a result of its interpretation, the Court concluded that a member, when voting on the admission of a state that met the five express conditions, could not make its consent to admission dependent on conditions that were not expressly provided for, and in particular a condition that other states must be admitted together with the applicant.
The opinions of the dissenting judges placed much weight on paragraph 2 of Article 4: “The admission of any such State to membership in the United Nations will be effected by a decision of the General Assembly upon the recommendation of the Security Council.” The system, on their view of this provision, was one of admission and not accession, and did not involve automatic admission on the basis of the routine application of rules. Admission was the result of actions by the General Assembly and the Security Council, both of which were political organs that were entitled to take political decisions on the basis of political factors, even though the decisions were not based on the express qualifications of Article 4. The organs and members were bound by the Charter not to admit a state that did not meet the express qualifications, but the Charter did not provide that these qualifications were sufficient as well as necessary. The language, including the expressions “membership is open” and “admission will be effected,” was permissive in tone and not obligatory.
One dissenting judge pointed out that a member did not have to give reasons when voting, and it was impossible, therefore, to determine the reasons that influenced its vote. It followed that it was not possible to subject a member’s vote to legal regulation beyond the legal obligation to act in good faith and in the interest of the Organization.
If the approach of the majority of the Court were applied to the Fund, it could be said that the conditions for admission to membership are that an applicant (1) is a country (Article II, Section 2) and not a territory that falls into any of the categories of Article XX, Section 2 (g); (2) is able to carry out the obligations of the Articles (Article XX, Section 2 (a)); and (3) is willing to carry out the obligations (Article XX, Section 2 (a)). The first of these conditions is explicit; the other two could be regarded as implicit. It would not be possible to argue, however, that these three conditions are sufficient as well as necessary, because the Fund may prescribe terms for admission and may permit admission at such times as it prescribes. Neither of these powers appears in the text of the Charter of the United Nations. It is true that the Charter says that “membership is open” whereas the Articles say “membership shall be open,” but it is not clear that the Fund must prescribe the terms and time of admission for every applicant, if only because Article II, Section 2, refers to such times and terms “as may be prescribed by the Fund.” It might be argued, however, that even these words do not enable the Fund to decide arbitrarily to reject an application by a country that meets the criteria for membership. The argument might be made that the Fund must be prepared to permit membership at some time that it considers appropriate and to prescribe bona fide terms, i.e., terms that are not designed solely for the purpose of preventing membership. The difficulty with this argument is that there are no obvious principles for determining what would be an arbitrary rejection.
If the approach of the dissenting judges were applied to the Fund, the conditions of the Articles would be necessary but not sufficient conditions. Moreover, the Articles, like the Charter, provide for admission by decision of an organ and not for automatic accession, but the argument for this approach would be stronger under the Articles because of the express power of the Fund to prescribe the time of and terms for admission. There is no practical advantage in attempting to determine whether there are boundaries to the Fund’s authority under Article II, Section 2. On any interpretation of the provision, the Fund’s authority is extensive, but the Fund has never withheld membership from an applicant that met the criteria.
An applicant that was denied admission would have no direct recourse against the Fund if it felt that it met the criteria for membership and had been turned away capriciously. The issue would be one of interpretation of the Articles and the applicant would not be able to raise it in any international tribunal, if only because under Article XVIII the Fund has the exclusive power to interpret its Articles.12 The applicant could pursue its cause through diplomatic channels, however, and might induce a member to raise the issue as a question of interpretation under Article XVIII. The Fund and its members would be bound by the interpretation that was then adopted. Some members that have granted independence to former dependencies have undertaken to lend their good offices in helping the newly independent countries to obtain membership in international organizations, including the Fund.
Cf. Higgins, Development of International Law, pp. 36–37.
Akzin, New States, p. 15.
Schermers, International Institutional Law, Vol. I, p. 16.
The report by the national rapporteur on Indonesia that was part of the material on which the report on new states and their relations with international organizations was based has this to say about conflicts in international organizations:
“The existence of two opposing blocs in international politics has also penetrated the international organizations. This strife has resulted in two trends:
a) In some international organizations this strife prevents a healthy and efficient co-operation. Thus this strife has brought about a weakening of the international organizations. In many cases effective co-operation was paralyzed. In other cases the international organizations become a mere forum where propaganda and antipropaganda can be launched.
b) In some other international organizations, however, one bloc has succeeded in getting full control of the machinery of the organizations. In those cases the countries of the other bloc withdraw and thus the organizations lose their international character and become mere instruments for one of the opposing blocs. …
“The trend mentioned above under b has resulted in a more critical approach by the Indonesians towards the question of participation in any new international organization. The Indonesians become more cautious in joining international organizations, [lest] such organizations or agencies would turn out to be merely dominated by one bloc or even mere tools of one bloc, so that participation in it could be interpreted as siding with one bloc, which would only lead to the strengthening of one side and might ultimately increase the tension between the blocs. Participation in such organizations might also be interpreted as abandoning the principle of an independent foreign policy to which Indonesia is pledged,”—Akzin, New States, p. 179.
Gold, Voting and Decisions, pp. 96–97.
Note par. 3 of the communiqué of March 27, 1973 of the Committee of Twenty: “The Members of the Committee reaffirmed the need for a world monetary order, based on cooperation and consultation within the framework of a strengthened International Monetary Fund, that will encourage growth of world trade and employment as well as economic development and will support the domestic efforts of monetary authorities throughout the world to counteract inflation” (italics added).—IMF Survey, Vol. 2 (1973), p. 100.
Note also a speech by C. J. Morse, Chairman of the Deputies of the Committee of Twenty, on “International Monetary Reform—The Shape of Things to Come,” before the National Foreign Trade Council, New York, November 12, 1973: “The negotiations are being conducted within the International Monetary Fund among the 126 nations that are members of the Fund. This is not to say that we are unaware of the important countries which are not members, principally the socialist countries and Switzerland. In the hope that they will before too long want to join the Fund, we frame the reform with a view to easing, or at least, not hindering, their joining, so that we may finally have a truly ‘one-world’ system.”—Reported in part in IMF Survey, Vol. 2 (1973), p. 341.
N. Feinberg, “Unilateral Withdrawal from an International Organization,” The British Year Book of International Law, 1963, Vol. XXXIX, pp. 189–219. (Hereinafter referred to as Feinberg, “Unilateral Withdrawal.”)
Article XVII (b) (i).
Conditions of Admission of a State to Membership in the United Nations (Article 4 of Charter), Advisory Opinion: I. C. J. Reports 1948, pp. 57, 62–63. See also Schermers, International Institutional Law, Vol. I, pp. 36–37.
See Gold, Interpretation.