International Organizations

Allocution Eleven: International Organizations

Key summary:

• International Organizations: These organizations play a crucial role in shaping the global economy and influencing financial markets worldwide.
• G7: The Group of Seven comprises the world’s most advanced economies, and their policies and actions significantly impact market trends and investor sentiment.
• G20: The Group of Twenty includes both developed and emerging economies, representing a broader range of perspectives and influencing global economic policies.
• BRICS: This bloc of emerging economies (Brazil, Russia, India, China, and South Africa) plays an increasingly important role in shaping global economic dynamics.
• OECD: The Organization for Economic Co-operation and Development provides a forum for developed countries to coordinate economic policies and promote sustainable growth.
• OPEC: The Organization of the Petroleum Exporting Countries is a cartel of oil-producing nations that significantly influences global oil prices and energy markets.
• World Bank: This international financial institution provides financial and technical assistance to developing countries to reduce poverty and promote economic development.
• International Monetary Fund (IMF): The IMF works to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
• World Trade Organization (WTO): The WTO aims to regulate and facilitate international trade, providing a framework for negotiating trade agreements and resolving trade disputes.
• Bank for International Settlements (BIS): The BIS fosters international monetary and financial cooperation and serves as a bank for central banks.
• Understanding the roles and functions of these international organizations is crucial for investors seeking to navigate the complexities of the global financial landscape.

1. Introduction

There are a lot of international Organizations which will affect the market prices greatly throughout the year. They will not just affect the stock market but also various markets like currency, futures, crypto, bonds, energy……etc Different economic cycle and social stages would have different effects even if it’s the same organization. Some incidents happened would have impact on several organizations and some organizations would have different effect on various markets. Important international happenings including energy crisis, climate change, currency rate, inflation, terror attack, nuclear crisis……can group together to generate greater impacts. Each organization would have cross effect on others and in turn will make their decisions referring to the rest so as to cover more sectors.

So for G7/G8/G20, United Nations (IMF, World Bank, WTO, WHO, Climate Conference) OPEC, EU, APEC, NATO, and ICJ. We will have a brief discussion one by one.

2. G7/G8/G20

a.Structure

Among various organizations, the G7/G8/G20 group probable has the greatest effect on financial market as well as global affair. It covers the sector of economic, political, environmental and social problem and can have the most to-the-point decision. It also can unite major central banks together to have currency interference, and very often the effect is prominent and fast.

The G7 actually is not a union, it is a forum. It does not have a head office, no permanent address, no general secretary. They do not have an office building like United Nations or European Union. Every year, each member will be the host from 1^st of Jan to 31^st of Dec. The leader of the host country will be in charge of everything. They don’t have the President or Chairman in every meeting, the leader of host country is the chair person.

Therefore, they need not to collect membership fee. Not as the United Nation has to collect annual fee to cover the overheads of the enormous office building. Every year the G7/G8/G20 would have several major topics to discuss such as terror attack, climate change, pandemic…..etc, and areas determined by the host country. They will also review the progress of last year and see whether they need to follow up in the coming year.

Russia joined in 1997 as G8, but in 2014 expelled because of annex of Crimea and go back to G7.

The first meeting was held in France that was G6 in 1975, later on develop to G8 and go back sequence that is Canada, France, US, UK, Germany, Japan and Italy. This year 2022, the host is Germany, will be held on 26^th to 28^th Jun in the city of Elmau, a mountain resort city in south of Germany.

b. Meeting schedule

So what is their meeting all about? Attached is a detailed meeting schedule of the G8 meeting in Scotland of UK in 2005. This is a good example as other meetings would be roughly running in similar situation.

(i) First Day

The meeting normally lasts for 3 days, the first day is for arrival, no special topic to discuss. In day time it’s their chartered plane arrival and Diplomatic Department will meet them in the airport. In the evening, it is the cocktail reception and dinner party. The host of course is the person in charge (Prime Minister), but the supreme leader has to turn up such as the Queen in the UK or the Emperor in Japan when they are the host. Actually, the first day is for them to fit into the jet lap only. (refer to figure 1 and 2 please)

This is a social meeting, the Queen will come out with her spouse Prince Phillip, therefore all leaders will bring their spouse to attend the dinner and have group photos. After that, their spouse will not turn up in any official ceremony. On the last day, there will be also another group photo with all leaders but no spouse. Therefore, some say the meeting is of 3 days, including the first day of reception and the trunk of meeting is on second and third day, some just count the second and third day and say this is a two-day forum. Both counting are correct.

In the following schedule, we use the 3-day system to describe everything and go further deeply into the details. Jul 6, is the first day for arrival.

Figure 2 : G8 Schedule (a)

Figure 2 : G8 Schedule (b)

(ii) Second Day

Jul 7, is the second day. Every year they will have a theme for the meeting; this year is on climate change and global economy. Please refer to the schedule that is for the first working session they only have 90 minutes to discuss, not so much time indeed (10:00 – 11:30, Jul 7). Of course the Chairman has to give his introduction and conclusion, say it will occupy about 10 minutes so for the rest 80 minutes, each of the 8 leaders will only have 10 minutes on average to express their opinions.

That’s why this is considered as more important than the United Nations meeting. For there are 193 members in the UN, if everyone speaks for 10 minutes it will be 1,930 minutes which is 161 hours, all people might have gone asleep. It’s impossible to have a meeting for those busy people to seat down to listen to 193 speeches one by one.

(iii) Guest

Every year they will invite some guest to join them, this year, there are two lines of guests, the first line is from Brazil, China, India, Mexico and South Africa. They cannot join the core meeting in the morning session; instead they arrange the G8 with them to talk about for one hour (12:15 – 13:15, July 7). Some countries like to exaggerate and do not mention the whole scene, and just say their leader is invited to G8, and had not talked about there are a lot of other countries also invited, misleading their leader is solely talking with G8 leaders for they would not post out the group photo, just post out their leader is taking a boat tour in the lake with other G8 leaders by their side. So in country of no press freedom, citizens are always misled and brainwashed thinking that their country is very important.

But when refer to schedule the time is even shorter, it only has 60 minutes but 5 leaders plus G8 leaders altogether had 13 people, when cutting off the introduction and conclusion of the Chairman, say it occupies a total of 5 minutes, so each one can only have 3.3 minutes to speak on average. So do not be so agitated when your leader is a guest here. Do not forget still have some representative from IMF, IEA, UN, WTO and World Bank, they also have the right to speak and have not calculated above.

Immediately after that will be a press conference concerning the discussion with these guests and also group photo taking. Then the guests will leave and the second working session again is only G8 core member for another 60 minutes. (17:00 – 18:00 Jul 7). It is on Middle East and North Africa and then comes the dinner.

(iv) Third Day

So on the third day in the morning there will be the third working session and this time only has 75 minutes. It is one of the core meetings but the theme is on Africa (10:00 – 11:15, Jul 8). After that, another line of guests will come. They are from Algeria, Ethiopia, Ghana, Nigeria, Senegal, and Tanzania (11:30 – 12:45, Jul 8). Please be noted that South Africa is on both lines of the previous day and this day and of course African Union has to take part in. The meeting lasts for 75 minutes and is quite limited indeed.

Mind that both days they have their working lunch, on the second day is just one and a half hour (13:30 – 15:00), but on the third day it is two hours (13:00 -15:00), for they need to draft a Joint Declaration of the meeting. After that the host will hold the press conference and release the Joint Declaration. They do not have a vote at last of deciding which country will do whatsoever, they just come to a consensus of what part they would take say on climate change and fighting terror attack, and the depth is hard to control.

To sum up, there are only 3 core meetings of G8 members, two on the second day and one on the third day, each can only last for 60 to 90 minutes. Also there are two lines of guests meeting that is G8 members with two different lines of guest countries. Altogether there are 5 important meetings, 3 on core members of G8 and two on two different lines of guests with other international organizations presenting.

(v) Down to earth impact

Why the writer pick up this year as an example? Because it has something special, it manage the “Live-8” concert of million people across the globe and 3 billion people through 5 continents to fight against poverty. Anyone still remember the white ribbon at that time is for the concert. A series of live concerts are held in different time zone in Marathon form in various cities consecutively such as London, Paris, Berlin, Rome, Philadelphia, Chiba, Moscow, Johannesburg, Cornwall and Edinburg. Details can be seen in the following website. It shows that G8 is not just a meeting for high class society, but also has its down-to-earth side.

Figure 3 : Live 8 Concert

(vi) Side meetings

Besides the meeting of leaders which is called summit, there are ministerial meetings since 1973 which is even earlier than the meeting of leaders. Or some people would say the G7 summit derives from G7 meeting of Finance Ministers. Now they have independent meetings 3 to 4 times a year, and is know as G7 meeting of Finance Ministers and Central Bank governors. In spring and autumn, they will turn up at Washington DC at the annual meeting of IMF and World Bank respectively. The host country will also have their Finance Minister meeting once or twice, and IMF and World Bank must present including the representative from EU. Sometimes it is known as Sherpa meeting, that is a meeting in preparation of the leader meeting, just to narrow the discussion panel so that leaders can make decision at once to save time. Mind that even during the G8 time of 1997 to 2014, the Finance Minister Meeting is still of G7 and not included Russia, for their discussion is always on taking out how much money and manpower to help the poor, and after the collapse of Soviet Union, Russia has no money to help others.

There are still several ministerial meetings held annually including labor and employment ministers, environment ministers, foreign minister, trade ministers, energy ministers and technology minsters, while for other departments, they will also have meetings but not every year. Actually, how many side meetings should be held is decided by the host country.

(vii) Expansion of G7

The G7 is composed of the seven wealthiest advanced countries. As of 2021, Crédit Suisse reports the G7 (without the European Union) represents around 53% of the global net wealth; including the EU, the G7 accounts for over 60% of the global net wealth.

The People’s Republic of China, according to its data, would be the second-largest with 17.90% of the world net wealth, but is excluded because the IMF and other main global institutions do not consider China as an advanced country. The major reason is because of its relatively low net wealth per adult and Human Development Index.

During the G8 period, from 1997 to 2014, there are always some voices saying should expand the members further to G13 or G14, until the 2008 comes the Financial Tsunami. George Bush upgraded the G20 Minstrel meeting which started in 1999 to summit. At first it was held twice a year, but in 2011, it became once. G7/G8 is held separately at different time and place. Just to show the world there are two categories, one is of advance economy and had freedom and democracy and the other consist of all major economies.

G20 technically consists of 19 countries plus the EU. Together these countries account for 85% of the world economy and two-thirds of its population. They are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. Each year, there is a host and invites all members to participate and discuss on several topics, just running in the same manner of   G7. That is besides core meeting still have meeting with guests. It is quite hard to say whether G20 or G7 is more important. G7 keeps on the pattern of democracy and freedom and concentrates on discussions. G20 is more comprehensive and covers a wider range of countries no matter they have democracy or human rights can also join it.

Russia is expelled out of G8, and since then, there has been saying to ask them to come back to G8, but in 2022, because of the military action in Ukraine, some countries wish to expel them from G20 also, at last the idea is cancelled. What they want is to have one more venue to talk with Russia besides to talk about them. This is also a practical means of avoiding nuclear war.

Some people said that G20 has already replaced the importance of G7, but to the observation of the writer, the G7 is still in a level apparently above the G20. Such as in case of central bank interference of the market, there is only G7 central banks will have joint action together and the G20 central bank never had any joint action for some countries like China, even their economy is strong, their currency still cannot have free float in the market as that of the G7 currencies.

(viii) Globalization

Coming together with the G7/G8/G20 is a matter of Globalization. That is a group of demonstrators to fight against the situation that large enterprises are swallowing small businesses. Such as the rise of chain stores no matter in supermarket or fast food restaurant had already eliminated small stores and individual restaurants. Nearly all small shops are kicked off from the economy especially in advance countries. Formerly a couple of pensioners like husband and wife can run a small store for a long time and now seldom happens. Chain stores also make the distribution of wealth uneven and concentrated in a small group of people only. Anti-globalization is a group of demonstrators asking the G7 leaders to face such a problem of distribution of wealth and not just work for large enterprises. But the leaders said they formed the G7 to fight such a problem.

Anti-globalization is just a group of poorer people in Europe and they have no money to travel across the ocean to America or Asia, so their demonstrations are limited to Europe only. So the venue for meeting is normally in far off locations, where few people can go. Thus the security will be better and travelling expense and time cost will be higher so demonstrator will be lesser. But latter on it is develop into Occupy Wall Street where they say 99% of the wealth is held in the hands of 1% people, and for the poor of 99% they can only have 1% of the world wealth. It’s only a numeric slogan, the actual case is even worse.

For more details of G7 or G20, there is a think tank in the University of Toronto, you can see the summit of each year, minstrel meetings and the originals of documents announced and relevant data.

For G7 is G7 Information Centre (utoronto.ca)

For G20 is G20 Information Centre (utoronto.ca)

3. United Nations

Superficially, United Nations consists of 193 nations of the world and should be the most important organization, but now we are talking about the impact on the market. Emphasis should place upon whatsoever can make the Indexes and prices go up and down vigorously, and not how many members in that organization.

When taking about the United Nations, normally people would think of the Security Council where there are 5 powers of US, UK, China, France and Russia, or the General Assembly. But besides that, the writer wants to divert the attention to a group Specialized Agencies that has close relation to the market in different period. So let’s start with the closest first.

(a) Security Council

This is the most important part of UN, it is established to maintain peace of the world. The UN passed a lot of resolutions, but if other countries does not obey it, who will enforce it? It is the Security Council. It has the right to pass and levy sanction against any country as a lower level of enforcement. The higher level is to form a Peace Keeping Force to fight against any intruders. The aim is to control the members not to use military action to solve any international problem, the only way to keep peace is to have strong military power than intruders. In 1988, this Force got the Noble Prize of Peace. They have fought a lot of famous wars. Since 1948, they have fought for 113 countries. The first famous war after the establishment is the Korean War, where Soviet Union used China to fight for North Korea against the Peace Keeping Force of UN as a proxy war. Soviet Union deliberately absent from the Security Council so as to pass the bill to launch out Peace Keeping Force and compromise with China to let Chinese army to enter into the war to fight against South Korea. And in 1991, the Gulf War is the first modernized war using missile and smart bombs, that is a war of new era which is fought by pressing buttons. Henceforward, missiles can aim at military targets sharply and avoid shooting to residence, and the carpet bombing and Kamikaze (suicidal plane) of World War II no need to launch out and can avoid unnecessary sacrifices. All targets are bombed precisely and hurt to citizens are lesser.

Since there are 5 powers inside the Security Council, each one has a veto to reject the action, so a lot of actions are turned down simply because one of the 5 powers is in objection. This is the blind point of UN. In such a case, the most famous war is the Vietnam War, because of the veto of the Security Council, there is no UN Peace keeping force, the war was fought by US with his allies and lasted for nearly 10 years. The same in the Iraq War of 2003, the Security Council did not pass the resolution and US and its allied form a force known as US-UK allies to capture Hussein Saddam, George Bush Jr just completed the mission not yet completed in 1991 by George Bush Sr. It show that Security Council is not an almighty entity and is always hold back by the veto. Meanwhile, even if it does not pass a bill, others still can carry it out.

(b) General Assembly

The United Nations is situated in New York, the city donated an area for it to use as headquarter. That area does not belong to US but to the United Nations. Metropolitan police of New York cannot enter into it unless invited for enforcement of law. This style is accepted by other organizations such as European Union in Brussel and African Union in Johannesburg …. etc

Since all members can attend this General Assembly, it becomes a symbol of the UN. They have a meeting every September, important guests are invited to give speeches, of course quite limited. Those leaders would only announce what they would do in the speech and have no time to discuss with other members. The discussion is done in Security Council or other autonomous organizations as said in the following item of UNESC.

The Security Council is used to take action against other members, so what happens if problem occurs among the members. That is how to expel a member from the Security Council, if one of the 5 powers, that is he himself can cast a veto, so it will be illogical. Thus will go to the General Assembly for decision.

The most famous bill is in 1971, at that time Republic of China (Nationalist government in Taiwan, ROC), is one of the founding member of the UN and also one of the 5 powers in the Security Council. The People’s Republic of China (Communist China in mainland PRC), wish to replace their position totally. So it goes to the General Assembly, when over two-third of the members passed, than the bill will come true and PRC replaced ROC. For in the General Assembly, even one of the Five Powers cannot exercise his veto. That is one cannot cast a YES or NO vote for himself, it should be cast by all members.

The latest bill is on March 2022, for the military action of Russia in Ukraine, the General Assembly passed a bill by 141 in favor, 5 against and 35 abstention that Russia must withdraw the troops from Ukraine at once. But Russia neglects it and refuse to withdraw and no one can carry out the bill. The Security Council cannot do anything for Russia has a veto to block it. In order to solve this problem, in April 2022, another bill is raised in General Assembly to suspend the membership of Russia in the Human Right Council for their war crimes are confirmed in Ukraine with 93 nations voting in favor and 24 against. So Russia’s membership is suspended. However, their status of Five Powers in the Security Council and member of the General Assembly remain unchanged.

So these are the blind points of Security Council has no symptom to be solved shortly and still will carry on for a longer period.

(c) UNESC (IMF, World Bank, WHO, WTO, ICJ, UNFCCC)

There is another council where the name is seldom heard, but of great importance. For underneath it, there are a lot of autonomous organizations working with the United Nations and each other through the coordinating machinery of the United Nations Economic and Social Council (UNESC). The subsidiaries have a lot of functions and is serving the world in various aspect which benefited a lot of people.

These agencies actually are quite famous and often heard in the market, but few people would like to link it up with the United Nations of even do not know there is a UNESC above them nearly as important as the Security Council. Under the UNESC, there are the IMF, World Bank, WTO, WHO, IAEA of greater importance and there are a lot of organizations such as the ILO, ICAO, ITO, UNESCO, WIPO and WMO are of secondary importance but still doing a lot of things for the world.

(i) International Monetary Fund and World Bank

The International Monetary Fund (IMF) and World Bank are so famous for every time when the G7 Finance Minister and Central Bankers have their meeting, these two must turn up. And not only these, the IMF will have its annual spring meeting and World Bank have its annual autumn meeting, the G7 Finance Minister also have to attend. Also in a lot of circumstances like APEC, G20, EU and BRICS, these two are also invited as a guest or observer to attend. So some people say, for every famous international gatherings, it is very easy to see the IMF and World Bank.

A lot of people mixed up their function, for superficially, they seemed quite near, and physically, their headquarters are situated side by side in Washington DC, quite near the White House which means they are of high importance. Besides, the Treasury Department and General Service Administration (GSA), it is the nearest organization to White House. Basically they are taking out money to help the needed countries and not individuals or enterprises.

These two institution comes from the conference of Bretton Woods in 1944, that is after the World War II, the victory countries unite together to form a new financial structure for the world of tomorrow. Thus gave birth to IMF and World Bank. But after the Financial Tsunami of 2008, the G20 tried to form a new financial system beyond the Bretton Woods Agreement and now is still working.

Figure 4 : Map Of Washington DC

The World Bank is not a commercial bank and not a central bank either. So what is it? It is an inter-governmental investment bank. It borrows money from rich members and lend to members of poverty. Very often, the poor countries have no money to pay back so they have to issue bonds. The IMF serves to stabilize the international monetary system and acts as a monitor of the world’s currencies. The World Bank Group provides financing, policy advice, and technical assistance to governments, and also focuses on strengthening the private sector in developing countries. The IMF keeps track of the economy globally and in member countries, lends to countries with balance of payments difficulties, and gives practical help to members.  Now, each institution has 189 member countries.

(ii) World Health Organization (WHO)

The WHO is quite famous these few years because of Covid-19, and formerly few people would aware of it. It’s the largest inter-government health organization, with headquarters in Geneva and with 6 regional offices and 150 branches worldwide. According to the Millennium Plan, their target includes the following:

a. Eradicate extreme poverty and hunger
b. Reduce child mortality
c. Improve maternal health
d. Combating HIV/AIDS, Malaria and other diseases
e. Ensuring environmental sustainability
f. Building a global partnership for development

It became famous because of the pandemic in China in late 2019. At first China called the virus Wuhan Virus, that is used the city of origin as the name, but later on Chinese government found it’s a name of humiliation to the city and China, so asked the WHO to give a new name as Covid-19.

During early stage of Covid-19, the WHO helped China to conceal the pandemic and made a lot of people disappointed. Donald Trump withdrawn the membership of US away from the WHO, which means would not support them any more in terms of membership fee. Even though once said after withdrawal, he would ask G20 to form a new organization on health. But the WHO has 150 branches, so if a new organization has to establish and need to build up 150 branches it may take 10 years’ time or more to replace the WHO. The cost of manpower, material, land and capital will be so enormous that it cannot find any support. The better way is to re-join it and give pressure to them and ask them to have reformation.

After Joe Biden took office, he really rejoined the WHO and gave pressure to them to become more neutral than just a puppet of China. As the pandemic spread worldwide, so a lot of countries requested to have investigation on the source of Covid-19 so as to prevent it from happening again. At first China refused to let an independent commission to go to China for investigation. Later on, just said only accept approved persons from WHO for investigation. After initial investigation, the group of specialist said they could not contact a lot of original data, people and places thus requested for a second stage investigation, but refused by China. China started to educate the next generation in school that the virus comes from American laboratory and carried to Wuhan and thus spread worldwide. While in rest of the countries, they just consider Wuhan is the originator of Covid-19, but would not call Wuhan Virus again, even WHO asked all members keep on calling Hong Kong Foot, German Measles, Japanese Encephalitis, Spanish Flu, African Swine Fever, Middle East Respiratory Syndrome and Zika virus, but for Wuhan Virus must use the official new name Covid-19, others can kept unchanged.

Actually, the WHO has done a lot in prevention of other disease like Ebola and AIDS, but failed to prevent Covid-19 because in early stage always said it is a controllable regional disease and concealed the spread for China. Later, every country has their own measures and the part they play is not so much. It shows that their function and power is quite limited, it is the common symptom of United Nations. For routine and secondary problems, they can handle on the track, but when extraordinary case arises such as worldwide pandemic; they cannot do anything to stop it. It is the blind point of United Nations rather than any single autonomous organization.

(iii) World Trade Organization (WTO)

The WTO is formed in 1995, replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948. The aim is to help member countries to use the organization to establish, revise, and enforce the rules that govern international trade. Altogether it as 164 members now.

The basic idea is help members to be fair and just to all other members. At most of the time is to help members to give the most favorite nations to other members, but cannot be done to all members. That is if all members do not have tariff, then there is no need to have a government. The function of a government is to protect domestic industries, if they do not collect tariff at all, there is no need to have a government.

The talks will concentrate on the following guidance: (1) Non-discrimination, (2) Reciprocity, (3) Binding and enforceable commitments, (4) Transparency, (5) Safety values.

However, it really plays an important part in the modernization of China. In 2001, China joined the WTO after a negotiation of 15 years since 1986. During this period China made a lot of reformation and developed the trading from an under developing country to a star. The Trade Balance surpasses Japan to be the greatest trading partner of US, and turned from deficit to surpass. Western countries also had high hopes on China, thinking that adding them into the world trade platform would help China to step into the road of modernization. And not only for this, will also step to the way of democracy and freedom. For China has an enormous population and should not be neglected. If it can step into the universal value of democracy and freedom, it would be beneficial to the world very much. China promised to keep open door policy and gradually step into the universal value of democracy, humanism and freedom, but anyway it takes time to change and cannot be done in a single day. So the west help her in the negotiation and modernization. After entering into the WTO, China had great improvement in modernization, but still carries on the practice of authoritarianism.

In the presidency of Donald Trump, they started the talk of trade war between US and China. For WTO is unable to handle such a big problem, therefore it needs the direct talk between these two countries. In March 2018, US issued a memo to start a trade war with China. The official reason is that China has been “in theft of intellectual property and trade secret”, therefore have to levy tariff. Mind that the aim is not on trade balance, but on intellectual property, because Chinese government use systematic plan of “Thousand People’s Scheme” and oversea student to have theft on intellectual property and let America loss a lot of job opportunities. Trade Balance is just a means of solving the problem by levying tariff and having compensation. In Jan 2020, they signed the first stage of trade agreement on tariff and trade balance, and the core is in second stage of intellectual property which will be discussed after the general election of 2020. The Agreement was considered as an insult to China, in order to solve the problem of pirated CDs that lasted for several decades still had no improvement. The US police and Chinese police will form a squadron, and US police have the right to order Chinese police to carry out the enforcement of law against pirated CDs inside China. But just one week after the agreement signed, China lock down the city of Wuhan because of Covid-19 and the pandemic spread worldwide. So such a squadron never come into enforcement, and for buying of US goods is also greatly behind schedule in the next two years. However, the term “Thousand People’s Scheme” is now blocked by internet controller inside China now.

The WTO has done a lot in verdict of general trade disputes but for the large problem of China using the whole nation’s effort to transfer technology back to China, they cannot do anything. The only method US can do is stop accepting students from concerned national defense universities to go to study in US while there is no ban in other department concerning high technology and the problem still exists though controlled.

The WTO of course can act as a middle man to solve the problem when there is disputes on intellectual property, but it applies to small cases only. When as large as the Sino-US Trade War case, they cannot do anything.

Figure 5:Trading volume of China

Figure 6: China’s economic growth after joining WTO

Figure 7: Sino-US Trade

(iv) International Court of Justice

The International Court of Justice (ICJ), sometimes known as the World Court, is one of the six principal organs of the United Nations (UN). It settles disputes between states in accordance with international law and gives advisory opinions on international legal issues. Mind that it is different from International Court of Criminals (ICC). The ICC is for criminal case of citizens and ICJ for disputes in states. Even both of them are located in Hague, Netherlands.

If it is criminal case they can ask the police of that country or Interpol to carry out the enforcement, but for states they cannot do anything, carry out the verdict, but if the counterpart has nuclear power, they would also afraid of bring about nuclear war or World War III.

Even the ICC has 15 judges to give a verdict, but they have no power to ask members to follow. That is if members do not follow their verdict, they cannot do anything, but other countries can base upon their verdict to levy sanction or military action.

(a) South Sea Dispute

In the South Sea Islands, there are 5 surrounding countries claim that they have sovereign on different islands overlapping each other. But China claimed the whole South Sea belongs to them. According to the United Nations Convention on the Law of the Sea (UNCLOS), all public waterways including estuary, bay, river, entrance to bay belongs to the world and not any country. But China’s used the Nine Dash line drafted by Nationalist government after World War II to claim the whole South Sea belongs to them. It’s an internal document without longitude or latitude and no agreement with other countries.

The verdict in 2016 also give definition that all islands on South Sea are defined as reef and not island. An island according to UNCLOS, must have its natural fresh water supply and must have continuous economic activity by inhabitant. If just military and weather collection activity cannot be counted. Therefore all islands South Sea are defined as reef in law. An island has a territorial sea 12 miles while reef on has 6 miles. Artificial buildings like oil platform cannot have territorial sea.

There is one more point, shoal (coral reef underwater literally known as sunken bank) cannot be claim as a territory. China claimed the southmost territory is James Shoal, this place is also claimed by Malaysia and Taiwan. A shoal is a reef 24 hours a day, 365 days a year kept underwater, and it has no territorial sea. The James Shoal is 22 meters under surface of the sea all the way and surrounded by Malaysian Islands. But China sunk a stone crafting it is the territory of China. US and western warships like to sailed to South Sea for freedom of sailing, and always sail across the area between 6 and 12 miles of the reef so as to claim they have freedom of sailing. But China said they entered into the 12 miles territorial sea and was driven out by the liberation army. On the eve of the verdict of South Sea by ICJ, China announced they would not recognize the verdict when there is any point unfavorable to China, therefore no need to follow and can have they own way to handle during such a dispute.

(b) Civil soldiers

Basically, for terrestrial disputes it should be negotiated by those countries involved no matter it is two or three countries. But if a country drives out other countries in public sea, the ICJ of UN cannot do anything. China is accustomed to use Little Blue Man in South Sea to drive away fishery boats of other countries. Little Blue Man is a group of armed fishery boats, the appearance is the same as normal boats, but with arms inside and also stronger deck for protection. They are actually civil soldiers. Boats are in larger size and great number as 200 or 300 boats together so as to occupy a certain area of sea to keep it under the control of China. When other countries complain, China said they are normal fishery boats and seeking for shelter from storm, even the weather is fine. US complained that China build up so many military facilities in South Sea reefs, but China complained US warship get into the South Sea frequently and that’s why they need to defense, for the whole South Sea belongs to China and they have the right to defense the threat from foreign countries. US said they have the right to keep international water free for navigation since the ICJ and UN are incapable to do this. If they don’t do so, no one is capable of doing this and no one will expect other countries to do it.

Recent years not only US, but the Five Eyes and “Asian NATO” like UK, India, Japan, and Australia keep sending warships to protect the public sea. China is also quite firm in protecting the economic resources of South Sea and thus is very easy to have misfire in that area.

Figure 8 : Five countries claim the territories overlapping each other in South Sea

Figure 9 : Nine Dash line of China

(c) Hong Kong

Also for the handover of Hong Kong in 1997, the Sino-British Agreement is filed in the United Nations stating to keep Hong Kong for 50 years unchanged. But even if it changed within 50 years, the United Nations cannot do anything indeed. The problem lies in the One Country Two Systems, China thinks that One Country should be greater than two systems, and the UK thinks the Two systems is greater than One Country. The only guideline is to keep 50 years unchanged, when it really changed, nothing can be done by the UN or ICJ.

The US and western countries can have sanction upon China and HK officials, but China can also have counter sanction upon the west. The west say China is in breach of the Agreement, China said it is their internal affair and the Agreement is just an historical document and a piece of waste paper now; and other countries has no right to talk about it. Both sides claim that they are the only correct side and the other side is completely wrong. So in such a case the UN or ICJ has no effect at all.

(iv) UNFCCC

Climate change is a hot topic in recent years, the policy affects every part of financial market and focus should be place on carbon dioxide emission. It affects the factory production and government policies in turn will affect the production quantity and production cost which is an important part of the economic cycle. The United Nations Framework Convention on Climate Change (UNFCCC) is an international treaty that was negotiated in 1992 and came into force in 1994. However, they would have annual meeting to see the progress, and this year.

Their base is similar to a forum, that is after discussion, each country will to back to carry out the policies and come back to review next year. Of course, some would fulfill the target and some cannot. The problem again arises, when those countries cannot fulfill the target in a long term of period, what can they do? Nothing at all.

They agreed to cut the carbon dioxide emission year by year. In 1997 the Kyoto Protocol agreed each country should cut the emission of carbon dioxide year by year. From Figure 10, it can be seen that most advanced economy are in low emissions for they have a nice foundation of environmental concept, while emerging economies are of higher emissions. So after the Agreement, advanced economies cut the emission greatly, emerging economies like Africa and India cut slightly but still have some progress. China has no sense of cutting but grew up greater than ever. The argument is that in such a case they classified themselves as under developing countries and need to be specially treated even they gave administrative orders their economic growth must be faster and higher than US. China is the factory of the world, so they are producing for the world and not only for themselves.

So in 2015, on maturity of the Kyoto Protocol, a Paris Agreement is made which is more updated to the practical world status. But no improvements made, US and EU cut continues to cut the emission, China had not cut and only increased. Therefore Donald Trump again withdrew the membership form it in protest for it is unfair and ridiculous to face such situations. However, the same case as in the WHO talked before, Trump is unable to form a new agreement to replace the UNFCCC and carry out the function by such action of objection. So after Joe Biden took office, he rejoined the UNFCCC. In Apr 2021, he held a video conference on Climate Change, in Jun he brought the topic to G7 to discuss. In Nov it’s the 26^th annual meeting of Climate Change of UNFCCC in Scotland. Under great pressure, China promised to cut emission with effective from 2030 which means before that still have to increase. After reaching the peak and cut down still need a certain time to be lower than present statues. But during their internal propaganda, China just emphasize they would take up their responsibility to cut from 2030, without mentioning what will they do before that.

So this is just one of the examples, other sector and other countries may have similar situation which reflects the power of the UN is limited even if it has quite a number of contribution. But still a lot of blind points need to be solved.

Figure 10: World Carbon Emissions

Figure 11: Projection of (CO2) Emissions

4. OPEC

Organization of the Petroleum Exporting Countries (OPEC) is established in 1960, it swelled from 5 founding members to current 13 members, accounted for an estimated 44% of global oil production and 81.5% of the world’s “proven” oil reserves. Saudi Arabia accounts for 11% of world production. The headquarter of OPEC is situated in Vienna, just outside the member countries, so as to be more neutral. At first the aim is to have a better inter-relationship among the member countries, but since the petroleum crisis occurred in 1973, the OPEC became an organization of controlling the price of petroleum.

(1) 1970s : The petroleum crisis arises not because of any shortage in production, but because they want to control the output. During the Middle East War, Israel just one country can defeat the allied of over 10 Arabian countries. They thought the main reason is that US supplied Israel the latest and most advanced weapons. Their retaliation is limit the supply of petroleum to the west and made the price soared up from $3 per barrel to $12, that is 300%. The whole world is in energy crisis. US started the energy saving scheme. All lights in Washington cut half, including street lamp and White House, even the fountains and illumination on outer walls had to cut also and just light up alternatively. Thus the whole world followed, even performance in stage lights are cut half.

Israel used latest American weapons were true, but Arabian countries used Soviet weapons were not bad at all, or at least just marginally and slightly weaker. It’s not the main reason of total collapse, rather likely, it the training, management, sense of vigilance and modernization of the country. Such as on the first day of war, 200 Arabian planes were bombarded on the ground, only two were shot down in the air. They were not shell at a single time. They were located in different airports and bombs by Israel planes went back to the base and refilled and bombed again and again, Arabian planes were still not ready to fly up.

Henceforward, US not only sell arms to Israel, but also to Arabian countries, so those manufacturers made a lot of profit on both sides. And on selling of arms, they do not just sell the weapons, but in a whole package also include the training course which made them earn more profit in a single contract. Such as selling of fighters, when they sell 50 single seater war planes, it will have another 2 extra prototype of double-seater training plan which will be more expensive. It will also include a training course of seed-trainers for them to go back to train general pilots. Ultimately solve the crisis in this manner.

(2) North Sea Oil

Middle East is the largest oil field in the world, because of the petroleum crisis they wanted to develop other oil fields. The oil field was found before the two world wars, but because it is under water so it needs high technology and cost to excavate. After World War II, technology was matured and they started to excavate, but the amount was not so large. However, the petroleum crisis prompted them to fully develop the oil field underwater and opened a new page.

Following the 1958 Convention on the Continental Shelf, the North Sea is divided into 5 countries; each occupies their Exclusive Economic Zone. They are UK, Norway, Denmark, Germany and Netherlands. They use the same brand name which is Brent Oil. North Sea is situated on the northern side of European continent and thus is called so. So even it is east of the UK and west of Norway, they are still called North Sea. They are traded in the International Petroleum Exchange in London. Since the quality of Brent Oil is a little better so the price is slight higher than WTI in the American Exchange. By the end of Apr 2022, the closing price of Brent Oil is US$106 and WTI is US$103. They have been trading in similar ratio all the way.

The British and Norwegian sectors hold most of the large oil reserves. It is estimated that the Norwegian sector alone contains 54% of the sea’s oil reserves and 45% of its gas reserves.

Even though the North Sea is the second largest oil field in the world, it is still greatly below the Middle East. It can greatly reduce the threat of energy crisis of last century but not this century. The peak of production was confirmed to be seen on 31^st Dec 1999. Therefore no need to wait for that day, the market reacts earlier, more than one year ahead of that day, prices started to soar up. A new cycle of Bull Market begins as that in 1973. For the chart below, it can be seen since the development of North Sea Oil even several stages of Petroleum crisis occurred, the price still dropped. But after the peak of North Sea Oil production, it started another grand trend of rising; until it triggered the collapsed of Subprime Mortgage and led to the Financial Tsunami in 2008. On recovery of the Great Recession (Financial Tsunami) it rebounded, but because of the development of shale oil the price drops again. In 2012, US announced the successful development of Shale Oil which means future crisis will be softened. At that time, the cost of Shale oil is $120, but the price of petroleum was $110. Even they could not press down the price of petroleum but at least prevent it from rising again. However, they keep on lowering the cost and was quite successful. The production of shale oil in 2015 started to have full turbo, the total production in 2015 surpassed Saudi Arabia, and US became the largest producer of petroleum, formerly she is just the largest user. Since then both largest user and producer which means they can rely on their own production and no need to import from Middle East. Thus the energy crisis was solved. The cost was lowered greatly in a short time from 120 to 110, 100, 90, 80, 70, 60, 50, 40, 30, until the writer forecasted the low should be from 22-28, and it formed a double bottom from Jan and to Feb of 2016 in this range and rebounded.

Figure 12: History of Oil Price

OPEC has its annual meeting twice a year to determine the production and price of oil, and when necessary can has special meetings. Normally, when the price is too high they will increase production and when price is low will decrease production.

On the peak of North Sea Oil, petroleum reserve on earth in 1999 still can be used for 90 years, but as economy develops when shale oil came into existence in 2015, it only has 40 year left.

(3) OPEC+

OPEC+ is a number of non-OPEC member countries also participate in the organization’s initiatives such as voluntary supply cuts in order to further bind policy objectives between OPEC and non-OPEC members. This is a loose grouping of l exporting countries, and it includes Azerbaijan, Bahrain, Brunei, Darussalam, Kazakhstan, Malaysia, Mexico, Philippines, Russia, Sudan and South Sudan.

Figure 13: North Sea Oil

Figure 14: Production volume of oil

Figure 15: Top 12 producers

Figure 16: Export Revenues

5. APEC

(a) Basic structure

Once it was quite important, but after the establishment of G20, its importance lowered. At first, it is because many countries cannot join the G7, so Australia established a forum using the east, west and south sides of Pacific Ocean, to form the APEC, but thus would be without European countries. Even it has 21 members, but when comparing with G20 the GDP of G20 is 85% of the world, APEC only 60%; as for trading volume G20 occupies 80% and APEC only 47% of the world. Therefore before the establishment of G20, it was an important forum just after G7/G8, but after the G20 established, its glamour dims.

Figure 17 : Members of APEC

Basically, the particular of this forum is that every leader should put on the local traditional costume for a group photo. So for those country that has no press freedom, they just release a photo that the US President dress up in their traditional costume to talk with their leader and so as the Japan Prime Minister also dress up so to talk with them, without releasing the group photo and misled the citizens that those leaders dress up so to please their leader. Basically, it also has minstrel meeting like G7/G20 and is still running now, but the importance is much lowered than before.

(b) Absentee

(i) Mexico 2002

Normally for such large scale meetings, the highest leaders must turn up and seldom absent, but APEC has several absentees need to be mentioned.

In 2002, on the eve of the meeting, there is a Moscow theater hostage incident. A group of people known as “Black Widows”, that is composed of dead soldiers’ wives occupied a theatre in Moscow and asked Russia to withdraw the army from Chechen Republic or else they would blow up the whole theatre. Black Widows are holding remote control button of the bombs, if armies enter into the theatre they will blow it up at once. Putin at once declared he would absent from the Mexico APEC where he should depart the next day. This is the first time that an important leader absent from such important international meetings. The APEC issued a joint declaration to blame the terrorism. At length, Putin used poison gas to kill the Black Widows silently, but also 129 hostage died of the action poison gas and the rest is saved. Total audience is 850.

(ii) Chicago NATO 2012

NATO has a bi-annual meeting in May 2012 in Chicago, they invited Putin as a guest to discuss the nuclear weapon and missile problem. Putin rejected, for after the collapse of Soviet Union, the Warsaw Pact (WP) is also dissolved. A lot of former WP countries joined the NATO and he thinks it is a threat to Russia. He was unable to form another league as powerful as the WP. Thus he applied to join the NATO so as to wipe off the threat. But it needs the consent of all members or else they would not fight for the new member. Russia applied for 4 times and was rejected. The response was that member countries need them to improve the democracy, freedom of speech and news, human rights and wipe off corruption in order to fight for them. If there is no freedom of news and continue to release fake news, citizens will be easily misguided and thus would likely arouse a war. But Russia do not like to change their style. Even NATO invite them as a guest they still would not go, and thus led to sanction on Russia in the coming APEC.

(iii) Russia APEC 2012

In Sep 2012, APEC is held in the Russky Island, off the coast of Vladivostok, Russia. Putin spend US$10 Billion to rebuild the island for APEC including new bridge and other facilities, total amount is 5 times as the Winter Olympics Games in Vancouver. Barrack Obama did not go over for he said at the same time he has to attend the nominee meeting of Democratic Party for him to run for the 2012 General Election. He was absent. At the same time, the Chief Executive of Hong Kong CY Leung also absent for he has to run for the Legislative Council (congress) election at the same time and only assigned the Financial Secretary to attend the meeting.

6. European Union

The European Union basically is an economic union and the ultimate aim is to develop into a Eurozone. The Union is much united and stronger than G7/G8/G20, with headquarters in Brussel, and even more united than United Nations. However all important decisions must be passed by every member, if there is a single member refused, then it would not come true.

Now they have a President of the Commission, but not of the Union. Why the US President is said to be the most powerful man in the world because he is the commander-in-chief of American army, navy and air force. The President of European Union is just a Secretary General and has no military power. However they still have the Parliament like the Congress which are elected by general public.

Now they have no financial secretary and only have the Chair of European Central Bank. Once they have a European constitution 2015 but could not passed, and in the future they still struggle to have a real President of politics economy military and ever thing, it still have a long way to go. The introduction of Euro is to replace US Dollar as the international currency and they are still on the way.

Its anthem is the famous “Ode To Joy” from Beethoven’s symphony no 9 and is widely used in all ceremonies.

Figure 18: Various organizations concerning the EU

Figure 19: Members of the EU

7. NATO

North Atlantic Treaty Organization was established in 1949, the target is to make defense from the attack of Soviet Union. Its famous aim is on its Article 5, if any member is being attacked, it means all members are attacked and must unite together for defense. Soviet Union also established a Warsaw Pact (WP) as its counterpart. But after the collapse of Soviet Union, situation changed. Former states of Warsaw felt the threat from other side, they turned to join NATO in order to acquire security. After World War II, there was cold war, and at the peak, NATO has a troop of 300,000 people, but as cold war ends, there is no need to have so many people because maintaining such a force required great expenditure. And now the military force is lowered to 40,000 people only. However, small countries still want to join them not to be threatened by other big countries. It is a union of defense only which means if member countries attack others no need to fight for them when being counter attacked.

After the dismantling of Soviet Union, there rises a model known as “Finland Style”. Finland is famous for “Finland model”, which means when a small country is situated by the side of a large country, should follow the large’s policy and have self-censorship if want to keep peace. For example, not to call the fighting in Ukraine a war or invasion, must call military action even no one requested them to do so. Superficially it is neutral but actually dared not cling to the other side and only this side. Now they give up such a model. Since the Russian’s military action against Ukraine made a lot of their cities bombarded to ruins and 4 million people escaped, more countries wished to join NATO for protection and the Sweden and Finland both got a poll of over half to join and passed in their Congress also.

The first time that NATO exercise its Article 5 was on 2001, the 9/11 terror attack of New York, where they confirmed the attack is from external and the action is a war action, so they united together to fight against the Taliban of Afghanistan.

Current NATO countries and the years they joined.

In Feb 2022, Russia started military action against Ukraine, hope to stop them from joining the NATO. Ukraine promised not to join the NATO hope to stop the fighting, but it still continued, US with 44 countries formed an allied to protect Ukraine where the scale is even larger than NATO. The military action prompted 4 more countries tried to apply for membership in NATO earlier including Finland, Sweden, Georgia and Moldova. Meanwhile, Bosnia and Macedonia also have an intention to join.

8. Conclusion

Among the various organizations, the G7 should be the most important one for it would affect the rise and fall of financial market, no matter it’s the summit (Supreme leaders) or of Financial Ministers. Then comes G20. Various organizations would have various effect at different times. When the market focus is Trade War, of course the WTO will be important, but also Climate Change will affect the cost of trading. When in pandemic WHO is above all and when concerning military action will be of NATO. Investors should refer to them accordingly.

The League of Nations after World War I could not stop World War II, now the UN has some many blind points and would it lead to World War III? Readers have to understand them in the form of Anatomy. May peace be on earth!

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