Irada Case

2. The value of supranational agencies in understanding global social policy.

There is surprisingly little systematic research on the interaction between supranational agencies and national welfare state.

By supranational agencies means those international organizations in which national governments are represented. For instance: the European Union, World Bank, the International Monetary Fund, the World Trade Organization, the Organization for Cooperation and Development and the International Labour Organization. These mentioned above organizations influence welfare state policies either directly or indirectly. Specifically, the OECD focuses on education, health and labour market policy. The ILO concentrates on employment and labour conditions. The IMF and WTO focus on increasing competitiveness in the liberalized world trading system and on promoting financial stability and growth. Their measures, exemplified by the IMF's call for dept and deficit reduction, have major implications for social policy in the sense that they often imply cuts in expenditures or taxes, thus limiting the room for manoeuvre.

According to Klaus Armingeon, there are three channels can be distinguished in order to identify how do the supranational agencies influence national systems of welfare: first of all, on the one hand the supranational agencies can give resources to countries in order to support their welfare State. However, most supranational agencies have limited budgets that only provide help for small and targeted programmes. More important are the activities of supranational agencies that hinder national governments from using domestic resources for social policy. For instance, the IMF makes loans to countries dependent on their making cuts in public expenditure, which often impact on education and social security. There is a major argument of critics that the use of their resources has increased rather that decreased social inequality. The countries of Eastern Europe have experienced much this effect since the early 1990s.

The second argument applies to the setting standards and rules by these agencies. It may steer the national policies in the opposite direction, as the result social security standards are dismantled, social standards are generally downgraded. This implies to the idea of differentiation between "hard and soft" law. Hard law is precise, the rules are obligatory. The example of soft law is Open Method of Coordination of the EU and the mixture of surveillance and persuasion by OECD.

The third argument is that supranational agencies may use ideas and information in order to frame the outlook and options of national policymakers. The most obvious case is the OECD, which lacks the resources of the IMF and WB and which also lacks the institutional means of standard setting and diffusion of the ILO. The examples of such influential effect