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Bhutan's Quadrilemma: To Join the WTO, that is the Question Mancall, Mark 2003-12

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 BHUTAN'S QUADRILEMMA: TO JOIN OR NOT TO JOIN
THE WTO, THAT IS THE QUESTION
Mark Mancall*
Abstract
This paper argues that any discussion of the
operationalization of Gross National Happiness (GNH) in
Bhutan within an immediate or intermediate time-frame must
account for the fact that operationalization implies the
adoption of long-range policy objectives and immediate or
intermediate policy decisions, made in real time, that aim at
reaching those objectives. The discussion of any
operationalizaton of GNH, therefore, cannot fruitfully take
place in abstracto, because that implies a lack of seriousness
in raising the subject in the first place. The paper seeks to
outline, only briefly and suggestively, a framework within
which discussion of the operationalization of GNH may take
place, focusing on the question of Bhutan's possible entry
into the World Trade Organization (WTO). It concludes that a
decision to operationalize GNH in Bhutan carries with it
certain consequences that can be defined within the structure
of the problem of choice, and that structure can best be
considered as a quadrilemma. The potential consequences of
choice must be taken into account in choosing for any
particular set of policy directions and the potential cost must
be accepted as part of the solution of the problem the
quadrilemma suggests.
Bhutan's Policy Objectives within the Framework of GNH
We may assume that the word "development" best defines
Bhutan's long-range objective, but it is precisely the meaning
of this term for Bhutan, and the policies and policy decisions
* Professor of History and associated areas at Stanford University,
USA.
 Bhutan's Quadrilemma: To Join or Not to Join the WTO
needed to achieve that objective once it is defined, that the
concept of GNH is intended to cover. Therefore, we must try
to indicate, if only in the most general terms, what the
components of GNH-guided development may be. We can
assume, for the purpose of this argument, that they are five
in number:
1.   Eradication of Poverty
Poverty in absolute terms suggests a level of income, in cash
and/or kind, beneath which a reasonable standard of living,
as defined by the values of a society, cannot be sustained.
Obviously, GNH not only needs to consider what constitutes
"poverty" in Bhutan but also what phenomena it covers. For
example, it may ask who defines "poverty" in Bhutan and
what institutions are engaged in the definition. It may
consider whether a concept of "spiritual poverty" or "cultural
poverty" is part of the definition of the condition of poverty in
Bhutan. In brief, GNH certainly suggests the need to define
the term in specifically Bhutanese terms. Relative poverty
implies a spread of income that is too great to be sustained
either by the values of the society or the institutions of the
polity. The eradication of poverty within the framework of
GNH thought suggests, therefore, at least the possibility that
the measures usually adopted to alleviate poverty as defined
by strictly economic models may not be completely or even
primarily applicable in Bhutan. For example, some models of
development (China, the Soviet Union and Eastern Europe,
for example), based development on state-enforced forced
savings, primarily from the peasants, and the State's police
powers were used to prevent deviation from this policy. In
other societies, great disparity of income, often accompanied
by equally great corruption, was maintained by the oppressive
police power of the State (Indonesia under Suharto was an
example). Neither possibility is acceptable under GNH. The
operationalization of GNH, then, denies certain even
temporary justifications for the continuation of poverty and
requires the state to eradicate poverty by changing the
conditions that give rise to it or allow it to continue.
141
 Journal of Bhutan Studies
2. Preservation of National Sovereignty
National sovereignty may be defined as the ability of a
national polity to determine for itself, by whatever means it
chooses, the policies, institutions, and procedures whereby
its population lives within its boundaries. Obviously there are
always limitations on sovereignty, including, for example,
relative power internationally, geographical considerations
(e.g., limits on the use of resources, such as rivers, that are
shared across national boundaries), international political
and economic obligations, etc. While national sovereignty may
not be measurable as an absolute quantity (except negatively,
when one nation is completely incorporated into another), a
nation's ability to expand or diminish the reach or depth of its
sovereignty is always a trade-off in terms of other factors or
values that must be addressed in the formulation of policy.
3. Maintenance and Development of Culture
While it is true that social scientists have never succeeded in
defining "culture," it remains something that everyone can
perceive when he or she sees it. Cultures are malleable, which
in this instance means that they change, sometimes more
rapidly, sometimes less rapidly, depending on decisions that
are made by a nation through its institutions and on the
historical circumstances within which a nation may find itself
and which limit its ability to make independent decisions
regarding its culture. The degree to which the development of
a culture may be influenced by political or economic decisions
depends on the policy directions a nation takes in fields
ranging from education to the economy. While GNH envisages
the use of culture to protect the integrity of the nation, it also
posits the development of Bhutanese culture as an
instrument for defense. "National identity," therefore, beyond
its definition on legal documents, is a significant variable both
in the formulation and the consequences of policy decisions.
4. Good Governance, Democratization and
Dec en traliza tion
Good governance is one of the objectives of GNH, and,
according to prevailing ideas, that objective is best served by
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 Bhutan's Quadrilemma: To Join or Not to Join the WTO
decentralization and democratization. Good governance
assumes that the stakeholders in a society hold the policy-
and decision-makers accountable, and this, in turn, assumes
the ability of all the stakeholders to participate in the process
of policy formation and to evaluate the decisions that are
made in pursuit of those policies. In general this means that
an educated and informed population can exercise its
judgment on the managers of society, through whatever
mechanisms a given society establishes for that purpose. It
also assumes, however, the existence within that society of a
shared set of values, norms, and standards on the basis of
which the population can judge its managers. GNH is about
values, norms, and standards, but it is also about education
for participation (as well as about making a living).
5.   Self-Determination
Good governance and self-determination are closely linked
concepts. Without good governance self-determination may be
the exercise of the will of a small group that holds
concentrated power in its hands, power that it exercises on
behalf of the society but without accountability to the society
as a whole. There is a dilemma here, of course: The freedom
of the state to act independently, and in the contemporary
world to act quickly, sometimes requires, or seems to require,
that it be able to act without direct reference to the society on
behalf of which it is operating. Accountability may be delayed
until after, sometimes long after, action has been taken, by
which time the introduction of other issues or forgetfulness
diminishes the degree of accountability. This is a dilemma of
representative democracy in the contemporary world, for
example.
The operationalization of Gross National Happiness is an
issue precisely because it is by no means clear that the
commonly accepted definition of "development" satisfies the
needs of poverty eradication, the maintenance or even the
increase of national sovereignty, the maintenance and
development of Bhutanese culture, good governance, and self-
determination.
143
 Journal of Bhutan Studies
General and Specific Limitations on Freedom of Policy
Choice
Bhutan's ability to make policy choices in the pursuit of
Gross National Happiness may be defined or even limited by
both general system considerations and specific
characteristics of the nation.
General Considerations
Although we like to think that we make decisions in a world
in which our decisions are made in a mono-directional
fashion, that is, decisions and consequences are identified by
a close, cause-effect relationship, we are increasingly aware of
the problem of unintended effects, which is to say that a given
policy decision may lead to a quite different consequence than
the one we intended. The fact of the matter is that we live in a
highly complex and very integrated socioeconomic universe,
which we divide into domains ("disciplines") for the sake of
analysis, but these domains disappear as distinct entities
when we look more closely at the political economy. Any
decision we make in one area may have quite unintended
consequences far from the domain in which the original
decision was made. The introduction of new technology may
lead to social change that may result in increasing political
dissatisfaction in a significant element of the population, or
even in the production of a new social class, which, in turn,
may result in revolutionary seizure of power. New inventions
and ways of doing business that, collectively, we call the
"Industrial Revolution" were not intended to produce an
urban middle class in France that would seize political power
and create a new political system.
Specific Considerations
Although the specificities of Bhutan's situation are well
known, it is important to rehearse them here in order to
highlight the complexities of choice that face the society.
i.       Bhutan  is  a small state.  Bhutan  appears  on  almost
every list (World Bank, IMF, Commonwealth Secretariat)
144
 Bhutan's Quadrilemma: To Join or Not to Join the WTO
of "small states," a category sometimes defined as
"states with populations of less than 1.5 million people."
It is not possible here to discuss the characteristics that
distinguish small states from all the others, but they
suggest that small states are so different from the states
on which the traditional models of economic
development are based that they require a different
analysis and different solutions to the problems
presented by "development." They are highly vulnerable
to external events, have small domestic markets, have
very limited capacity in the public and private sectors,
are relatively undiversified in their production and
exports, etc. These conditions limit Bhutan's choices in
the pursuit of development and require different
solutions. The operationalization of GNH, with its strong
adoption of specific goals and values, further narrows
the choice of "development strategies" by requiring and
even insisting on profoundly humanizing both the
definition and the process of development.
ii. Bhutan is a "developing" society. That Bhutan is a less-
developed economy or society is not arguable. If
"development" means "improvement," the question of
the realization of development very much depends on
the values to which the society accords importance.
That Bhutan lacks the resources to "develop" in all
sectors at the same time is a given, but then this is also
the case with advanced industrial societies such as the
United States. From the point of view of resources, all
resources are scarce and so choice must be made, no
less in Bhutan than in North America. The fact that
Bhutan still has the ability to decide which path it
wishes to pursue, which means to determine its own
priorities (to the extent that it does indeed have that
ability), suggests that in a way Bhutan can benefit at
this stage in its history from its "underdeveloped"
condition to expand its ability to exercise choice, albeit
with certain limitations, to which we will come.
145
 Journal of Bhutan Studies
iii. Bhutan has limited resources. The nation's capacity to
grow exports or to speed-up domestic economic
development is limited by its lack of resources,
including "natural" resources, capital, labor, etc.
Whatever measures are taken to overcome this lack in
one area will have consequences in other areas, as we
will suggest.
iv. Bhutan is a landlocked country. Landlocked countries
experience particular difficulties in gaining access to
world markets, which is a limitation on their ability to
use trade as a way to overcome the limitation of
resources. Moreover, Bhutan's neighbors are only two
in number, one of which is relatively unavailable to
Bhutan as a resource for trade and development.
v. Bhutan is deeply integrated with the Indian economy.
To the extent that Bhutan seeks to deepen its
integration with the global economy as an instrument
for its own development (even given the conditions
already mentioned), it is limited by the extent of its
already existing integration with the Indian economy.
Considerations of relative political power and size of
economies severely condition Bhutan's ability to engage
itself with the global market.
Bhutan's WTO Quadrilemma
Operationalization of Gross National Happiness will require
very difficult policy choices in the short and intermediate
term that will have long-term consequences. The difficulty of
these choices can be indicated by a discussion of the
quadrilemma Bhutan faces in consideration of the value and
significance of its joining the WTO.
A quadrilemma may be defined as a state that requires a
choice between four relatively equal or attractive options, any
combination of two or three of which will prove unsatisfactory
with regard to one or two of the others. In other words, "you
146
 Bhutan's Quadrilemma: To Join or Not to Join the WTO
can't have your cake and eat it too." The decision about
whether to join the WTO poses a quadrilemma because there
are four primary elements that must be taken into account
but that may be, to some extent, mutually incompatible at
some level. These elements are: globalization (meaning,
thereby, real and "deep" integration into the global market);
the continuing development and continued existence of the
nation-state, in this case Bhutan; the development of a
decentralized and democratic polity; and the pursuit of Gross
National Happiness as an objective and a guide to
development choices.
Globalization and the Nation-State
It is now commonplace to point out that globalization as a
process of economic integration on a global scale has a long
history, extending at least as far back as the 18th century, let
us say, and that, that history is not unilinear, i.e., there have
been periods of increasing and of decreasing global economic
integration.
In the last decade or so, "globalization" has often been
presented, ahistorically, as a new phenomenon and,
ideologically, as a phenomenon that is somehow "natural,"
i.e., it is somehow propelled by the forces of nature so that
either you join or you get left by the wayside. Only lately, and
partly as a result of intellectual critiques and analyses of
"globalization" and of political and social protests against it,
has globalization been considered as something less than a
natural force.
World Wars I and II demonstrated the consequences of a
totally fragmented world in which individual states or nation-
states were pursuing their own political and economic
objectives without serious consideration being given to the
broader welfare of the world community. World War I led to
the creation of institutions intended to control, or at least
soften, the consequences of international competition and to
economic theories and policies that would soften the
consequences of a relatively unbridled market. World War II
147
 Journal of Bhutan Studies
was, to no small extent, the consequence of the failure of the
institutions and policies that followed World War I.
Consequently, after World War II two sets of institutions were
created that, it was hoped, would prevent the rise again of
those conditions that had led to World War II. Those
institutions were The United Nations and its ancillary and
associated bodies, and the Bretton Woods institutions,
namely the World Bank, the IMF, and the GATT (replacing the
failed ITO).
Both sets of institutions were predicated on the need to
mediate between the nation-state, as the primary political
unit and the primary unit of economic planning, on the one
hand, and, on the other, the need to integrate the nation-
state and national economies into a larger whole that would
make possible the control, and alleviation, of the excesses of
the nation-state and of national economies.
The United Nations rested on giving priority to collective
security and decisions made collectively by member nations
through the UN's institutions. The UN was intended to
provide sufficient international security so that the nation-
state could continue to function with only minimal
restrictions on its sovereignty while its sovereignty was
limited to the extent that the collective interest of the whole
inhibited its exercise of independence to the point where it
seriously infringed on other nation-states. While the UN's
history has been checkered by moments of success and by
failures, its fundamental premise has only recently come
under direct attack. The UN has held out at least the promise
of security for small states in the face of potentially predatory
larger neighbors, and the consequences of the failure or even
the weakening of the UN for small states would be serious
indeed.
The institutions of the "Bretton Woods Compromise" are more
to our point, however. At the end of World War II, it was
commonly recognized that the world consisted of states and
nation-states   that   differed   from   each   other,    sometimes
148
 Bhutan's Quadrilemma: To Join or Not to Join the WTO
radically, in ideology, social policy, socioeconomic systems,
levels of development, national purpose, institutional
structures and political processes. Moreover, each state had
its own political procedures for arriving at policy
determinations. If peace were to be preserved (even in the
midst of the Cold War) and stability maintained, differences
had to be mediated rather than overcome, and the Bretton
Woods institutions were created for that purpose. To be sure,
there was a preference for democracy (not surprising after the
anti-Fascist war), but it was rooted in the idea that diversity
of political, social and economic arrangements could be
tolerated and preserved by the development of institutions
that encouraged growth and attended to the alleviation of
crises that might otherwise weaken the stability of the
international system. The GATT was intended to provide a
procedural framework within which the adjustment of the
institutions and procedures could take place to account for
change.
The Bretton Woods compromise began to fall apart at the
beginning of the 1980s with the Thatcher government in
Great Britain and the Reagan administration in the United
States. The idea of mediation between states with their own
arrangements gave way to the idea of the market as the over-
determining institution to which the nation-state had to
acquiesce if it were to develop, or even to survive. The market
trumped any and all domestic arrangements within individual
nation-states. Moreover, the market was assumed to be a
self-controlling mechanism. All this was legitimated by the fall
of the Soviet Union and the supposed turn of China away
from "socialism" to "capitalism." The WTO, replacing the
GATT in 1995, was the institutional expression of the new
"globalization." It is supposed to provide a means for
negotiating the acquiescence of individual nation-states to the
world market, but the "conditionalities" which surround any
given nation-state's entry into the world market are, both
logically and politically, only temporary; the inexorable power
of the world market will dissolve them in due course. The
crucial difference between the Bretton Woods institutions and
149
 Journal of Bhutan Studies
the WTO is contained in the difference between mediation and
acquiescence. The first real indication that this inexorable
power could be challenged came at Seattle in 1999, and the
first real challenge occurred at Cancun in 2003.
Entrance into the WTO holds out the promise, theorists say,
of rapid local (nation-state) development in return for the
surrender of a considerable amount of local autonomy. The
ability of the nation state to define its own path to improving
the conditions of its population, and even to define what
"improvement" means and in what domains it should take
place, is surrendered to the global market. Sovereignty is
transformed, and diminished, by adhesion to the WTO.
Here, then, are two parts of the quadrilemma that both in
theory and in reality are mutually incompatible. Accession to
the WTO severely limits the domestic independence of the
nation-state in precisely those areas where it needs to be
effective to survive, namely in the political, social, and
economic spheres. As we have seen recently, the WTO,
particularly its most powerful members, can attempt to place
limits even on independence in medical (pharmaceutical) and
intellectual (TRIPS) areas.
Good Governance and a Democratic Polity
Both globalization (the WTO) and GNH posit "good
governance" as a sine qua non for development of any kind.
"Good governance" is usually interpreted to mean, as we said
above, the ability of the stakeholders to hold policy
formulators and decision makers accountable for their policy
formulations and decisions. This raises temporal as well as
procedural issues. Temporally, integration into the WTO may
take place in such a way and at such a time that the
stakeholders are either not part of the decision for integration
or that holding the policy makers to account can take place
only after the fact, when the decision to enter is irreversible or
its consequences irredeemable. In other words, the concept of
good governance can be nullified by the decision to enter the
WTO,    which    supports,    theoretically,    good    governance.
150
 Bhutan's Quadrilemma: To Join or Not to Join the WTO
Furthermore, once the nation-state has acceded to the WTO,
large areas of its traditional domains of independent action
are no longer available to it and are thus removed from the
reach of good governance.
Gross National Happiness
To the extent that GNH pursues development objectives that
are different from, or are serious modifications of, the more
narrowly economistic, definitions of development objectives
that the WTO recognizes, and to the extent that the WTO, and
the World Bank and IMF, which have become participants in
the new, post-Bretton Woods dispensation, limit the ability of
the state to pursue happiness socially, politically and
economically in terms that GNH defines and through
institutions and procedures that GNH creates, GNH and the
WTO appear to be incompatible, at least to some extent. For
example, if GNH requires that the state manage the economy,
whether it be public or private or some mix of the two, to that
extent arrangements that are predicated on the independence
of the economy and on its self-regulation contradict GNH.
GNH posits the preservation and development of the national
culture as both a purpose and an instrument for the
preservation of national sovereignty. Minimally controlled
international trade, however, which is the immediate goal of
the WTO, may require allowing the importation of goods that
will have a severe impact on the national culture. To that
extent GNH and the WTO may be mutually contradictory.
The Quadrilemma
Bhutan, like any developing nation, faces an extraordinarily
complex decision concerning the WTO. The four components
of the decision carry some degree of mutual incompatibility.
There is no question that joining the WTO may be beneficial,
in one way or another, to Bhutan's economic development, at
least as development is narrowly defined in economic terms.
However, membership has its costs. The sovereignty of the
Bhutanese state will be diminished and compromised. Given
the already existing degree of economic integration with India,
151
 Journal of Bhutan Studies
it cannot be determined beforehand if the value gained from
WTO membership will exceed the value already gained from
the degree of economic integration between Bhutan and India.
As Dani Rodrik puts it, deep economic integration places the
nation-state in a "golden straightjacket." The quality of the
gold remains in question.
Membership in the WTO and the globalization of Bhutan's
economy may also restrict the degree to which Bhutan can
pursue good governance, one of the objectives of GNH.
Furthermore, the decision to join the WTO and submit to the
disciplines of the World Bank, the IMF, etc., cannot be made
democratically or in consultation with the Bhutanese
stakeholders because neither the mechanisms nor the
educational level necessary for such consultation exists at
this time. Unless and until the WTO itself becomes a body
characterized by good governance, the diminution of good
governance within Bhutan in exchange for the benefits to be
gained from accepting the discipline of the WTO and its
associated institutions cannot be compensated. A "global
federalism," deeper than, but perhaps patterned on, the
"Bretton Woods compromise," is highly unlikely in any
foreseeable future, given the reluctance of the world's sole
super-power, and a host of second tier powers, to surrender a
significant degree of sovereignty to world bodies.
The surrender of sovereignty by small states, for example the
loss of the ability to forbid or even control imports, will
inevitably undermine national culture as the nation's
economy becomes more and more globalized. The
"westernization" or "North Americanization" of Bhutanese
culture will be propelled forward at a faster rate than might
otherwise be the case, particularly given the condition that
Bhutanese culture itself has to be deepened and strengthened
through education, the humanities, consciousness of values,
etc., to be able even to begin to withstand the onslaught of
international trade borne-cultural change.
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 Bhutan's Quadrilemma: To Join or Not to Join the WTO
The pursuit of GNH depends upon the affirmation and
reinforcement of Bhutan's ability to exercise self-
determination in the positing of long-range objectives, short-
and intermediate-range policy decisions, and the development
of the institutions and values in which those long-range
objectives will be embedded and the procedures through
which they will be realized. WTO membership weakens and
diminishes national self-determination institutionally,
procedurally, and culturally.
None of this is to suggest that membership in the WTO will
not bring significant advantages to Bhutan. Perhaps those
advantages will be judged to be potentially of such a
magnitude and quality that Bhutan should cut through the
quadrilemma like Alexander the Great cut the Gordion's knot.
The magnitude and complexity of the decision is in ratio to
Bhutan's present stage of development and the fixed reality of
its size and power vis-a-vis the WTO itself and its neighbors.
In any event, the fate of the operationalization of Gross
National Happiness lies at the very center of this decision.
Bibliography
1. Buira, Ariel, ed., Challenges to the World Bank and IMF:
Developing Country Perspectives (London: Anthem Press,
2003).
2. Commonwealth Secretariat/World Bank Joint Task Force
on Small States, Small States: Meeting Challenges in the
Global Economy ([Washington, D.C.,] April 2000].
3. Rodrik, Dani, "Feasible Globalizations,"
ksghome.harvard.edu/-. drodrik.academic.ksg/
Feasglob.pdf.
153
 The Bhutanese Quadrilemma
Deep Economic Globalization/integration
Golden Straitjacket   / Global Federalism
Nation State
The Bretton
Woods Comprise
Democratic Polity
Self-
Determination
Globalization
of culture and polit
Gross National Happiness
Modilied from Dani Rodrik, "Feasible Globalizations, "
ksghome. harvard. edu/~. drodrik. academic, ksg/ Feasglob.pdl

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