International financial institutions

International financial institutions (IFIs, 국제금융기관/國際金融機關) are financial institutions that have been established, or chartered, by more than one country, and hence are subjects of international law. Their owners or shareholders are generally national governments, although other international institutions and other organizations occasionally figure as shareholders. The most prominent IFIs are creations of multiple nations for the purpose of international financial cooperation after World War II.

Korea has obtained huge amount of funds as well as technical assistance from such international financial institutions as the World Bank, the International Monetary Fund (IMF), the Asian Development Bank (ADB), the International Financial Corporation (IFC), etc. since its foundation and during the financial crises like the IMF Crisis.

Now Korea already graduated from all those financial programs provided by IFIs. In light of its experiences with those IFIs, however, Korea may give useful guidance to North Korea if and when Pyongyang wishes to become a member of international community. So the following explanation is focused on how to induce international financial cooperation from the IFIs from the North Korean perspective.

Key words
international financial institution, multilateral development institution, official development assistance (ODA), trust fund

Bretton Woods institutions
The best-known IFIs were established in the framework of the Bretton Woods system after World War II to assist in the reconstruction of Europe and provide mechanisms for international cooperation in managing the global financial system. They include the IMF, the World Bank, the IFC and the Multilateral Investment Guarantee Agency (MIGA).

International Monetary Fund
Any country may apply to be a part of the IMF. Post-IMF formation, in the early postwar period, rules for IMF membership were left relatively loose. Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information. However, stricter rules were imposed on governments that applied to the IMF for funding.

The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates secured at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement.

Some members have a very difficult relationship with the IMF and even when they are still members they do not allow themselves to be monitored. Argentina for example refuses to participate in an Article IV Consultation with the IMF.

Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members’ economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment. In particular, the Poverty Reduction and Growth Facility (PRGF) and the Heavily Indebted Poor Countries (HIPCs) Initiative may be available to North Korea on a concessional basis.

World Bank
See infra section.

Multilateral development banks
Multilateral development banks (MDBs) are international financial institutions, created by a group of countries, that provide financing and professional advising for the purpose of development. MDBs have large memberships including both developed donor countries and developing borrower countries.

MDBs finance projects in the form of long-term loans at market rates, very-long-term loans (also known as credits) below market rates, and through grants.

There are a number of MDBs across the world, to which Korea has contributed a portion of capital:
 * World Bank] (International Bank for Reconstruction and Development: IBRD)
 * Asian Development Bank] (ADB)
 * European Bank for Reconstruction and Development] (EBRD)
 * European Investment Bank] (EIB)
 * African Development Bank] (AfDB)
 * Inter-American Development Bank] (IADB)

World Bank
The World Bank is an IFI that provides loans to developing countries for capital programs. Its official goal is the reduction of poverty. According to the World Bank's Articles of Agreement (as amended effective 16 February 1989), all of its decisions must be guided by a commitment to promote foreign investment, international trade, and facilitate capital investment.

The World Bank has set up the Millennium Development Goals (MDGs) targets for 2015 within reach in some cases. For the goals to be realized, six criteria shall be met: stronger and more inclusive growth in Africa and fragile states, more effort in health and education, integration of the development and environment agendas, more and better aid, movement on trade negotiations, and stronger and more focused support from multilateral institutions like the World Bank.

In this regard, North Korea may benefit from the following MDGs if Pyongyang wishes to do:
 * Eradicate Extreme Poverty and Hunger: From 1990 through 2004, the proportion of people living in extreme poverty fell from almost a third to less than a fifth. Although results vary widely within regions and countries, the trend indicates that the world as a whole can meet the goal of halving the percentage of people living in poverty. Africa's poverty, however, is expected to rise, and most of the 36 countries where 90% of the world's undernourished children live are in Africa. Less than a quarter of countries are on track for achieving the goal of halving under-nutrition.
 * Achieve Universal Primary Education: The number of children in school in developing countries increased from 80% in 1991 to 88% in 2005. Still, about 72 million children of primary school age, 57% of them girls, were not being educated as of 2005.
 * Promote Gender Equality: The tide is turning slowly for women in the labor market, yet far more women than men- worldwide more than 60% – are contributing but unpaid family workers. The World Bank Group Gender Action Plan was created to advance women's economic empowerment and promote shared growth.
 * Reduce Child Mortality: There is some what improvement in survival rates globally; accelerated improvements are needed most urgently in South Asia and Sub-Saharan Africa. An estimated 10 million-plus children under five died in 2005; most of their deaths were from preventable causes.
 * Improve Maternal Health: Almost all of the half million women who die during pregnancy or childbirth every year live in Sub-Saharan Africa and Asia. There are numerous causes of maternal death that require a variety of health care interventions to be made widely accessible.
 * Combat HIV/AIDS, Malaria, and Other Diseases: Annual numbers of new HIV infections and AIDS deaths have fallen, but the number of people living with HIV continues to grow. In the eight worst-hit southern African countries, prevalence is above 15 percent. Treatment has increased globally, but still meets only 30 percent of needs (with wide variations across countries). AIDS remains the leading cause of death in Sub-Saharan Africa (1.6 million deaths in 2007). There are 300 to 500 million cases of malaria each year, leading to more than 1 million deaths. Nearly all the cases and more than 95 percent of the deaths occur in Sub-Saharan Africa.
 * Ensure Environmental Sustainability: Deforestation remains a critical problem, particularly in regions of biological diversity, which continues to decline. Greenhouse gas emissions are increasing faster than energy technology advancement.
 * Develop a Global Partnership for Development: Donor countries have renewed their commitment. Donors have to fulfill their pledges to match the current rate of core program development. Emphasis is being placed on the Bank Group's collaboration with multilateral and local partners to quicken progress toward the MDGs' realization.

In addition, the World Bank Institute (WBI, formerly Economic Development Institute) creates learning opportunities for countries, World Bank staff and clients, and people committed to poverty reduction and sustainable development. WBI's work program includes training, policy consultations, and the creation and support of knowledge networks related to international economic and social development, most of which are available to North Korea.

The Global Development Learning Network (GDLN) is a partnership of over 120 learning centers (GDLN Affiliates) in nearly 80 countries around the world. GDLN Affiliates collaborate in holding events that connect people across countries and regions for learning and dialogue on development issues. GDLN clients are typically NGOs, government, private sector and development agencies who find that they work better together on subregional, regional or global development issues using the facilities and tools offered by GDLN Affiliates. Clients also benefit from the ability of Affiliates to help them choose and apply these tools effectively, and to tap development practitioners and experts worldwide. GDLN Affiliates facilitate around 1000 videoconference-based activities a year on behalf of their clients, reaching some 90,000 people worldwide. Most of these activities bring together participants in two or more countries over a series of sessions. A majority of GDLN activities are organized by small government agencies and NGOs.

As a guideline to the World Bank's operations in any particular country, a Country Assistance Strategy is produced, in cooperation with the local government and any interested stakeholders and may rely on analytical work performed by the Bank or other parties.

Asian Development Bank
The ADB is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia. The bank now has 67 members - of which 48 are from within Asia and the Pacific and 19 outside.

The ADB offers hard loans from ordinary capital resources (OCR) on commercial terms, and the Asian Development Fund (ADF) affiliated with the ADB extends soft loans from special fund resources with concessional conditions. The ADB was modeled closely on the World Bank, in terms of lending operations as well as the weighted voting system. For example, the ADB is providing a multi-tranche financing facility of up to US $500 million to help Uzbekistan reconstruct around 230km of poor quality roads.

For North Korea
It is imperative for North Korea to be admitted to the IFIs as many as possible and to induce foreign capital on a concessional basis and technical assistance, as South Korea had achieved in its development period in the 1960s and 1970s.

At present, the biggest obstacle for North Korea to be admitted to the above IFIs is the nuclear development and terrorism issues. In addition, the North Korean government should abide by the requirements for membership. Even though North Korea could not satisfy such requirements, it may be eligible for the Trust Fund which Gaza and West Bank (1993), Bosnia and Herzegovina (1996), Kosovo (1999), East Timor (1999) applied for, respectively. Another option will be to establish an independent international organization like the Korean Peninsula Energy Development Organization (KEDO, 한반도에너지기구) although it failed to attain the purpose. If the international community members are convinced of North Korea's position toward the peace of the region, the previously discussed North East Asian Development Bank (동북아개발은행) and the North Korea Development Assistance Group (NKDAG, 북한개발지원그룹) are expected to take shape.