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NEW INTERNATIONAL ECONOMIC ORDER:Criticism of IEO, NIEO Activities

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International Relations-PSC 201
VU
LESSON 15
NEW INTERNATIONAL ECONOMIC ORDER
Changing Economic Circumstances
Since WWII, the world economy has undergone drastic changes brought about by changing political
circumstances, industrial and technological changes, and changing trade patterns. The dominant economic
order which prevailed for four decades after WWII is referred to as IEO.
IEO Subsystems
North-West System: referred to financial and trade linkages between developed nations of Western Europe,
Japan and North America.
North-East System: referred to centrally controlled economies of the Soviet Union and Eastern Europe
South System: referred to developing countries of Africa, Asia and Latin America
Criticism of IEO
Economics based on nationalistic grounds has received a lot of criticism. It failed to function in the case of
the North-east, leading to the collapse of the USSR.
The control of capital and use of neo-colonial and imperialistic tendencies in terms of trade resulted in large
disparities around the world. The North-West system donated money to the South System, but it was not
enough to remove widespread poverty. Many developing countries and segments of the population within
the developed world called for a revision of the prevailing IEO.
NIEO
Reacting to the inequitable economic situation, countries of the South articulated a strategy to alter the
structure of international economic systems. The NIEO called for economic justice and balanced economic
growth which could be sustainable in the future.
One of the most significant and potentially far-reaching events of the 1970s took place in 1974. On that day
the Sixth Special Session of the United Nations General Assembly made its Declaration on the
Establishment of a New International Economic Order. The ground for the Declaration was prepared by a
series of international meetings covering various issues of trade and development, culminating in the Fourth
Conference of Heads of States or Governments of Non-Aligned Countries, held at Algiers, in September
1973.
The Sixth Special Session of the United Nations was summoned as a strategic follow-up of the Algiers
Conference. The Algiers Conference and the Sixth Special Session of the UN was a long overdue Third
World response to the blatant injustice and unjust partiality of the existing World Order.
It was under heavy pressure from the numerical preponderance of the Third World countries that the Sixth
Special Session of the United Nations Organization set itself two tasks. The first was to declare
unequivocally its determination to overthrow the Old International Economic Order - which was of course
the World Order prevailing at the time - and establish in its place the New International Economic Order.
To quote the Declaration, the NIEO was to be "based on equity, sovereign equality, interdependence and
cooperation among all States ... which shall correct inequalities and redress existing injustices, make it
possible to eliminate the widening gap between the developed and the developing countries."
The second objective and task was "to delineate a series of measures that should be taken without delay in
certain areas of international relations in order to make the New Order a reality."
The Sixth Special Session of the UN fulfilled its first task by adopting the Declaration on the NIEO and by
proposing on the same day the Program of Action for the establishment of the NIEO. The Sixth Special
Session was therefore not merely a statement of principle but a statement of actions that had to be taken if
the principle was to be translated into actual reality.
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International Relations-PSC 201
VU
Predictably, the rich industrialized countries pretended as a first reaction to be open to the idea of a New
International Economic Order but in reality felt seriously threatened. The then US Secretary of State, Henry
Kissinger, as indeed befitted the then leading protagonist of the hegemony of the Northern Hemisphere in
the Existing World Order, realized the threat to this hegemony if the NIEO ever became a reality. He
therefore took it upon himself to lead the campaign at the Seventh Special Session of the United Nations
held in September 1975 to strangle the NIEO in its cradle.
With the scarcely-concealed superciliousness that has come to be part and policy of the leaders of Western
countries, chiefly the United States and Britain, in their dealings with Third World leaders, Kissinger
appeared in the beginning of his speech to show sympathetic understanding of the aspirations of the
developing countries. He gave evidence of understanding their determination to work for the eradication of
the injustices of the World Order and the establishment of a New Order of justice and equality for all.
Justice and equality were especially the demands of those parts of the World that had so consistently been
denied them during the long night of colonialism and the first decades of neo-colonialism. The NIEO
called for a transfer of technology and interest free investment-capital instead of charity. NIEO also
challenged the structure of the international financial institutions like the IMF and World Bank, in which
two thirds of the world population has less than a third of the voting power. There have also been summits
held to specifically discuss the NIEO.
NIEO Activities
Cancun Summit: was held in 1981 but the US insisted that the Western states should participate in the
summits as well if developing countries wanted to use the UN mechanism.
Melbourne Summit: was arranged by the Commonwealth to review issues of the South as articulated by the
NIEO.
New Delhi Summit: North-South moot in reaction to demands from the South to reduce tariff liberalization,
increase international commodity prices and make available more concessionary aid for development.
Subsequent UN events like the WSSD have also seen calls for NIEO.
Suggested Readings
Students are advised to read the following chapters to develop a better understanding of the various
principals highlighted in this hand-out:
Chapter 9 in `"A Study of International Relations" by Dr. Sultan Khan.
Internet Resources
In addition to reading from the textbook, please visit the following web-pages for this lecture, which
provide useful and interesting information:
NIEO
http://www.satyodaya.org/Articles/NIEO.htm
Table of Contents:
  1. WHAT IS INTERNATIONAL RELATIONS AND WHAT IS ITS RELEVANCE?
  2. APPROACHES TO INTERNATIONAL RELATIONS: THEORIES IN IR
  3. APPROACHES TO INTERNATIONAL RELATIONS:Traditional Approach
  4. THE NATION-STATE SYSTEM:Further Evolution of Nation-State
  5. THE NATION STATE SYSTEM: BASIC FEATURES OF A NATION-STATE
  6. NATIONAL INTEREST:Criteria for Defining National Interest
  7. NATIONAL INTEREST:Variations in National Interest, Relevant Vocabulary
  8. BALANCE OF POWER (BOP):BoP from a historical perspective
  9. BALANCE OF POWER (CONTINUED):Degree of Polarization, Functions of BoP
  10. DIPLOMACY:How Diplomacy Functions, Traditional Versus Modern Diplomacy
  11. DIPLOMACY (CONTINUED):Diplomatic Procedures & Practices, Functions of Diplomacy
  12. COLONIALISM, NEO-COLONIALISM & IMPERIALISM:Judging Colonization
  13. COLONIALISM, NEO-COLONIALISM & IMPERIALISM:Types of Neo-Colonialism
  14. COLONIALISM, NEO-COLONIALISM & IMPERIALISM:Objectives of Imperialism
  15. NEW INTERNATIONAL ECONOMIC ORDER:Criticism of IEO, NIEO Activities
  16. NEW INTERNATIONAL ECONOMIC ORDER:Prerequisites for the NIEO
  17. NON-ALIGNMENT MOVEMENT:Origin of NAM, NAM’s Institutional Structure
  18. NON-ALIGNMENT MOVEMENT (CONTINUED):Cairo Summit, Egypt - 1964
  19. NON-ALIGNMENT MOVEMENT:Criticism of NAM, NAM and Pakistan
  20. THE COLD WAR AND ITS IMPACTS - INTRODUCING THE COLD WAR PHENOMENON
  21. THE COLD WAR AND ITS IMPACTS (CONTINUED):Truman Doctrine, Marshal Plan
  22. THE COLD WAR AND ITS IMPACTS (CONTINUED):End of the Cold War
  23. DISARMAMENT AND ARMS CONTROL:History of Disarmament
  24. DISARMAMENT AND ARMS CONTROL (CONTINUED):Other Disarmament Efforts
  25. THE RELEVANCE OF INTERNATIONAL LAW IN INTERNATIONAL RELATIONS
  26. THE RELEVANCE OF INTERNATIONAL LAW IN INTERNATIONAL RELATIONS (CONTINUED)
  27. INTERNATIONAL ORGANIZATIONS:Need for IGOs, Categorizing IGOs
  28. INTERNATIONAL ORGANIZATIONS (CONTINUED):United Nations, Criticism of the UN
  29. INTERNATIONAL ORGANIZATIONS (CONTINUED):European Union, World Bank
  30. THE ROLE OF DECISION MAKING IN INTERNATIONAL RELATIONS
  31. DECISION MAKING (CONTINUED):Rational Actor Model, Group Politics Model
  32. SYSTEMS APPROACH TO IR:Underlying Assumptions, Elements of the System
  33. SYSTEMS BASED APPROACH (CONTINUED) – DISTINCT SYSTEMS IN IR
  34. LIBERALISM AND SOCIAL DEMOCRACY:Neoliberalism
  35. LIBERALISM AND SOCIAL DEMOCRACY (CONTINUED):Liberalism vs. Social Democracy
  36. INTEGRATION IN IR:Preconditions for Integration, Assessing Integration
  37. GLOBALIZATION AND ITS IMPLICATIONS:Advocates of Globalization
  38. THE GLOBAL DIVIDE:World Social Forum, Can the Global Divide Be Bridged?
  39. FOCUS ON FOREIGN INVESTMENTS:Pro-poor Foreign Investments
  40. CONFLICT AND CONFLICT RESOLUTION:Components of a Conflict
  41. CONFLICT RESOLUTION:Creative response, Appropriate assertiveness
  42. THE GLOBAL ENVIRONMENT:Global Concern for the Environment
  43. THE GLOBAL ENVIRONMENT:Environmental Concerns and IR, Some Other Issues
  44. HOW IR DIFFER FROM DOMESTIC POLITICS?:Strategies for altering state behavior
  45. CHANGE AND IR:Continuity in IR, Causality and counterfactuals, IR in a nutshell