THAT MY KEEN KNIFE SEE NOT THE WOUND IT MAKES PART II: WHY LOOT WHEN YOU CAN LEND: THE VIOLENCE OF INTERNATIONAL FINANCE AND ITS CONTINUATION OF COLONIALISM THROUGH OTHER MEANS

The international financial system continues the violence of colonialism through other means. International law, structured from the beginning as an apologia of colonist plunder, continues the colonialist narrative to entrench the inequality and inequity between former colonies and their colonizers. International jurisprudence and the structure and ambit of international financial institutions serve both as a mechanism and a justification for continued intervention in the affairs of so-called “post”-colonial states.

In The Three Penny Opera, Bertolt Brecht’s masterful novel satirizing the violence and hypocrisy of capitalism, Mack the Knife, whose journey from street gangster to respectable businessman evinces the threadbare differences between the two, muses, why steal when you can become a bank? In looking at the international financial system, by which money begets money and debts begets debt, we can ask, why loot when you can lend? The ramifications of servicing debt, however, are political and a state’s subject positioning within the international system determines whether debt is utilized as a tool of intervention. For instance, the United States holds the biggest external sovereign debt in the world at $31 trillion (increasing), paying around $475 billion annually in interest alone. It is expected that by 2026, the interest alone will exceed the defense budget, currently around $767 billion. While the increasing sovereign debt creates issues for the US economy, we likely won’t be seeing international technocrats imposing painful austerity measures onto the economy as they belabor its financial indiscretion. This is in part due to the power of the United States, including its military might. It’s also due to the fact that it structured the financial system in such a way that the stability of the US economy has become integral to it. For instance, the US currency has been floating for decades and is the dominant reserve currency throughout the world, so if the dollar crashes, so do most country’s reserves. This is why some countries are actively trying to de-dollarize their economies- but at the moment, the US dollar remains the main reserve currency.

Debt is political and its imposition, collection and relief is inextricably intertwined with a state’s subject positioning in the international space. Not only did newly independent ex-colonies take on debt because they were underdeveloped during colonialism, their economies structured for extraction to benefit their colonizers but because their economies were amputated from the start. While ex-colonies obtained formal independence, some after years of brutal fighting, international law ensured that prior concessions provided to colonial entities and persons were protected so that independence did not come with sovereignty over national resources. Moreover, ex-colonies were saddled with odious debt. That’s right, rather than reparations for slavery and colonization, the debt of their former colonizers, utilized for exploitation of people colonized and their natural resources, was imposed on the states under a fiction of state responsibility. In 1960, newly independent ex-colonies had $59 billion in externally imposed debt and at 14% interest- hardly a concessional rate, to say the least. UN Special Rapporteur El Hadji Guisse, working for the Sub-Commission on Prevention of Discrimination and Protection, wrote a damning report in 1997 in which he elucidated the impunity of the “former” colonizers that had provided a cosmetic sovereignty that resulted in the “disaster” of “exploitation and dependance” (https://digitallibrary.un.org/record/240942?ln=en) that still shackles ex-colonized states today.

The imposition of debt and lack of reparations mirrors what occurred post manumission, when formerly enslaved people were forced into peonage, while their former “owners” received reparations for the loss of property. In 1833, Britain prohibited slavery throughout her colonies and spent £20 million, the equivalent of a whopping 40% of the then current annual budget on paying reparations to families who lost their “property”. Lincoln’s emancipation in D.C., included reparations to slaveowners under the District of Columbia Emancipation Act of 1862 — the people enslaved, however, did not get their “freedom dues”.

France imposed a debt on newly independent Haiti for the loss of its most profitable colony and Belgium imposed its loans from the World Bank- which it utilized in exploiting the people and resources of the Congo for its own benefit — on the newly independent Congo. This was one of the reasons that the first democratically elected leader of the DRC, the venerable Patrice Lumumba, was assassinated with the direct participation of Belgium and the CIA, supporting their mignon, the kleptocratic thug, Mobutu — Lumumba would not accept the imposition of the loan, but Mobutu did. Lumumba well understood that colonialism was being reformed in a different guise, providing a cadaverous sovereignty while Western interests continued the same process of extraction, exploitation and interference. Lumumba also understood that internal tribal conflicts within the DRC and external state conflicts within Africa were utilized to prevent solidarity against Western interests. His insistence on national and pan-African unity and substantive independence from colonialism could not be tolerated, particularly due to the immense wealth of the DRC (a wealth that continues to support the world, while the Congolese get little benefit). Lumumba presented a pertinent threat both by setting an example that an ex-colonized state could achieve real independence and thrive and also because a pan-African bloc would impede Western interests. It was far better to ally with a brutal thug who cared nothing for his people and who was provided with loan after loan, which he misused for his own benefit — at one point becoming the third richest person in the world. In Burkina Faso, Thomas Ankara, who refused external debt, noting that it was simply a new form of colonialism and refused food aid, famously stating “who feeds you, owns you”, was also murdered and while the murder trial of his successor in this century apparently exculpated the West, it is noteworthy that his successor immediately took on the chains of debt, accepted food aid and opened up his state to Western investment. This same stygian story is repeated throughout Latin America, from Jacobo Árbenz to Allende. One must ponder who is dependent on whom if the Global North continually interferes to prevent independence in the Global South.

Numerous countries in the Global South are not only caught in a spiral of debt that was odious from the start, having been imposed by their former colonizers, but also because continual interference in democracies propped up kleptomaniac dictators that took on mass amounts of debt — that their people did not choose and did not benefit from but nevertheless have to repay. The loans were provided to these thugs even though creditor agencies and nations not only well knew that the loans provided were servicing corruption but aided the imposition of the same dictators because as liberal as they were with the truth and lining their own pockets, they “liberalized” trade. Marcos, for instance, saddled the Philippines with $28 billion in foreign debt, much of it going to his police state and his own pocket, including that of his wife Imelda, who was known for her inordinate pairs of shoes and the monstrosity of her 25-karat pink diamond (and now their son, named after his kleptocratic father, is the incumbent President). South Africa is saddled with the debt of the apartheid regime, even though the debt was utilized for the enforcement of the apartheid regime, including its Bureau of State Security (BOSS), the Gestapo of the apartheid regime. The loans thus not only contributed to the continuing pillage of these nations by their dictators and Western governments and companies but provided the means by which dictators were able to quell any resistance to their regimes. Thus, the debt was accepted because of a democratic deficit and it in turn fortified the democratic deficit.

Despite the insistence that nations inherit the debt of their prior colonizers and dictators, there is state practice that odious debt should not be collected. When the Spanish empire, having lost Cuba to the United States, declared that the United States now assumed Cuba’s debt, the US refused to accept the debt, noting that the debt was imposed “under force of arms” and was used to repress the Cuban people, including being used to directly repress independence movements. In 1917, the Soviet regime repudiated the debts of the Tsarist regime, which were used for the benefit of the imperial family and the imposition and fortification of its power, including its wars. In the Treaty of Versailles, Article 254 dealt with the liability of successor states for German public debt and exempted the newly independent Poland from its debt as the loan was used to quell Polish independence and rather expand Prussian and German colonization of Poland. Professor Alexander Nahum Sack is credited as first articulating the concept of “odious debt” and he did so within very narrow margins, including that the creditors had to know the odious purpose to which the loans would be used and exempting portions of loans that were used for the public benefit from the “odious” character of the loan. This is too narrow a concept and there should be no actual knowledge element on the part of creditors who should rather do some diligence on whom they lend to and what they lend for, including having the ability to tie conditions to loans to ensure that they are not used for repression, corruption and environmental destruction. It should also be more expansive and cover community interest — was the loan made to a democratic government or to a dictator? If the latter, it is an odious loan and should not be imposed on successive democratic governments. Was the loan utilized for public services and/or infrastructure or was it utilized for corruption, Western corporate concessions or projects that resulted in rampant environmental destruction and the expulsion of local communities? The primary issue however is not one of legal theory, but practical effectuation. Post-apartheid South Africa could have a made a clear articulation of the odious character of its prior debt but chose not to do so because the government was concerned it would harm foreign investment. The fear was so grave that South Africa would be penalized and not obtain future foreign investment, that the government of the Republic of South Africa formally filed its opposition to an ATS case against Ford, GM, Barclays and IBM for aiding and abetting apartheid on behalf of plaintiffs who were arbitrarily detained, tortured, subjected to cruel, inhuman and degrading punishment, denationalized, exiled and murdered by the apartheid regime. Archbishop Desmond Tutu, Chairperson of the Truth and Reconciliation Committee, notably, however, rightly declared that such litigation was “entirely consistent” with the “policies…and findings” of the TRC.

Ex-colonized nations stuck in a debt trap are directly entrapped due to the continuing consequences of colonialism. The political nature of this financial subjugation can be seen by the debt relief provided to Western Europe after WWII. Western Europe, decimated after WWII, did not kneel before the IMF to obtain loans. Rather, the United States helped reconstruct Europe via the Marshall Plan, of which the vast majority were grants, transferring over $13 billion to Western Europe under it. The US realized that it was in its interest to give Europe money rather than lend it money, so that Europe could rebuild and spend its money on buying US exports. Germany’s current economic might is in no small part due to the fact that West Germany received over a billion in aid from the US for its reconstruction, right after the Shoah. The agreed German reparations under the Potsdam Conference were not sufficient for recovery, however– in particular for countries within the Eastern bloc which only received what the Soviet Union dished out. Poland, the country arguably most decimated by the Nazi regime, last year made a formal demand for $1.3 trillion in reparations for WWII, which Germany has thus far snubbed, claiming that this issue had already been dealt with in its reparations to the Soviet Union, failing to acknowledge that Poland was not independent at the time.

The international space is rife with hypocrisy both in its jurisprudence and its structure. International law is putatively deemed as idealistic, humanistic and universal, while it serves the interests of the powerful few, providing a hegemonic narrative and justification for the world’s unequal and inequitable international structure. The “persistent objector” rule, a rule that can only be properly effectuated by a powerful state, for instance, is one such doctrine, which holds that general principles of customary international law are not applicable to a state that has consistently objected to such principles. In international human rights law, the right to acquire, own and dispose of private property is a fundamental right, which was utilized by ex-colonial entities and persons to retain their loot from colonized peoples. The dichotomy between civil and political rights and the supposedly non-justiciable economic and social rights, logically fallible as you can’t have one without the other, is another means by which Western interests are serviced by international law. Yet another example is the doctrine of restrictive immunity and the partition of public and private law such that a state is held to its commercial contracts — which included newly independent states that were held to former colonial concessions. One other doctrine that has been utilized in the interests of intervention is organizational immunity for international institutions, including the UN and international financial instruments, such as the IMF (for a discussion on organizational immunity and the UN’s gross negligence in Haiti hear Brian Concannon speak in the episode Diplomacy in the Time of Cholera: Immunity Not Impunity, http://thegravity.fm/#/episode/15 and Marco Simons speak to the IFC’s carious investments under cover for which it claimed immunity in Pernicious Profits: Financing Terror and Catastrophe at the International Finance Corporation in http://thegravity.fm/#/episode/23). The amputated juridical personality of the corporation, on the one hand, not deemed a proper subject of international law and not beholden to any of its obligations, has however sufficient legal personality to pursue its rights against a sovereign state it invests in through nefarious international settlement of dispute mechanisms. This is not to say that international law is one over-arching imperial narrative, but that it has been utilized to serve as such, despite the contentions within it. Such contentions and tensions have developed a more humanist approach to international law, for instance in the development of ius cogens or peremptory norms that obligates all states, even persistent objectors, encompassing slavery, war crimes and genocide. However, there has been selective enforcement of violations, so that international criminal law has been enforced against Africans, but not against their repressors. The fragmentation of the discipline, so that international human rights law is not expressly incorporated into international financial law and selective enforcement of the discipline, including notably, international criminal law, continues colonialism and subject positioning by other means.

It is no mere coincidence that the discipline of international law developed concomitantly with colonialism. It was colonialism, with the attendant need to both demarcate spheres of control between European states as well as to provide an intellectual hegemonic justification for the brutality and pillage of whole peoples, that rendered the development of the discipline necessary (for an astute and thorough analysis of the colonialist formation of the discipline, see Imperialism, Sovereignty and the Making of International Law by Professor Antony Anghie; you can also listen to Professor Rachel López speak on the issue in the episode Grit and Gravity in International Law: Democratizing the Colonial Space of International Law http://thegravity.fm/#/episode/38).

The accepted founding father of international law, Grotius, was an apologist for colonial plunder and specifically, the plunder and pillage of the Dutch East India Company, for whom he was counsel. The Vereenigde Oostindische Compagnie (VOC) was a behemoth, which was provided a monopoly for two centuries by the newly independent Dutch crown to trade with Asia. It was the first company to be listed on a public exchange and is the forefather of the modern multinational corporate conglomerate, including engaging in tulip speculation (in 1629, a tulip was sold for 12,000 guldens, the then current price of a palazzo in Amsterdam) in which its shares rose by a whopping 1200%. It held a quasi-state status, bestowed with the power to hold an army, wage war and enter into treaties. The VOC built Amsterdam, Utrecht and other Dutch cities in a massive wealth transfer from the areas it colonized, including the Spice Islands, now part of the Republic of Indonesia. The VOC amassed its wealth through human exploitation, including engaging in the slave trade and environmental destruction, cutting down native forest for commodity agriculture throughout Indonesia, specifically, nutmeg and cloves. It is this plunder that had to be defended and protected — both with respect to the subjugated native populations whom the violence and terror of conquest was repackaged into more digestible terms such as “freedom of trade” and a “civilizing mission” by murderous marauders- and against other European powers and specifically, the Kingdom of Spain, whom the Dutch had recently gained independence from. It is the justification of this rapacity and murder that the “humanist” Grotius defended and justified, and which provides the carious foundation of modern international law, which continues its colonial structure. Recently, PM Rutte made a formal apology for the Dutch involvement in slavery, without properly consulting the nations affected. This top-down approach, the failure to acknowledge and also apologize for the carious consequence of colonization and economic domination and the rather small reparations envisioned (in the millions not billions) and without any acknowledgement of the urgent need of structural reform of the international space, from a nation that continues its Zwarte Piet tradition, rings a little hollow.

The catastrophic situation in Haiti today, where kidnapping, murder and rape are rife and where the government has fallen, leaving Port au Prince ruled by warring gangs which control water and energy sources, has its roots in continued colonialism. In 1804, the enslaved people of Haiti, then the French colony of Saint-Domingue, after years of continued revolt, won their independence from France and permanently banned slavery, inspired by the French revolution and its call that all men were created equal. Its independence was however not recognized, because its message -that people could rise up against their enslavers and take back their freedom — was a threat to the European colonial order. The Americans, rightly noting that Haiti threatened its own slavery, didn’t recognize Haiti until after the civil war and the emancipation decree- and just like slavery morphed into Jim Crow, Haiti’s formal independence came at the price of continued financial dependence, which from time to time, led -and continues to lead- to actual intervention. In 1825, Charles X of France, engaged in gunboat diplomacy and demanded that Haiti pay France reparations for the projected loss of its most profitable colony- a whopping 155 million francs. Haiti did not have the means to pay the sum of course but the French had a convenient solution with French banks stepping in to lend money to Haiti at extortionate rates. It was this criminal act that led to Haiti’s cycle of debt, with Haiti taking further loans to repay older loans and prevent default. Recently, The New York Times poured over archives to disclose the true extent of this bondage — for this debt was simply slavery by other means. In 1911, Haiti’s highest revenue was from coffee taxes and of this, out of every $1 of tax collected, over 84c went to France. Haiti continued to transfer its wealth to France and was independent in name only. The US did not wait long to get its share of Haitian blood, and Citigroup’s predecessor, the National City Bank of New York, began to hold the majority state in the Banque Nationale de la République d’Haïti (BNRH). The National City Bank of New York urged the US government to intervene directly in Haiti arguing that Haiti would default on its loan payments, despite Haiti complying with increasingly draconian terms. On December 7, 1914, marines stole Haiti’s national reserves, walking out with $500,000 of gold. As Americans worked to foment instability in Haiti, they at the same directly occupied Haiti under a hypocritical and racist narrative of preserving peace and stability amongst the unstable and unruly native population. This was a brutal occupation, with thousands of Haitians, including children, tortured and killed by inebriated American soldiers. Americans installed martial law and built infrastructure with chain gangs. In 1920, James Weldon Johnson went to Haiti as a representative of the National Association for the Advancement of Colored People to investigate the US occupation and wrote several articles detailing how, as one his articles is titled, Haiti had become “government of, by, and for the National City Bank of New York” with the bank in control of the Haitian national reserve and Farnham, the VP of the National City Bank of New York, “virtually the representative of the State Department in matters relating to the island republic”. The cycle of debt continued.

From 1964 to 1986, the Duvalier family controlled Haiti. Pillaging their people and preventing social democracy, they were protected by the US and other Western powers and provided steady loans from the IMF fueling their kleptocratic proclivities. In the 1980s, the IMF imposed structural adjustment policies on Haiti, demanding that Haiti cut social spending, privatize and liberalize trade which mirrored US policy. At the time, Haiti was agriculturally self-sufficient. After the institution of “liberalization”, heavily subsidized US imports of staples such as rice (dubbed “Miami Rice”) and chicken flooded the domestic market and local farmers, not being able to compete with what was essentially legalized dumping, eviscerated the local agricultural economy. This directly led to Haitian food insecurity and the current instability. Without domestic production, this small island nation is dependent on food imports which it must buy from its devalued currency, the gourde. Bill Clinton has since apologized for being directly involved in what turned out to be the evisceration of Haitian domestic agriculture and food security. Clinton explained that the idea behind the policy was altruistic — if the US and other rich nations export food and “relieve” the poor countries from having to feed themselves they could concentrate on “development” and everyone would be better off. Of course, this also directly benefited American farmers and corporations, the latter receiving cheap labour for their factories in Haiti from people who had previously been engaged in farming and feeding their own population.

All of these loans were truly odious, benefitting Haitian enslavers, imperial interests and kleptocratic thugs. Moreover, the IMF and World Bank imposed extremely harmful policies which made it more difficult for Haiti to service its loans. All these odious loans should have been forgiven after the Duvaliers were overthrown. But, that was not the case. In 2004, still not being accepted despite being strangled by debt into the World Bank’s debt relief Heavily Indebted Poor Countries (HIPC) programme, the democratically elected President Aristide, started asking some very sensible questions. Why was not all debt forgiven? Why was Haiti not provided reparations for slavery, occupation and usury? This led to France and the US orchestrating a coup d’état which led to years of political instability, which continues to this day. Haiti remains in debt and in political turmoil despite being accepted in 2006 into the HIPC and graduating in 2009 through painful austerity measures, obtaining $1.2 billion in relief — but it nevertheless remained saddled with $900 million in debt. The January 2010 earthquake led to reconstruction loans, which Haiti continues to be saddled with and brought in the UN to aid Haiti. The UN did much more harm than good, to say the least, as its negligence resulted in a cholera outbreak, which continues to this day and which the UN claimed its organizational immunity for. Meanwhile, its staff and that of Western NGOs patronize Haitians with hygiene campaigns about washing one’s hands, skirting the real issue that the water one could have washed their hands with was contaminated. In 2018, the IMF, following its “Great Reset” policy, conditioned a loan of $96 million on Haiti’s reduction of fossil fuel subsidies which led to widespread protests and Prime Minister Jack Guy Lafontant’s resignation. This condition was myopic for several reasons and bound to cause civil unrest. First, the “Great Reset” by focusing on poor countries, like Haiti, focuses on states that use but a trifle of fossil fuel usage in the world. Second, Haiti is dependent on fossil fuels and without funneling money into Haiti to transition to renewable energy, all that making fossil fossils prohibitive achieves is essentially denying necessary services to the population (which, like food production, transport and medical supplies and services, to name a few- require energy) and one needn’t be particularly prescient to understand the consequence. Not having learnt from 2018 or perhaps aiming to achieve the same consequence or worse, the Haitian government was pressured again last year to cut fossil fuel subsidies which was the precipitant to the current catastrophe. Haiti’s current turmoil, thus, cannot be understood without looking at the history of continued intervention and extraction, which depleted Haitian resources, destabilized the nation and prevented democratic rule- in another words, a history of colonialism de jure followed by de facto colonialism that is repeated throughout the Global South.

When formerly colonized states claimed independence, some of whom had to fight for years to achieve it, they were not provided sovereignty and arguably, have not yet received sovereignty but have received an ossified independence that perpetuates past economic extraction and continues effective political control. During the colonial period, the colonies were “developed” and structured for wealth transfer to the European states. European companies gained mining and other trading concessions and title to land. On gaining independence the former colonies wanted control over their land. International law, having earlier justified colonialism, now justified continued economic extraction. Just as Haiti was forced to provide reparations to its former enslavers, the doctrines of state succession and acquired rights required newly independent states to compensate their former colonizers for any nationalization of industry and resources. Western jurists, protecting Western interests argued that the theory of pacta sunct servanda was a sacrosanct principle of “natural law” and hence imputed it into international law. In doing so, they undertook some logical acrobatics.

International law was partitioned between “public” international law and “private” international law, under the fiction of the stabilization clause, in which the state suspended its sovereign status and was treated as a nominal commercial actor. In this fiction, normal contractual principles applied, so that the agreement could only be modified by the consent of both parties. However, other contractual principles, which allow for repudiation of contracts, were deemed not to be part of this growing body of “natural” contract law. For instance, a party is held to a contract if its putative agent had “apparent authority” and one could argue that the colonizers’ brutal conquest was well known and should have denied that apparent authority to any potential contracting party. Additionally, one could argue that under normal contractual principles, a contract is deemed void ab initio if it lacks a meaningful meeting of the minds and was executed under duress or fraud. It can hardly be denied that the extremely profitable concession contracts provided to European entities throughout their colonies were not extracted through these illegal means. Yet other legal fictions quickly came to the rescue of Western interests. The newly independent state was deemed to be the successor of the prior state and under the doctrine of “state responsibility” it was thus deemed to have had meaningfully entered into the prior contracts- indeed the colonists entered meaningfully into these contacts because it served their extractive purpose. Additionally, the prior violent act of conquest was fictionalized into an exchange between the two sovereigns in which the colonized people had merely effectuated their right to “dispose of themselves”.

Another fiction is the internationalization of contracts and other aspects of municipal law. The Westphalian sphere was created to adjudicate disputes between putatively equal sovereigns. Issues which were domestic in nature, such as contracts made and fully performed within a state, were governed by the municipal law of the applicable locality. However, while the international space between European sovereigns adjudicated disputes both within Europe and around the globe, demarcating areas of influence, international law for non-Europeans was always, and continues to be, both a mechanism through and a justification for, intervention into non-European states. This duality of purpose led to some logical fallacies, such as imbuing “native” people with an amputated juridical personality such that they were able to be on the one hand conquered or settled and on the other accepted as being able to enter into putative agreements in which they were effectuating a right to “dispose of themselves” — or in other words just enough sovereignty to be able to effectively hand it over to rapacious Europeans. Once international law codified this conquest, later independence was not seen to sever this history but entrenched it. Hence, people abused and exploited for centuries were held to “state responsibility” for their colonizers to prevent the “unjust enrichment” that would occur lest they finally took over their own resources for their own use without compensating colonial entities. The unjust enrichment — to say the least- of colonialism and slavery was conveniently not questioned as it was disposed of under the supposedly neutral doctrine of “state responsibility”.

The ICJ’s decision in the Serbian Loans Case in 1929 is instructive. The matter concerned the heavily indebted Serbian government repaying its loan to French banks (which were consolidated loans from prior debt that Serbia took from the grant of independence at the Berlin Conference both in order to build infrastructure as well for payment Serbia was forced to make for a traction of land from its prior occupier, the Ottoman Empire and which loans it continued to repay through World War I despite the catastrophic consequence of losing a whopping 60% of its male and 29% of its total population). The contention between Serbia and France was that while Serbia was paying its loan in full, it was utilizing a French law to pay the debts in devalued francs rather than francs tied to gold. The ICJ first considered whether it had any jurisdiction to hear the dispute because it rightly noted that French entities and persons who held loans were not imbued with international juridical personalities. The ICJ reasoned it did have jurisdiction because the dispute as to the interpretation of the contract and the servicing of the loans was a dispute between France, pursuing the right of its lender citizens, and Serbia. What is most instructive is that the ICJ did not internationalize the agreement. It held that only municipal law applied, that of Serbia or France and decided that as the Serbian parliament had to provide authority for the loans and did so through acts of parliament, that the only law applicable was Serbian law (denying Serbia the French loophole it was hoping for to limits its debt). It is only when disputes start to arise between former colonized states and their prior colonists that we see the dominant jurisprudence internationalizing contracts under the guise of “generally accepted principles of law as recognized by civilized nations”- the implication being clear. Just as brutal domination was clothed under the narrative of civilizing missions, Western jurists developed a transnational lex mercatoria in the service of protecting the former colonial concessions. The lifting of contracts from their lex loci developed international investment law and was the precursor to the current secret, unappealable ISDS panels where multinationals can challenge environmental, health and other government laws that hurt their investment.

Lord Asquith’s arbitration decision concerning the extent of concessions provided to the British company Petroleum Development Ltd. in 1939 by the Sheikh of Abu Dhabi- principally whether they included exploration of the seabed within Abu Dhabi’s territorial waters- well exposes the latent racism of international jurisprudence. Lord Asquith first decided that the company could pursue its claim as a contracting party. He then had to decide which law was applicable and decided that it could not be municipal law of the locality, which in his view was inadequate to deal with the matter. Rather, he decided that the applicable law was a transnational “modern law of nature” which remarkably mirrored the law which he deemed so “grounded in reason” — English law. In The Texaco Overseas Petroleum Company and California Asiatic Oil Company v. The Government of the Libyan Arab Republic, the companies argued that by entry into the Deeds of Concession, the Libyan government had lost its normative state powers and could not nationalize its resources and deprive the concessionaries of their contractual rights. If Libyan law applied, the companies had no recourse, so the arbitrator had to lift the contract to an international realm which Duprey did via a number of different theories, but the most interesting one is his admission that contracts of “economic development” were one category of contract which squarely fell within the international realm and prevented a government from nationalizing in breach of the granted concessions. Yet another example, this time in the Court of Appeal of England and Wales, was the decision of Denning M.R. in Trendtex Trading Corporation v. Central Bank of Nigeria in which the first question to be answered was whether Nigeria, as a sovereign power, held sovereign immunity that was absolute and prevented it from being impleaded in the courts of another state. Lord Denning MR decided that sovereign immunity was not absolute, but restricted. This partial immunity provided immunity only to acts of a governmental nature, or jure imperii but provided no immunity to acts of a commercial nature, or jure gestionis. Having decided that the contract at issue was purely commercial in nature, Nigeria could not claim sovereign immunity and its bank was held to the contract.

This is not to say that there were not international jurists proffering different theories and doctrines. Unsurprisingly, they were from ex-colonies and aimed to justify actual sovereignty and unfortunately, did not prevail. Carlos Calvo, an Argentine jurist, deemed that any foreigners entering into contracts fully performed within the jurisdiction, should accept the exclusive jurisdiction of such locality (the “Calvo clause”). Mohammed Bedjaoui, an Algerian jurist, former President of the ICJ and Algerian diplomat developed a theory that concessionary colonial contracts didn’t survive past the colonial regime without the express consent of the newly independent state. In his Towards a New International Economic Order Justice Bedjaoui well lays out that international law is a structure of and a justification for domination that fortified the right of confiscation by European states of their colonies. The problems Bedjaoui recognized decades ago continue to persist today and have only escalated: the military-industrial complex, the power of multinational companies and ecological disaster, now a palpable existential threat. Bedjaoui well articulated that the cadaverous sovereignty provided to ex-colonial states under a “legal venality” in which they were structurally hooked to centres of capitalist power (following Yash Tandon’s quip) was at most a camouflage. He also well articulated how international financial structures directly depleted sovereignty by supposedly neutral rules applied to an unequal landscape. Trade regulation, the enforcement of prior concessionary contracts and debt chained the ex-colonial states to continued bondage. Indeed, it is in the structure of the international financial system and the rules that uphold it that we find the real dynamic of the international realm — continued domination, what Bedjaoui astutely termed “the international order of poverty”.

In his seminal work, International Law from Below: Development, Social Movements and Third World Resistance, which should be taught in every introductory course on the discipline, Balakrishnan Rajagopal presents a thesis that one of the failures of the Third World movement was the acceptance of the development discourse over the theory of dependency and the consequent fetishization of institutions that in turn allowed for a data-driven technocratic colonialism that was no less brutal in consequence. Despite Bedjaoui’s radicalism, Rajagopal criticizes Bedjaoui’s failure to reject the very concept of development as a Western construct that judges all states according to a Western standard and thus ensures Western intellectual hegemony and in turn fortifies the current structural positioning between the West and Fanon’s wretched of the earth. Indeed, and somewhat paradoxically, the entry of newly independent states into the international fora, proliferated international institutions whose mandates largely concentrated on the Third World and ensured continual interference. This mirrors the brilliant works of Frantz Fanon, who argued that independence within a liberal bourgeois system simply perpetuates the very same domination with different faces at the helm (see Fanon’s genius Les Damnés de la terre and also see Colonialisme et Néo-colonialisme by Jean-Paul Sartre). It also mirrors the political poet, Aimé Césaire, whose Discours sur le Colonialisme analyzes the invention of subject identities and their “thingification” whom continue to be viewed as subjects of development discipline, statistics to be analyzed and manipulated rather than souls to be recognized and connected with.

As more and more states obtained “sovereignty” it was indubitable that they would ally and attempt to change the rules, stacked against them from the start, of the international order. In 1955 Alfred Sauvy coined the term “Third World” to designate states that were not within the bipolar political spheres of the East and West. Later, this political space was designated the “Global South”. The new states were invited into international fora where they had numerical superiority but no effective voting potency. This deliberate denial of participation was not lost on newcomers. In 1963, Nigerian Foreign Minister, Jaja Wachuku (who intervened to demote Mandela’s sentence, and that of his defendants, from the death penalty to life imprisonment for sabotage against the maleficent apartheid regime), acerbically noted the asymmetry of power at the UN, with the ex-colonial powers controlling the Security Council while the remainder were “veranda boys” relegated to the General Assembly that could pass altruistic resolutions to no effect. Despite this, the ex-colonized nations allied, albeit with fissures and fractures between more moderate and radical members, the former victorious, to utilize their voting power in the General Assembly, succeeding in expanding the non-permanent members of the Security Council from six to ten in 1965 and the establishment of international institutions including the UN Development Programme (UNDP) and the UN Conference on Trade and Development (UNCTAD) and developed international customary law, including the law of the sea.

The two avenues the Third World began to ally through were the Non-Aligned Movement (NAM) and the G77, the latter a voting block, the former an intergovernmental institution with its own secretariat. In 1955 African and Asian nations met in Bandung, Indonesia to establish principles of solidarity and call for a new order, one of self-determination, non-interference, peace and equality. The next year, on the enchanting island of Brijuni, Tito, Nasser and Nehru met to establish the NAM, or states that refused to be part of the Eastern or Western blocs, from Yugoslavia and Cuba to Egypt, Algeria and India. The first conference was in September 1961 in Belgrade with Marshall Tito the first Chairman. The G77, founded by a coalition of Latin American, African and Asian states and Yugoslavia were met with opposition from the threatened West, which Vijay Prashad, terms the “Atlantic project”, which machinations led to the political stagnation of the Third World project, a chief architect of this nefarious cabal being Kissinger (see Vijay Prashad’s The Darker Nations: A People’s History of the Third World and The Poorer Nations: A Possible History of the Global South). The 1974 General Assembly Resolution the Declaration on Establishment of a New Economic Order called for a new international order based on “equity, sovereign equality, interdependence, common interest and cooperation”. The principles of the NEOI would be self-determination, restructuring of the international monetary system, permanent sovereignty over national resources (PSNR) and regulation of multinational corporations. Not only did Western states broadly object to this, but tellingly complained of Third world “capture” of international institutions. That’s tantamount to complaining about people voting in their interest in a democracy. The “Atlantic” powers bemoaned the cry for wealth transfer, but the wealth transfer had already taken place en masse from the South to benefit the North and had never stopped — in fact, despite all the talk of foreign aid, it’s still happening today. When the oil producing states realized they could effectively command a cartel (OPEC) and caused oil crises in the early 70s, we see the neoliberalism charge to unleash carnage in the 1980s. Prior to this in 1977, McNamara, the then President of the World Bank, commissioned a report from experts, led by ex-West German Chancellor Willy Brandt to analyze the widening cleavage between the North and South and achieve the rapprochement that had been seemingly established between the Eastern and Western blocs. The Brandt report clearly laid out the inequities of the international financial system and how it was contributing to abject poverty, an arms race and environmental destruction with recommendations that largely mirrored the requests of the G77 (with the exception of the environmental concerns of the report which presciently noted we must transition to renewable sources of energy). Debt relief, financial assistance, the end of harmful Western protectionist subsidies, stabilization of global commodity prices, disarmament, regulation of multinational corporations, restructuring of the international monetary system to include participation by developing states, disarmament and environmental sustainability. No brainers, right? The report was killed by the World Bank which commissioned it and was shunned by the IMF and the Western states.

Third World efforts did not reform nor even rupture the international financial system despite the OPEC hiccup, and the international space continued to be one by which the ex-colonial states perpetuated the extraction and exploitation of ex-colonies through interference and indenture. With independence came debt and thus the chains of bondage were not camouflaged, but no less tightly held.

In 1944, the U.S. was unrivalled in its economic and military power and it established an international financial system in its favour, which it continues to benefit from. In 1941, as the United States was aiding Britain in the war against Germany via supplying it through arms under the Lend-Lease Act of 1941 (and making money from it, just as the US is currently profiting from the war in Ukraine, with the bonanza of indebting the Ukraine to the US and being able to test its weapons in actual conflict, while pledging all manner of vocal support, because after all, talk is cheap; with the IMF also earning interest from Ukraine’s plight), President Roosevelt and Prime Minister Churchill met and established principles for a post-bellum order. The principles called for self-determination, the open seas, free trade, economic growth and disarmament. Anghie points out that, particularly as Britain at such time ruled over 25% of the Earth’s surface, resisting independence movements across its realm, self-determination is not accompanied by return of economic resources and free trade speaks to “access, on equal terms, to the trade and to the raw materials of the world”. Indeed, the new international financial system would ensure that Western interests would continue to have access to raw materials of their former colonies even after putative sovereignty would be granted.

The world is a plutocracy and the structure of the international system evinces this, from the structure of the UN Security Council to the structure of international financial instruments which were established post-World War II and which reflect the international power structures of the mid-20th century, with much of the world under express colonial rule. In 1944, at Bretton Woods, NH, 44 countries signed the Bretton Woods Instruments which created the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). The current World Bank Group consists of several different facilities, including the original IBRD, which is a project-lender. At the vociferous insistence of the US pursuing the interests of its corporations, the International Finance Corporation (IFC) was established in 1956 to help facilitate private investment in Third World nations and in 1988 its complementary Multilateral Investment Guarantee Agency (MIGA) which insures investment against losses from breach of contract, expropriation, civil disturbance and currency transfer issues. The only concessional finance facility from the BWI is the International Development Association (IDA) which can provide loans to the least developed and poorest countries (collectively, these facilities will be referred to as the “World Bank”; for a thorough analysis of the institution and operation of international financial facilities and the competing interests within, see The Globalizers: The IMF, the World Bank and Their Borrowers by Ngaire Woods).

It’s important to note that the IMF never had any development mandate nor is it a concessional facility. It’s the lender of last resort — a nefarious usurer- that charges high interest and causes catastrophic destruction to its debtor economies because its express mandate is merely to ensure that its debtor can pay off other banks’ debt. Thus, in essence the role of the IMF is to socialize private debt. In order to rebuild devastated Europe and provide a needed market for US goods, the US charged the IMF with facilitating currency exchange and pegged each then worthless European currency to its greenback, which in turn was pegged to gold so that any holder of $USD35 would obtain an ounce of gold from the US. Keynes’s plan of an international clearing house backed by an international currency -the bancor- had lost to the US one. But then, that made sense, after all, the US, one could argue (as did Woods), could have demanded harsher terms. Indeed, when the US realized it was not in its interest to be tied to the gold standard, fearing that there would be a run on its gold reserves and needing to inflate its monetary supply, it went off the gold standard and flouted its currency (Nixon in 1972 simply following what FDR in 1933). Its foreign exchange mandate thus basically moot from thereon, the IMF simply became the world’s payday lender, albeit with stricter terms. It’s the lender of last resort — when a country knocks on its door, it’s already on its knees. As the lender of last resort, default is not a practical option for countries which will not be able to access capital from anywhere else. It’s back-alley medicine and the results are just what one would expect from such treatment. When Argentina, in direct contradiction to its name, nearly collapsed, it had the gall to state it would default on its loans in 2001 — but later it achieved a massive and complicated debt swap with its creditors and is still indebted with a struggling economy (for some perspective, Argentines migrate to Mexico to make money). Argentina continues to be indebted and continues to merely restructure its debt, caught in a debt trap, like so many other nations. Even though the IMF’s mandate is to aid countries in their balance of payments, its debts actually achieve the reverse, with debts to the IMF causing additional balance of payments problems- thus, ironically, the IMF exacerbates the very thing it is meant to alleviate.

The international financial system is undemocratic, unaccountable, opaque- and stupid. This is not supportable in the 21st century. It was established when much of the world was under direct colonial rule and had little say in its establishment, subordinate to their colonizers. People in the Global South have about one-eighth of the votes of people in the Global North in the IMF (in the UN they are the WEOG, “Western Europe and Others”, which includes Scandinavia, the US and Canada and the antipodean Commonwealth). Forty-four countries signed the BWI in 1944 and established the weighted voting system in their structure. The IMF gives each member equal basic voting rights but anything of any substance is weighted, with the U.S. and its allies obtaining the lion’s share, with the U.S. alone obtaining 33% of votes initially. While the weight of voting has somewhat changed, so that US voting interest has decreased while other states have had increases, in particular, Japan, there has been a concomitant increase in decisions requiring a supermajority vote and increasing the number of decisions that require a supermajority of at or above 85%. The US in effect has a veto on IMF substantive decision-making via the supermajority vote. Historically the IMF was the lap dog of the US and it continues to be so. While some may argue as the weighted voting is related to contributions, the funders of a facility should have more voting weight. Leaving aside the tenebrous history of how the Global North came to have such a high GDP compared to the Global South and how intertwined their respective structural and financial subject positions are, the IMF, as Woods points out, is increasingly funded by its debtors, their interest payments financing their continued peonage. Yet, the countries that thus fund the IMF and which utilize the facility the most, however have the least say in how the IMF operates. Under a “gentleman’s agreement” the World Bank President would always be American and the IMF Managing Director would always be European (usually French, albeit not always as with the incumbent Bulgarian, Kristalina Georgieva) and second in command, watching over their shoulder, an American. This has thus far been the case despite increased and vociferous objection, including by the current U. N. Secretary-General, António Guterres. It’s also relevant to note that both BWIs are located in D.C. across the street from each other (conveniently the two buildings have an underground passage between them reflecting their unity) and one can also wryly note that the U.N. Secretariat is also in New York. The world continues to meet in the U.S. Moreover, the technocrats that make the policies are largely educated in the U.S. and the U.K. and there is less diversity in staff with no adoption of the citizenship quota of the Secretariat and its bodies. The staff propagate the economic policies en vogue in the U.S. and the U.K. — which also favour these nations. The thin veneer of technocracy belies the imperialist interest that these institutions have been fortifying — after all, the rapid liberalization conditionalities were not called the “Washington Consensus” for nothing.

While the Global South has historically had and continued to have the least amount of input and control in the policies of the IMF and the World Bank, it is however the main focus of both facilities and it has been an effective instrument of achieving intervention and continuing a democratic deficit in the South. The choice of whom to lend to, as Woods well analyzes, was not primarily financial, but political, with the US ensuring that its geopolitical interests were serviced along with the loan. The U.S. has historically forged alliances with kleptocratic rapacious maniacs, like Mobutu, Pinochet, Duvalier and Suharto- because these thugs and the U.S. had the same interest — the pillage of the local population and their resources. All of these thugs received loans from the IMF, with US support, which supported their repressive regimes and lined their own pockets. To hide their corruption and protect their theft, these dictators siphoned off their stolen money in foreign jurisdictions, in banks as well as buying up assets, including real property — so that money flowed in from the IMF and flowed back to New York and London. It was a win-win for Western interests (or rather the people whom benefitted within the plutocratic Western systems).

From the 1980s, the IMF pursued the “Washington Consensus” — austerity and neoliberalization- as conditionalities of debt leading to wealth transfer both from the local economies back to the West as well as from the poor to the rich domestically. The austerity measures were crippling and at times, fatal. “User fees” were imposed for healthcare and education. The impecunious could not afford healthcare nor education and access to these services plummeted, including a significant reduction in girls going to school. The IMF decimated public health across the African continent and directly contributed to the Ebola and HIV pandemics, by essentially denying healthcare to a vast number of people and allowing disease to spread as well as preventing the establishment of a central healthcare system that could easily mobilize to prevent the spread of an epidemic. By impoverishing people throughout the African continent, trumpeting the same SAPs country to country, it directly contributed to deaths, as malnutrition and lack of access to clean water made people susceptible to diseases that simply should not be infecting or killing anyone in this day and age — diarrhea, continues to be the main cause of fatality. Public utilities were privatized, so access to water and energy, became prohibitively expensive for the poor. Austerity measures speak to a paternalistic and racist viewpoint that people in the Global South are poor not because of their history of exploitation, which continues in different garb today, but because they have no financial acumen and discipline. Of course, the dictators who took out these loans didn’t have to comply with any austerity measures but rather received a bonanza. While their people suffered, these kleptocratic thugs continued to buy more foreign property and yachts and the U.S., composing ballads about itself as the champion of human rights on the one hand, made deal after deal with these thugs on their yachts. Boston University’s Global Development Policy Center has issued a number of working papers that show that IMF austerity measures led to increased poverty and widened the gap between the rich and poor — transferring wealth to the top 10% (https://www.bu.edu/gdp/2021/04/05/imf-austerity-is-alive-and-impacting-poverty-and-inequality/).

The IMF also imposed devaluation of the local currency as a condition of its loans and trade liberalization that combined with the reduction of public services led to political instability and fuelled conflict from Yugoslavia to Sierra Leone.

During the Cold War, Tito exploited Yugoslavia’s non-aligned position by being a socialist country outside of the Warsaw Pact to obtain loans from the IMF. While mainstream history views the disintegration of Yugoslavia solely through an ethnic lens, in reality it was economic catastrophe that fuelled ethnic conflict with the standard of living dropping 40% from 1982 to 1989 (coincidentally, the very years I lived in the country, regular blackouts and water shortages a prime part of my childhood memories). The IMF shock therapy included massive unemployment, major cuts in social services and prevented Yugoslavia from accessing its central bank, the National Bank of Yugoslavia. The IMF also forbade transfer between the states, encouraging the richer states, Slovenia and Croatia, to formally secede (for a good detailed analysis of this, you can read Susan L. Woodward’s Balkan Tragedy: Chaos and Dissolution after the Cold War). The economic instability led to a massive brain drain, with professionals emigrating, providing their skills to help the economies of Germany, France, Canada, Australia and the U.S. The IMF’s policies of rapid liberalization pursued Western capitalist interests and was inherently political. During the Cold War, Yugoslavia had utility, but after the collapse of the USSR it not only lost its geopolitical utility and it became a threat to the capitalist order as an example of an open socialist society.

The IMF and World Bank directly contributed to the war in Sierra Leone by creating an economic catastrophe that fuelled political instability and eventually, war (see Professor Earl Conteh-Morgan’s analysis: https://www3.gmu.edu/programs/icar/ijps/vol11_2/11n2C-M.pdf). The IMF conditioned its loans on Sierra Leone devaluing its currency under the economic theory that its exports would be more attractive. Cheaper exports however meant that Sierra Leone received less return for its exports and had to pay more for imports, so that its people were suddenly impoverished, by the whisk of a pen. This led to people not being able to buy necessities, such as food. Professionals began to emigrate, seeking opportunity elsewhere, with the massive brain drain fuelling more economic and political instability. Meanwhile, devaluation resulted in cheaper raw materials, including diamonds, and combined with the mostly alluvial method of extraction, as analyzed by Professor Earl Conteh-Morgan, it arguably contributed to an illicit “blood diamond” trade. During this economic instability, the financial gangsters impelled the government to cut social services, when the people were most in need of them. While economic instability was not the only cause of the civil war, with the government being an autocratic state that had come to power via a military coup and lacked legitimacy, economic catastrophe, primarily caused by the international financial facilities, was a corrosive contributing factor.

Here we have to examine the racist tropes that we are fed, that the international community has to intervene in places like Sierra Leone or Balkan ex-Yugoslavia, the people somehow not developed enough to properly govern themselves, but needing Western advice, aid and intervention to save them from themselves. This obscures and obfuscates the fact that it’s intervention in the first place that contributes to the main causes of conflict in the areas. One of the main fabrications we are fed, is that the Global North provides aid to the Global South and that essentially the Global North is providing charity to the Global South, which considering that there are many poor in the Global North, fuels resentment and contributes to racism, as these neglected people with dismal opportunities wonder why aid continues to go to distant places where it’s never useful while they are denied essential services. In reality, there has been and continues to be a massive wealth transfer from the Global South to the Global North. In thorough studies published in 2016 by Global Financial Integrity and the Centre for Applied Research at the Norwegian School of Economics, developing countries are net creditors, with net resource transfers for developing countries being “mostly large and negative” with “sustained and significant outflows” since the 1980s, totalling $16.3 trillion, with $4.2 trillion comprising interest payments. In 2012, for instance, the net outflow to the Global North was a whopping $2 trillion. One way wealth transfer occurs from the Global South to the Global North is capital flight to tax havens which incentivize corruption (

https://gfintegrity.org/press-release/new-report-on-unrecorded-capital-flight-finds-developing-countries-are-net-creditors-to-the-rest-of-the-world/ ; https://gfintegrity.org/report/financial-flows-and-tax-havens-combining-to-limit-the-lives-of-billions-of-people/ ).

The IMF and the World Bank imposed policies throughout Africa that greatly impoverished the continent, and one would rather think that these facilities owe all the countries they impoverished money rather than the reverse. Viewed from a development perspective, these policies were as stupid as they were callous. At the time numerous countries were gaining independence, Africa was food secure, being a net agricultural exporter. Today, Africa is a net agricultural importer. The international financial system, both in terms of the GATT (the WTO), which was structured in favour of Western interests and in terms of conditions imposed on loans, directly contributed to this predicament. Viewed from an imperialist or neocolonialist perspective, the policies pursued by the BWIs is right in line with their achievement in creating vassal states caught in a debt spiral. It of course should not be forgotten that the IMF never had any mandate, nor does it currently, to lend for social impact or economic recovery, but solely to resolve balance of payments and enable the debtor to service its debt. The “stabilization” it brings to economies, as Woods well analyzed is to contract economies, leading to further economic trouble — and more debt. The IMF’s impact around the world- propping up dictators, destroying economies and causing civil war- truly has earned its denomination as the international MF.

This article focuses on the dichotomous international structural positioning between the global North and the global South, but it’s important to note that this relationship is porous, malleable and ultimately more complex than a defined designation would allow. The pivotal inequality in the world, which is only escalating, is not between the global North and the global South, but the transnational divide between the rich and powerful and the economically and politically dispossessed. To put it at its most basic level, the rich are getting richer and the poor are getting poorer throughout the world, whether you utilize the Gini coefficient or the Palma ratio, which tracks inequality tails. The world richest 1% percent own a staggering 47.8% of global wealth (https://inequality.org/facts/global-inequality/). The countries with the lowest income and wealth disparities are European and the countries with the highest are in the Global South: whether you utilize Gini or Palma, South Africa and Haiti are the most unequal states, and both have a history of colonial exploitation. Part of the wealth disparity is due to the over $7 trillion that should be taxed for public services such as education, health and infrastructure but is stifled away in tax havens (a global convention to prevent this tax avoidance is necessary). There are also radical differences- economic, geographic, cultural, between states of the Global North and the Global South that consequently fissure and even fracture alliances. China’s and India’s economies can hardly compare to the Central African Republic, for instance, and the oil producing states have completely opposed interests to small island nations that are on the frontlines of the climate crisis and it is for this reason that we have seen the establishment of intergovernmental associations and alliances, such as BRICS, OPEC (Organization of Petroleum Exporting Countries) and AOSIS (the Association of Small Island States). Western interests can leverage the competing interests of the Global South to cleave its unity and in division, conquer yet again. However, concern over Western hegemony, with its historical and current brutality and calamity, may suffice for South-South cooperation. For instance, though initially crafted by Goldman Sachs economist Jim O’Neill to denote emerging investments markets in 2001, the term BRIC denoted Brazil, Russia, India and China, which became a cooperative body mutually investing in each other and harnessing their voting power in international organizations and summits, with South Africa joining in 2010. In order to mitigate against the dominance of the dollar as a reserve currency which props up US power, provide emergency liquidity and fund infrastructure projects and otherwise facilitate investment in their economies, the BRICS established the New Development Bank and the Contingent Reserve Arrangement in 2015 or the BRICS’ versions of the World Bank and the IMF. Other states are looking to join with Egypt’s parliament in January 2023, approving entry into the bloc and ascension into the NDB. However, this is not to say that there are not internal fissures that could fracture the alliance. For instance, China and India have still not resolved their dispute over territory around Tibet, engaging in skirmishes the past couple of years, most recently in December 2022 over the 2,100 km disputed demarcation, the Line of Actual Control. The Global North is also not immune to conflict nor are Global North countries immune from debt crises and the talons of international technocrats.

European countries have also been clutched by the claws of the IMF. The UK, struggling to pay its debts, had to knock on the IMF’s door in 1976, paving the way for Thatcherism (it seems the only time women become Prime Minister is when nobody else wants the job), Greece became a debt colony and Yugoslavia was murdered by the international MF. It’s also important to note that these public debt crises that the technocrats resolve are an avenue of fortifying inequality both through their rapid liberalization policies as well as the fact that they socialize debt. For instance, the Greek debt crisis was largely the product of private, not public debt but was socialized so that the entire Greek population through taxation and diminution of public services and programmes, had to repay it, whether they personally took on debt or not. While the media, particularly in Northern Europe, had a heyday over Southern European racist stereotypes, the real party in interest was not the Greeks, but the banks of Greece, France and Germany that received the bailout. The troika demanded austerity and fire sales and when Varoufakis, the Greek Finance Minister at the time, tried to explain that it was a debt that would never be able to be repaid and their directed measures would only serve to cripple the economy thus further hindering Greece’s ability to pay, they simply scoffed- it was Greece’s problem. Some German politicians even had the gall to wryly comment that Greece should sell some islands or even the Acropolis. Perhaps it was ill humour, but it’s exactly what happened. Despite a referendum that resoundingly voted no to the bailout, Varoufakis resigned anyway and Tsipras agreed to an even worse deal than his own people had rejected. Greece was forced to sell over $50 billion in assets, including the port of Piraeus (now owned by COSCO, a Chinese state-owned company). Unsurprisingly, the Germans, who had been the firmest in their negotiations with Greece, were the biggest winners with mostly German companies buying distressed Greek assets for virtually nothing. Germans also bought up real estate in Greece and are the top foreign buyers of island and coastal properties, increasing the price of such properties so that Greeks will be unable to afford their own properties (https://greekreporter.com/2022/07/05/germans-top-foreign-home-buyers-in-greece/). It’s a tale of tragic irony because while Germany argued that Greece had to pay its debts — to save German banks — it is the biggest defaulter of the 20th century. Germany received debt relief even after it committed the most heinous crimes in World War II — because a strong West Germany was needed against the Soviet bloc. In the end, the Germans have achieved what they always wanted — de facto owning mitteleuropa and now with ownership of their de facto colony, Greece, their long searched for place in the sun.

Despite the fact that the dichotomy between the Global North and the Global South is not impenetrable, the history of interference and extraction by BWIs has been focused on the Global South. The World Bank also has a rather stygian history of neocolonialism. Development discourse propagated by the World Bank and other international institutions, which developed into “sustainable development” are justifications for continued colonialism, as well analyzed by Rajagopal in International Law from Below. Rajagopal astutely pointed out how the World Bank created “poverty” as a means of intervention in the Third World. In 1948, the World Bank created per capita income comparisons between countries and denoted two-thirds of the world’s population as “poor”. The World Bank focused on eliminating subsistence agriculture in favour of commodity agriculture -and continues to champion this today. By diverting arable land away from food to commodity agriculture geared for export, the World Bank took away food security from entire populations — and contributed to famine. As the West held rock concerts for aid to Ethiopia, the contributing factor of international intervention causing widespread famine by diverting arable land for export commodities was not discussed and it was rather characterized as the West coming in to save poor, hapless, starving Ethiopians. Commodities are of course susceptible to the vagaries of the market and price volatility was a huge risk that the World Bank exposed the Third World to. To make matters worse, in what should be malpractice if economists were actually held to any professional liability such as doctors and attorneys- which conveniently for them — they are not despite their work directed to and impacting entire populations- the World Bank abjectly failed to take into account what the consequences of each nation to compete on the world market would have for the price of commodities. For instance, by directing several African nations to concentrate on exporting cocoa, the World Bank effectively decreased the price of cocoa on the world market. Thus, the very success of African farmers in following direction from the World Bank was their downfall with the price for cocoa plummeting from their downfall — a win for Western consumers and a catastrophe for African farmers. The World Bank destroyed Malawi by exhorting subsidy reduction and repeal. Walden Bello has well analyzed how the Malawian government was having success with domestic food production at a surplus via providing small farmers with free starter packs of seeds and fertilizer in the later 1990s. The World Bank and IMF waltzed in with exhortations (or rather extortions) that directly contributed to famine in its perpetuation of indirect murder. The IMF compelled the government to sell of its grain reserves to pay off its debts and the World Bank compelled the government to stop its subsidy programme, leading to decreased output and eventually famine in 2001–2002. Where the IMF and World Bank go, there is carnage.

The World’s Bank, through its various facilities, has a calamitous social and environmental record (for a thorough analysis into this devastation see environmental lawyer Bruce Rich’s Mortgaging the Earth: The World Bank, Environmental Impoverishment, and the Crisis of Development and Foreclosing the Future: The World Bank and the Politics of Environmental Destruction). The World Bank has invested in matters, both through its project lending and the IFC that have displaced millions of people, destroyed ecosystems and failed to provide prosperity. The Pak Mun dam at the confluence of the Mun and Mekong rivers, which prior to its construction had vociferous opposition from local communities, environmentalists and scientists and continues to have vocal cries for its decommissioning, is one example of the World Bank’s history of carnage. Despite assessments that environmental impact assessments were woefully inadequate to the point of criminality, including that the project would severely deplete biodiversity, in particular of fish species and increase the risk of parasitic disease and that the dam would destroy the livelihood and culture of surrounding communities- the project went ahead. More than two and a half decades later, many people have not received proper compensation for their relocation as originally the government miscalculated the affected area and did not have sufficient funds for all relocated communities, fish species are depleted, the downstream communities have lost their fishing livelihood and have had to turn to less profitable trades such as broom making or labouring in the city, nor are the people able to obtain fish, mushrooms and bamboo for their own diet nor are they able to perform their religious ceremonies at the rapids, now covered by the dam (see https://journal.probeinternational.org/2016/05/13/pak-mun-dam-25-years-after-world-banks-loan-problems-remain/).

Nehru is quoted as saying that “dams are the temples of modern India” and indeed the World Bank funded many dams in India, but to quote the brilliant Arundhati Roy, they are, rather than sacred places, weapons of mass destruction, and a “malignant indication of civilization turning on itself” (for Roy’s impassioned and astute analysis on the “planned environmental destruction” of dams and the Narmada dams in particular see her essay on the Greater Common Good which is within her recently published anthology, My Seditious Heart: Collected Nonfiction). There are around 3,300 dams built in India with over 33 million people displaced and whole ecosystems, communities and sacred sites flooded. The venerable Vandava Shiva, the physicist turned ecological activist, was directly involved in World Bank assessments of several dams and noted that the process grossly exaggerated economic benefits while vastly understated ecological and social effects (see her insightful and cutting analysis in Water Wars: Privatization, Pollution and Profit). The Narmada Valley’s dams, in particular the behemoth Sardar Sarovar dam, which continues to be litigated, has been a social and environmental disaster. Over 100,000 villages have been submerged without proper compensation, apart from the fact that people have lost their homes and connection to their community and the loss of land has exacerbated food insecurity. The environmental effects have been catastrophic: reduction in biodiversity, soil erosion, deforestation, groundwater depletion, pollution of groundwater and surface water and contributed to both drought and flood. The World Bank funded dams in Turkish Anatolia that are criminal in nature and have directly contributed to destabilization in the Middle East: they have depleted and polluted the Tigris and Euphrates downstream, they have flooded majority Kurdish areas, displacing the local people and have flooded medieval and ancient Roman ruins (https://www.savethetigris.org/water-shortage-crisis-escalating-between-turkey-iraq-and-syria/). According to the World Bank’s own data, 40% of its projects result in internal displacement and over 3,350,000 people were displaced from its projects in 2004–2014 alone. The World Bank has financed numerous mega dams throughout the world and the dams have caused environmental disaster including by flooding forests, leading to deforestation and less carbon sinks, reducing biodiversity both in the river and through loss of terrestrial habitat and decreasing water quality. The dams have also led to internal displacement. The aging dams, which have lost their utility due to sediment build up are also at risk of bursting from fissures, seepage, earthquakes and increasing floods. As climate change brings more tempestuous rain, dams have a greater risk of bursting from the increased water, threatening the lives and livelihoods and entire ecosystems, downstream(https://www.preventionweb.net/news/water-warning-looming-threat-worlds-aging-dams).

The World Bank has also financed massive coal plants — including in recent history. While in 2008, a number of states, including the US and Japan, provided $6.7 billion for low interest loans and grants to developing states for investment in clean energy projects through World Bank administered climate investment funds, the World Bank concomitantly invested $6.75 billion in coal plants in the Philippines, Chile, Botswana, India, and South Africa. Not only were the coal plants an environmental disaster both in the short-term and long-term, but were disastrous economically, including Tata Power which lost billions from the Tata Mudra project and the South African state electricity company, ESKOM. The IFC meanwhile, has financed projects that have not only caused environmental disaster, but have supported private land-grabbing that have used intimidation tactics, kidnapping, torture and murder of local farmers to steal their land and then claimed organizational immunity when called to account. The main reason for this arguably criminal negligence in investing in such stygian projects has been, as both Woods and Rich point out, the institutional loan culture of rushing to get money out the door and thus failing to adequately undertake due diligence of their projects. Combined with the relentless pursuit of free market ideology and what Rich termed “institutional amnesia” the World Bank continues to make the same mistakes even when its own internal audits excoriate it for doing so.

International trade regulation is another means that the North continues its exploitation of the South under its hypocritical liberalization of Southern states as it continued its protectionism. While there were negotiations at Bretton Woods for the International Trade Organization, no such organization was established. In 1947, while working to establish the ITO, numerous countries entered into the General Agreement on Tariffs and Trade (GATT) which was to provisionally apply from January 1, 1948. The GATT had numerous problems, in particular because it was never meant to be an independent legal body, it was ambiguous and inconsistent and most importantly, it grandfathered in protectionist measures. After numerous negotiation rounds, the GATT, as it was amended in 1994 developed into the World Trade Organization (WTO) which became its own juridical personality, with an established secretariat in Geneva. The WTO’s main aims are to provide a forum for trade negotiation, provide and administer a dispute mechanism and cooperate with the IMF and the World Bank. There are 164 members of the WTO (https://www.wto.org/english/thewto_e/thewto_e.htm). In order for a state to accede to the WTO it needs approval from a 2/3 majority of members. While voting is on consensus, states with more economic and military power have and continue to utilize their powers of persuasion to obtain consensus in their favour. China’s accession, for instance, took over 14 years, and it was required to execute bilateral agreements with the US and the EU prior to its accession. While voting on consensus is formally democratic and equitable, in practice it is yet another avenue by which Northern states fortify their puissance. The powerful states can pressure and persuade the less powerful to achieve “consensus”. The other pertinent problem is that richer states can negotiate better not only because they have more leverage, but because their larger resources allow them to have more of a presence at the WTO and enter into more negotiations. Many states cannot afford to have permanent delegates at the WTO and can afford to have less people in their delegations — hence the rich states of the North have more specialized and more numerous delegations, which allows them to better execute on their leverage. The asymmetry of power and resources plays out in the dispute settlement process, which is expensive. The vast majority of complainants have been from the North and the majority of complaints have been Northern states complaining about dumping and other trade distortions from the South. There is no legal aid available for poorer states to access the dispute settlement process and enforce their rights.

The WTO is hypocritical at its core (for acute insight into the WTO as a new form of colonialism and the entrenchment and exacerbation of global inequality, see the work of Deborah James, Director of International Programs at the Center for Economic and Policy Research, articles available at https://cepr.net/staff-member/deborah-james/ ). While purportedly a trade liberalization organization, the WTO members are parties to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which paradoxically establishes and entrenches global monopolies and has resulted in the vaccine apartheid of the COVID pandemic. TRIPS favours the rich states of the North which are overwhelmingly intellectual property producers and which otherwise could not export their domestic protections, for instance because of doctrines such as the US doctrine of extra-territoriality. TRIPS establishes minimum standards for the protection of IPRs throughout its members, at even higher levels than the Paris and Berne Conventions (this was not enough for the US and EU, which negotiate “TRIPS-plus” terms in their bilateral and multilateral trade agreements). Why would developing, poor countries agree to patent protection for vital medicines, which is tantamount to a death sentence? Pressure and persuasion from the North and promises of foreign investment and technology transfer, which have thus far been far and few between. While TRIPS allowed a transitional period for enforcement for developing countries and more for the least developed states to establish IPR laws and enforcement, the clock is ticking without their economies advancing. Nor did TRIPS provide any fund for this transition, and it’s important to note that the establishment of IPR regimes requires the expenditure of funds — that are not therefore utilized for education, health, infrastructure and energy transition. It’s likely that this will be funded by more debt — and so the cycle of continued shackles continues.

While national public health emergencies were meant to resolved via the compulsory licensing exception under Article 31, this limited exception was riddled with problems from the start. States have to jump through several hoops to utilize it, including negotiating for a “reasonable price” with the patent owner prior to any issuance of the compulsory license and worse, are required to domestically produce the medicine, so that states that do not have the ability to produce mass-scale pharmaceuticals — those most in need of an exception — could not utilize it. This problem was purportedly addressed with the enactment of Article 31bis which allows a state to issue a compulsory license for export to a less developed state, even without that state’s declaration of a state of national emergency. This has however been most beneficial for states that can issue the compulsory licenses because their domestic producer makes money from the manufacture and sale of the generic drug, while the developing state — which has to wait for the drug as it’s under the knife — has to compensate both the manufacturer of the generic version of the drug it receives as well and the patent holder. Everywhere we look, there are avenues for further indebting the impoverished states of the Global South and continuing exploitation.

Another pertinent problem of TRIPS is that it does not codify biopiracy and appears to directly conflict with the Convention of Biological Diversity (CBD), as pointed out by Daniel E. Robinson in his book Confronting Biopiracy: Challenges, Cases and International Debates. It’s important to note that the vast majority of biogenetic material for new pharmaceuticals is located in the South and that traditional indigenous knowledge includes vital medical knowledge and that both of these, along with the resources of the North, TRIPS and TRIPS-plus agreements, creates a fertile ground for biopiracy (termed bioprospecting in corporate circles) which is, to say the least, inadequately addressed in international criminal law. CBD clashes with TRIPS in a number of ways. CBD mandates protection of indigenous traditional knowledge but there is no corresponding IPR in TRIPS albeit the World Intellectual Property Organization (WIPO) has established some working groups on how to construct one, which has rather been relegated to an academic exercise. CBD rightly recognizes sovereignty over biogenetic material, but TRIPS establishes and enforces patents over these. CBD allows for states to restrict or prevent access to biogenetic materials, which conflicts with WTO more generally, which does not allow import controls except in very limited circumstances. CBD provides for royalty payments to countries that provide the biogenetic materials and technology transfer via concessional access to developing states which conflicts with the “free market” regime of TRIPS and the WTO, in particular because states cannot favor domestic firms. There are many proposals that aim to regulate a more equitable transfer of resources, one such proposal flouted at the recent Convention on Biological Diversity in December, 2022 by African states, is a one percent retail levy for consumers in developed states that would generate and be administered by a Global Environmental Fund that would in turn conservation projects throughout the globe (https://www.cbd.int/doc/c/1d8d/b02d/cd3a295666ce409859ad62e9/wg2020-05-inf-01-en.pdf).

Trade liberalization at the WTO has continued the inequality and hypocrisy of GATT, applied to some, but not all. TRIPS is a protectionist tool. If you’ve ever wondered how you can have your cake and eat it too, one would do well to look at how the US, and to a lesser extent, the EU, has manipulated the WTO regime. In 1955, the US obtained a waiver, with no temporal limitation, for its farm subsidies with European nations following suit, including Switzerland. The EU was allowed to enact variable levies on farm goods in order to ensure price parity with EU goods. Developing nations, however, were consistently denied “trade distorting” subsidies and agricultural “liberalization” was tied to IMF and World Bank loans, which also prohibited domestic food reserves. The WTO also grandfathered in agricultural subsidies. It cannot be overstated how hypocritical and even fatal these agricultural subsidies were to the Third World. They decimated domestic agriculture and eviscerated food security, made the Third World dependent on agricultural imports and food aid from the North and led to numerous deaths directly from starvation and indirectly exposed millions to other fatal diseases from malnutrition. Olivier De Schutter, the former UN Special Rapporteur on the right to food published a report in 2011 in which he exposed how WTO asymmetry directly led to food insecurity and how developing nations needed exemptions from rules to maintain food reserves and have some protection against market volatility (https://www.wto.org/english/news_e/news11_e/deschutter_2011_e.pdf). De Schutter noted that not only are the rules in favour of rich countries but that poor countries are more risk averse because they don’t have the resources to endure lengthy and expensive trade regulation litigation. However, despite criticism, trade distorting agricultural subsidies and the imposition of tariffs prevail in rich ex-colonial nations to the detriment of developing nations. James has well analyzed how recent agreements that require industrialized states to reduce subsidies and tariffs, were to do so based on a reference price that allowed industrialized countries to choose from an historical reference price which provided a loophole of choosing a reference point of low world prices, thus achieving minimal substantive change. Thus, while the majority of anti-dumping cases is by state claimants from the North against the South, the biggest dumpers are rich countries — the US, EU and China. However, developing states have insufficient resources to adequately challenge and negotiate loopholes as well as prosecute cases. Even when the US is taken to court and loses, the US has opted to pay damages and simply continue trade distorting and harmful protectionist policies. Trade regulation hypocrisy has been a means that rich and powerful states have fortified the structural imbalance and continued exploitation of impoverished ex-colonial states.

Then there’s the shadow courts of investment (see Shadow Courts: The Tribunals that Rule Global Trade by Haley Sweetland Edwards). In 1966 the Executive Directors of the World Bank crafted the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ISDS Convention) and submitted it for review and signature to its members governments. The ISDS Convention entered into force October 14, 1966 (https://icsid.worldbank.org/sites/default/files/ICSID%20Convention%20English.pdf) and it established a World Bank managed and funded the International Centre for Settlement of Investment Disputes. Its purported intention was to facilitate investment in developing states. In part, this was to minimize the impact of the Calvo clause, which was utilized throughout Latin America to prevent the very issues that this dispute mechanism fosters — a decimation of national sovereignty, even though investors have long had the benefit of buying insurance from MIGA to insulate themselves against fears that the investment arbitrations are purportedly meant to alleviate, including expropriation and unfair treatment. ICSID’s Secretary General is the World Bank’s Legal VP and in that role has numerous administrative powers including appointing arbitrators in cases when parties disagree. There is an inherent conflict of interest, as many developing states are also clients of the World Bank and the IFC has pressured states to accept the dispute mechanism in order to obtain investment for projects from companies that it is a shareholder of. While not regularly utilized until the 1990s, investment arbitrations exploded with the execution of thousands of bilateral and multilateral “free” trade agreements which utilized international arbitration, including the ICSID, the London Court of International Arbitration and the Hong Kong International Arbitration Centre (collectively, “ISDS”). Prior to 1997, the number of cases registered with the ICSID didn’t hit double digits but in this century there has been a proliferation of cases. As of June 2022, there were 3,289 investment treaties and 1,229 cases filed (https://investmentpolicy.unctad.org). There are more that we don’t know about as not all cases are registered and many more that are merely threatened to achieve leverage.

One could not have come up with a more creatively corrupt structure. A few select attorneys practice in these international investment arbitrations and remarkably they double hat as arbitrators on the same panels that they argue before. Considering that the clients with the most money at their disposal are multinationals looking to secure their investment, it’s in the attorneys’ direct financial interest to render decisions in favour of their large potential clients, which they can represent in their next matter. It is elementary that sitting judges cannot be in private practice to prevent corruption of the judiciary, and yet, here we have it. Not only are the awards rendered gargantuan, in billions (Pakistan, for instance, was ordered to pay nearly $6 billion to a mining company in one award), but there is an inherent resource disparity between the litigants. The vast majority of cases have been initiated by corporations from the North against governments of the South, adding to the continuous wealth transfer between the South and the North. Moreover, there is no international legal fund to help these indebted, impecunious and continually exploited states to defend themselves against the full pockets of the large multinationals that prosecute them.

ISDS is decidedly a contra-bonos mores scheme and the winners are multinationals, and extractive industries in particular, as well as large law firms, mostly located in the U.S. and the U.K. that easily charge millions for a single matter. What’s even more harrowing is that these conflicted, if not corrupt, panels, lack transparency with strict confidentiality clauses rendering most arbitrations in camera. Dirty deeds favour darkness. However, whether a matter is open to the public and whether NGOs participate as amici is dependent on the particular trade deal at issue and the strength of the state litigant. In 1999, Methanex, a Canadian company manufacturing methanol, which is used in the gasoline additive MTBE, sued the US under NAFTA’s Chapter Eleven, when California banned MTBE reasoning that it polluted its groundwater. Methanex argued that California should have undertaken other protections of its groundwater that were less adverse to its investment and that it was tantamount to indirect expropriation. The International Institute for Sustainable Development (IISD) submitted a petition for amici and for open access to hearings and documents. In 2001, remarkably, the panel allowed amici in the matter at the merits stage, allowing other parties in other panels to argue the same — but did not allow access to the documents and proceedings. The US however, being a party, released all the documents in any case under its Freedom of Information Act. When UK Biwater sued Tanzania for cancelling a water privatization deal by which Biwater would have excluded the poorest neighbourhoods from its supply amongst other contractual breaches, the proceeding took a different turn. Tanzania, in this instance, released documents in an effort to make the proceedings transparent and Biwater simply sued for a mandatory injunction to prevent Tanzania from doing so because such disclosure was making it look like the bad guy it was, the repercussion of which increased Tanzania’s costs — and Tanzania complied. Whether filings are published, so that one can peruse all the nefarious and noxious arguments on UNCTAD’s Investment Policy Hub (albeit finding many materials redacted), for instance, or whether a state releases them under its domestic laws, is dependent on the puissance of the particular state. Countries from the South have less resources to obtain transparency, which would provide them protection, including leveraging public opinion in their favor. Thus, ISDS perpetuates and fortifies the structural positioning of the North and the South.

Nor is there accountability. Settlements and awards are generally not disclosed, there is no appeal process, no necessity for a domestic court to affirm the award and no perquisite of domestic exhaustion for a corporation to file a claim. Due to the cost of simply defending a matter, let alone the cost of an award, large corporations can leverage the threat of making a claim to essentially commit extortion against governments, particularly, resource-strapped developing states.

ISDS are a major threat to democracy, human rights and our environment — both in the North and the South. However, it is the South that bears the greatest burden. A recent article published in Climate Policy from Boston University’s Global Development Center, Colorado State University and Queen’s University calculated that more than 2/3 of the financial risk of ISDS suits is borne by the Global South (https://www.tandfonline.com/doi/abs/10.1080/14693062.2022.2153102?journalCode=tcpo20). The vast majority of cases are companies from the North suing governments of the South to prevent public health, environmental and social development policies that impede their “investment” — a continuation of colonialism by other means. ISDS works perfectly within the IMF and World Bank’s trade “liberalization” agenda: these facilities imposed privatization conditionalities in their loans, in particular for the water and energy sectors, while the companies that obtained these contracts utilized the ISDS system to ensure that they protected their “expected” profits. Numerous cases have concerned the water supply — including Biwater’s suit against Tanzania, Bechtel’s suit against Bolivia and Azurix’s and Suez’s suits against Argentina. Each of these companies was also violating the human right to life and bodily security, which one cannot have, without access to freshwater. However, in our fragmented and contradictory international law system, the bilateral and multilateral trade agreements at issue in these arbitrations are not being interpreted consistent with international human rights law, even though human rights has become a part of international customary law. Part of the issue concerns who is on the panel — international human rights attorneys they are not.

ISDS is one of the biggest threats to divesting from fossil fuels and investing in clean energy transition which is an existential need. The main complainants are extractive industries and they have discovered a bonanza of profits through ISDS at a time when these perilous projects should be urgently phased out (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2697555). Climate change is no longer academic — we can feel it in our lungs, on our skins, in the destruction of our homes and forests — and governments have no choice but to change policy in favour of energy transition. Fossil fuel investors will have to take government policy shifts away from fossil fuels, including loss of subsidies, taxation and moratoriums on exploration and extraction as inherent risks and may find investment in clean technology a more stable and more profitable option, particularly if a government is subsidizing the sector to attract investment — global survival aside. A recent paper by the Columbia Center for Sustainable Investment, by its Director, Lisa Sachs and Lise Johnson and Ella Merrill has pointed out how ISDS mechanisms, by essentially allowing fossil fuel companies to sue governments that impede their future potential profits in energy transition policies — for instance, in denying specific polluting projects or in putting a moratorium on future extractive projects- foster a distorted investment climate in which fossil fuel investment, rather than being risky, becomes near foolproof and an easy moneymaker because of the investment insulation bent of ISDS (https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=1070&context=sustainable_investment_staffpubs).

ISDS is an unparalleled gift to multinationals (and to their attorneys) and a decimation of sovereignty. The purported incentive for arbitration was to protect foreign companies from being mistreated by governments, for instance, by having their funds and assets expropriated or by not being provided due or any kind of process to seek remedies or by being treated on a less than equal footing with their domestic counterparts. However, what ISDS has achieved is to elevate foreign corporations to a near sacrosanct position where they are essentially insulated from risk which predictably encourages more arbitration. This may in part be due to the “general” principle of law that Dickens so aptly elucidated in Bleak House, “to make business for itself” — particularly when the arbitrators also practice before their panels. Panels have absurdly interpreted claims beyond any limits of merely protecting foreign investment and have rather expanded it to insulate it. For instance, a company can sue for denial of “fair and equitable treatment” and denial of a “minimum standard of treatment” which should be interpreted to protect a foreign company’s right to due process and equal treatment with domestic counterparts. Rather, “fair and equitable treatment” has been absurdly interpreted to be a positive obligation on the part of the government to aid the successful investment of the foreign company — an obligation that domestic companies would lack (see https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/61/azurix-v-argentina-i-) (while in the same matter, the panel concomitantly and perfunctorily dismissed Argentina’s argument that the human right to water was violated by Azurix). Additionally, a “minimum standard of treatment” has been astonishingly interpreted to obligate a state to a “stable” regulatory framework, which in practice handcuffs governments from changing laws to favour clean energy transition and protect the environment, for instance. What’s even more astounding, is the claim of “indirect expropriation” which would not meet normal pleading standards for any damages claim as it too attenuated and not sufficiently proximate, allows corporations to sue for claimed future potential profits from a canned venture. For instance, “indirect expropriation” claims damages based on denial of permits arising from negative environmental impact assessments for ventures that may have in fact not only devasted the local environment but that may not actually make any profit. In effect, “indirect expropriation” challenges environmental, energy and other social welfare policies and is the subject of much arbitration over extractive projects as the world, facing an existential crisis, sets to transition to cleaner energy. This is absolute insanity- governments should not be handcuffed to fossil fuels and dirty extractive projects and the EIA process is not meant to be a shoo-in for applicants. Yet, here we are.

This fragmented framework has also fostered treaty shopping in creative efforts to challenge government laws and regulations (see https://www.oecd.org/daf/inv/investment-policy/4th-Annual-Conference-on-Investment-Treaties-agenda.pdf). Due to the thousands of trade agreements with ISDS provisions, a company can create a subsidiary in a state that provides the best investment protection under a particular treaty with a particular state, then invest in such state through the subsidiary in order to be able to access and take advantage of the treaty protections. This juridical personality of convenience is then utilized as a claimant in order to challenge environmental, public health and social welfare legislation. One may call this treaty shopping or even abuse of process or you may alternatively deem it the more cosmetic “BIT planning”- how to get the best BIT for your bite. Access and advantage planning begins by searching for an investment treaty that loosely defines nationality (so that creative restructuring to obtain advantage of the “home” state can be undertaken without penalty) and investment (so that indirect investment will suffice and practically allows for a company to sue without providing any actual investment in a “host” state) with a flexible ratione temporis (to allow for strategic timing of restructuring), while ideally lacking a denial of benefits clause. The latter is a host’s state best weapon against treaty shopping by expressing exceptions as to which type of investors and investment the protections of the treaty do not cover. However, it’s not a panacea as procedural rules limit its invocation, and a cadaverous interpretation of the exclusion can essentially render it null. A cursory review of investment settlement disputes reveals that the best home state to masquerade as is the Netherlands which has quite aggressive investment treaties in favour of its investors. US based and owned Mobil took advantage of this by restructuring to access a BIT between the Netherlands and Venezuala in order to successfully be awarded damages against Venezuela for its nationalization of certain fields. Investment treaties can protect foreign owned domestic entities otherwise known as LIEs (locally incorporated entities) under Article 25 (2) (b) of the ICSID Convention (albeit with stricter qualifications) which has been incorporated into numerous investment agreements. Loose interpretations of nationality in certain instances have denied jurisdictional challenges to shell companies and have even provided protection to natural domestic investors who took advantage of investment treaties and creative corporate restructuring in order to challenge their own government’s policies. It also breeds more litigation, which means more costs for the host state, because a claimant can bring several claims based on several treaties in one dispute. This also leads to fragmented decisions, for instance, when for the same nationalization action, Venezuala won under one BIT and lost under another. Even where panels definitely deny any jurisdiction and consequent protection to the claimant, the costs of defending the suit alone render it a pyrrhic victory. For instance, Australia’s win against Phillip Morris for challenging its cigarette packaging legislation came at a substantial loss with Australia paying over $AUD24 million in legal fees alone (which fees were challenged by Phillip Morris, noting that numerous attorneys were salaried personnel of the government on rather paltry salaries). Additionally, New Zealand delayed its own packaging laws due to threat of suit. What was Phillip Morris challenging? Australia, following WHO directives, legislated for plain packaging laws, which is a tad of a misnomer because the plain package was distinctly the opposite, expressing the real effects of smoking (photos of lungs swallowed by cancer for instance) next to a true health warning. The cancer pusher having lost its domestic challenge to the law and not being able to challenge the law through the Australia-US free trade agreement, went shopping and after some creative restructuring brought an investment suit via its Asian subsidiary under an old Hong Kong-Australia BIT for denial of its trademark. Poorer countries, with less resources than wealthy Australia, will have a quicker pain point and may settle earlier or cave to a threat of suit, thus further curbing their independence.

ISDS cases have challenged moratoriums on fossil fuels, the denial of extractive projects in the Amazon, clean energy transition, mandatory health disclosures on cigarette packets, increase in the minimum wage and social equity policies such as South Africa’s Black Economic Empowerment. Importantly, the interpretation that investors’ “expected” profits are protected under a “stable” regulatory environment in effect entrenches the status quo at a time when we rapidly need to make significant changes to divest from fossil fuels and transition to cleaner energy. The North is not immune to this challenge. It is in fact difficult to identify a state that not borne the brunt of ISDS claims, although increasingly we find states with sufficient leverage, are choosing to move away from this mechanism. Spain, Italy, Germany and the UK have all been hauled into court as have Australia, Canada and the United States, to name a few. When Obama denied a permit to the Keystone pipeline, as he should have, TC Energy sued the United States under NAFTA for the no small change of $15 billion for denying the permit and its expected profits because no President had ever denied a permit for climate reasons prior to that, thus denying TC Energy its “stable” regulatory environment. It is thus as little surprising as it is terrifying that the majority of claims under NAFTA and currently filed across the thousands of investment treaties are challenges to environmental protection. The fact that the corporations and their partner law firms weaponized the mechanism against the public interest to a level that the governments had not suspected- at least not for their own populations- may be discerned from their actions. NAFTA governments have been amici to each other against their own companies — in Mesa Power’s case against Canada, for instance, all three governments filed amicus briefs against the claimant arguing that a prior matter, Bilcoin, which prevented “community values” from being taken into account in an EIA, was erroneously decided. The public censure across the spectrum — from trade liberals who dislike the avid market distortion of this mechanism and from environmentalists and social democrats alike — has thankfully led to the ISDS mechanism set to sunset under the renegotiated framework and the fact that the parties. Unfortunately, this has not transferred to the bilateral and multilateral treaties outside of North America. The Canadian Centre for Policy Alternatives (CCPA) has recently published a report exposing how Canada has actively pursued and obtained “egregiously slanted” trade agreements which provide for ISDS mechanisms for Canada’s companies- and it’s important to note that half of the world’s extractive companies are based in Canada. What doesn’t work for the North is still being pushed onto the South (https://policyalternatives.ca/ontheoffensive).

The ISDS mechanism has likewise not been immune from criticism and excoriation of the mechanism has pervaded scholarship while it has received rife objection as a predatory tool from several UN bodies, including the UN Conference on Trade and Development (UNCTAD), the Intergovernmental Panel on Climate Change (IPCC) and the Human Rights Council (HRC). UNCTAD has several working groups on reformation and has opined that there grave and “systemic deficiencies” including lack of transparency, accountability and inconsistency in decisions (https://unctad.org/system/files/official-document/diaepcbinf2019d3_en.pdf). Increasingly, UNCTAD has focused on the urgent need to amend IIAs (international investment agreements) to prevent the ISDS mechanism being utilized to impede energy transition and climate mitigation efforts. UNCTAD’s recent notes on IIA reform notes both the problem of old generation IIAs continuing to be utilized to stall effective climate change policy in addition to the fact that new generation IIAs which recognize climate change and energy transition as legitimate public policy may continue to be interpreted narrowly by arbitration panels so that they lose much of their efficacy in interpretation. Additionally, there are few new generation IIAs with express environmental carve outs and those that contain it do not contain carve outs for “fair and equitable treatment” which has been problematically interpreted to impose a positive obligation on the part of the host state. In its most recent report, the IPCC noted how ISDS not only has stagnated and impeded certain climate mitigation and energy transition efforts by claims from fossil fuel companies but has fostered misalignment in investment. In his damning report to the HRC in 2015, Dr. Alfred-Maurice de Zayas, the then Independent Expert on the promotion of a democratic and equitable international order, addressed the corrosive impact of free trade and investment agreements to our human rights and the protection of the environment (https://digitallibrary.un.org/record/803449?ln=en). Dr. de Zeyas laid out how the lack of transparency, accountability, inconsistency, conflicts of interest and asymmetry of resources has led to a grave deprivation of national sovereignty, a shrinking of the policy space and a chilling regulatory effect. As Dr. de Zeyas noted, while international human rights are now a recognized part of international customary law, the arbitration panels have not interpreted IIAs in accordance with international human rights law and have rather handed opinions that protect the violation of human rights and the destruction of the environment. Dr. de Zeyas argued that these treaties are contra bonos mores and thus not legitimate and that multinational corporations and their lobbyists may be charged with criminal conspiracy “can be applied to the method in which international investment agreements have been elaborated and negotiated in secrecy”. Much certainly needs to be done — if we are to have a supranational dispute mechanism, it should be a proper court and should level the playing field. Justices would have tenure and would leave private practice, the bench should be representative of the different geographic and cultural regions of the world, a Legal Aid fund should be set up for impoverished nations, impoverished states should not pay costs for any loss, interpretation of treaties needs to be consistent with international human rights law, all proceedings should be transparent, with documents made public and open proceedings and investors need to be held accountable for violations of international customary law and bad faith investments. After all, the ISDS mechanism was established to attract direct foreign investment and the results have been a spectacular failure.

This is necessary, but not sufficient. What is needed is a radical reformation of international law that is more democratic and equitable and that finally disowns its colonial tethers. The BWI require reformation to be more equitable and democratic, the WTO likewise needs to reform to prevent the continuation of systemic hypocrisy that continues to allow rich ex-colonial nations to essentially leverage their rapacious past as an advantage, including in the continued allowance of agricultural subsidies which has contributed to global food insecurity and fortified financial structural positioning. The WTO must amend its agreement to allow for more protection for environmental, labour and public health policy progression. Moreover, there must be more cohesion in international law. One of the core issues in international law is its fragmented nature so that idealistic and altruistic aims are confined to spaces in which they cannot have significant impact. International trade regulation, international criminal law, international environmental law and international human rights can no longer be segmented. The crime of ecocide, for instance, will be one such holistic-and necessary- bridging between international criminal and environmental law (for a discussion of ecocide, listen to Darryl Robinson and Kate Mackintosh http://thegravity.fm/#/episode/50). More needs to be done, both structurally in reforming our international institutions which continue to be centers of colonial control and in development and interpretation of international law and accountability. One such change that is desperately needed is corporate accountability. Corporations cannot continue to have rights — including the right to sue states through the ISDS mechanism- without concomitant obligations.

It is rather interesting that corporations have avoided international accountability because international law and corporations are inextricably linked with the rise of one expanding the other. In the beginning of this article, I noted how Grotius the father of international law, was corporate counsel to the VOC and was rather an apologia for its colonial plunder. Indeed, colonialism was mostly effectuated via corporations and this is how these psychopathic juridical personalities were first established as the behemoths they became. The VOC, as discussed above, was a behemoth of a corporation from trade monopolies in Asia and the slave trade. The East India Company was another such corporation that brutally destroyed the Mughal empire. The pillage was so grand that the English word “loot” derives from the Hindi word lut (which is turn derived from the Sanskrit lunt, meaning to “rob” and “plunder”). The East India Company was provided quasi-state status by parliament as was the VOC in the Netherlands. The East India Company was allowed to hold an army, make war and entry into treaties. Its status was in part due to the fact that a substantive number of MPs held shares in the company and one may argue likely the reason it was the beneficiary of a massive bailout by the government in 1773 deemed “too big too fail”. Not much has changed. The problems of legislative and regulatory capture, through lobbying, ownership of stock by members of government (unfortunately a bipartisan bill to prevent members of Congress and their spouses from owning and trading in stock didn’t succeed last year) continue on the domestic front and international pillage continues, although there are some glimmers of hope. Recent decisions in various domestic courts have established corporate accountability for grave human rights abuses as well and there has been legislation in the right direction, including the French Vigilance Law. Last year, the Paris Court of Appeal affirmed the indictment of Lafarge and its key officers for crimes against humanity and the financing of a terrorist organization due to its repeated dealings with ISIS, with which it traded millions for raw materials for its factories. The court took stock of the monthly $15.5 million payment to ISIS which facilitated and aided ISIS’s stygian crimes (http://opiniojuris.org/2022/11/15/multinational-lafarge-facing-unprecedented-charges-for-international-crimes-insights-into-the-french-court-decisions/ ). While a 5–4 decision, the Canadian Supreme Court established corporate accountability via Blackstone’s theory of domestic adoption of international customary norms for a Canadian mine in Eritrea owned by Canadian company Nevsun where the plaintiffs were forcibly conscripted by the Eritrean army to work and subjected to inhumane and degrading treatment (https://www.scc-csc.ca/case-dossier/cb/2020/37919-eng.aspx). In 2021, a Dutch court mandated that Shell reduce its emissions (including throughout its entire operations and supply chain) by 45% in 2030 compared to 2019 levels, holding that a company was accountable for violations of human rights and environmental damage (https://www.business-humanrights.org/en/blog/the-shell-climate-verdict-a-major-win-for-mandatory-due-diligence-and-corporate-accountability/). The EU’s deforestation law, which aims to hold companies accountable for their value chain, increase diligence and ban products into the EU that contribute to deforestation (such as agricultural products from plantations on former forest land, including cocoa, palm oil, timber, cattle, soy etc.; see https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7444).

Much needs to be done and some necessary steps, including structural change, will indubitably require conventions and consequently, time. Yet, while we debate what structure an ideal equitable and democratic order may look like, we don’t have the time to wait until we obtain it to achieve energy transition and climate mitigation. Debt relief and access to concessional finance for climate mitigation and energy transition as well as public health and education were needed yesterday and must be provided today. The new republic, Barbados, which seeks to transition to a fully renewable economy by 2030, under the leadership of its formidable PM, her excellency, Mia Mottley (whom someday, after her leadership of Barbados is handed to another, should become the UN Secretary General and by which time I hope the position is made more potent- we can all benefit from PM Mottley’s leadership), has formulated a practical and necessary plan that achieves this in a creative way — the Bridgetown Initiative (https://www.foreign.gov.bb/the-2022-barbados-agenda/; https://geopolitique.eu/en/articles/breaking-the-deadlock-on-climate-the-bridgetown-initiative/). The Initiative provides for emergency liquidity in a number of ways, including operationalizing the Resilience and Sustainability Trust which provides concessional finance for climate mitigation and adaptation efforts (with Barbados the first country to take advantage of the facility via a staff-level agreement in September, 2022, which is awaiting approval from the Executive Board), suspending interest surcharges, returning access to credit facilities pe-crisis levels, debt suspension for the most distressed countries and most creatively, utilizing the IMF’s reserve account, Special Drawing Rights (SDRs), to access to hard currency at concessional rates (2.7%) to foster private investment in energy transition and climate adaption infrastructure projects in low and middle income countries.

Barbados pitched the plan at COP27, where a climate mitigation fund of $500 million (not nearly enough) was agreed to and which appears to have piqued interest and will hopefully come to full fruition. A more equitable international financial architecture and one that channels investment to energy transition and climate resilience is keenly needed by Barbados. As a small low-lying island, it is particularly vulnerable to climate change and has experienced both a rise in frequency and intensity of stochastic events linked to climate change and faces an existential risk from sea level rises. Barbados also has a history of being rapaciously exploited and was a colony of Spain, Portugal and consequently and mainly, England. The stygian history of slavery and rapacious extraction of resources led to the familiar distressing pattern, repeated throughout other ex-colonies, of gaining independence in 1966 only to be immediately indebted and continues to carry massive debt. The current government, however, is addressing the need for climate resilience and its history in ingenious ways. Barbados’s National Task Force on Reparation is looking at targeted reparations from families that directly profited from the misery of slavery by exploiting and violating the island’s population. With respect to climate resilience, Barbados is not only pursuing its Bridgetown Initiative, but has converted a portion of its debt for “blue bonds” an ingenious plan developed and organized by the Nature Conservancy (https://www.nature.org/en-us/newsroom/tnc-announces-barbados-blue-bonds-debt-conversion/). Blue bonds restructure a portion of a nation’s debt to lower interest rates and provide for longer payment periods in exchange for establishing and enforcing protected marine parks, with an independent trust governing the parks and holding the government to account for their protection. The marine plan that is governed by each trust is developed with local participation to ensure there is local buy-in. While impact finance or ESG seems to be en vogue, without much substance, blue bonds and bio bonds (protecting old growth forest and other ecosystems) are pertinent areas were investors seeking to utilize their money to finance a better world can make an actual positive impact. One may argue that this type of debt swap is tantamount to another form of colonialism, with the world finding our “common” heritage once again in the territories of the South. However, local buy-in, the benefits of environmental protection and the better economic outlook make such a relationship substantively different to prior colonial extraction.

The international space continues to be one of structural positioning that aims to fortify the puissance of states that held the balance of power in the mid-twentieth century. This is not supportable in the 21st century. If we are truly to have an international space for cooperation, we must do so on level terms. As related in Part I, the UN needs radical structural changes, including a more representative Security Council which includes African states and an international criminal law that holds everyone to account and is not selectively enforced against mostly African nations. We cannot continue to have fragmentation of the discipline and selectivity of enforcement. We need a more solidified and holistic international discipline so that international trade regulation and international investment law cannot be interpreted without reference to international human rights law and international environmental law. Ecocide must become an international crime. Economic and social rights must have equal force with civil and political rights as a definitive part of international customary law. The Millennium Development Goals and the Sustainable Development Goals must have substantive effect and not be merely inspirational. Multinational corporations, some with bigger coffers than most sovereign states, must be held to account for their actions, including violations of international human rights and ecocide. We must not let trade regulation allow for powerful industrialized nations to continue to have protectionist subsidies and essentially exempt their dumping into developing nations, while preventing those countries from ensuring food security by prohibiting reserves and subsidies. These criminal acts — for they have directly led to the starvation and malnutrition of millions — cannot continue. We cannot have secret courts in which practitioners double hat as arbitrators and allow corporations to challenge public health, labour and environmental policies. A more equal space is necessary, but not sufficient to reform the international space into an equitable one. We must relieve developing nations of their debt and we must provide concessional finance for infrastructure, public health, education, environmental protection and energy transition. We must finally keep to our promise of knowledge transfer and ensure against biopiracy. Otherwise, we cannot speak of an international space, which implies a horizontal relationship, but continue the colonial space of vertical integration.

This will not occur of its own accord. A cursory look at the discourse from the IMF and the World Bank may have one concluding that they have learnt their lessons and their professed new outlook, such as the World Bank’s professed “do no harm” agenda will result in radically different institutions. Yet these are mere performative gestures that masquerade the fact that business is going on as usual. Since the Paris Agreement in 2015, World Bank facilities have directly and indirectly — through intermediary financial facilities- financed fossil fuels projects, from gas to coal to the tune of a whopping $14.8 billion (https://bigshiftglobal.org/Investing_In_Climate_Disaster). Over half of the IFC’s current portfolio are fossil fuels projects totalling $31.5 billion. This is despite the fact that we are facing an inarguable existential crisis and rapidly need to divest from fossil fuels and invest in energy transition to more renewable sources. The IMF’s supposed amendments to the harshest consequences of its macroeconomic policies have been analyzed to be largely “ceremonial” and the IMF has rather revealed “an escalating commitment to hypocrisy” by a joint study between Oxford, Harvard, Cambridge and Waikato universities, led by Dr. Alexander Kentikelenis ( https://www.tandfonline.com/doi/full/10.1080/09692290.2016.1174953, also see https://inequality.org/great-divide/new-leadership-for-the-imf-same-old-hypocrisy/). Nor is the “reform agenda” at the WTO going to provide more equitable trade regulation. James, writing on the results of the 12th Ministerial Conference in June 2022, wrote that the WTO is pro-big business and seeks to allow more corporate influence, as “stakeholders” into the revision of trade rules, including eviscerating consensus based decision-making, while retaining harmful monopolies and subsidies against public health and attendant food security in the global South (https://cepr.net/the-world-trade-organization-after-the-12th-ministerial-conference/). Hypocrisy knows no bounds.

Substantive change rarely comes from the top. Grassroots movements that bridge social divides- these are the real game changers. The people of Cochabamba rose up and beat Bechtel (you can listen to water activist Marcela Olivera, one of the leaders of the resistance speak to the problem of water privatization throughout South America and the victory against Bechtel on Gravity- (http://thegravity.fm/#/episode/14). Despite its ISDS suit, Bechtel settled for a nominal sum of cents due to the intense and continual public pressure throughout Bolivia and also in San Francisco, where its offices were located. Together, we can prevail.

In the end, we are all just people — and simple arithmetic reveals who has the power. We should not let our solidarity splinter and work together to establish an open, participatory and equitable global community from the bottom up. For the international should be a space of cooperation and community and no longer control and colonialism. We can and must do better.