Optimal International Financial Cooperation: Solution to the Growing Breakdown of Global Cooperation

International Financial Cooperation today may require a more complex preparation than ever, particularly in the era of globalization. It is known that the global economy may bring about changing socio-economic, cultural, technological, and political condition of many countries, whilst the globalization itself has often surpassed domestic circumstances among nations which consequently leads to the need of providing a more advance principles of International financial cooperation. Regardless to these changing circumstances, the International financial cooperation may differ in nature which relatively depends on the types and objectives of the International institution involved. On the other sides, the literatures on International policy coordination are vast and multifaceted (there is no one size fits for all). However, there are some basic conditions that can be shared in common. Based on the study of various literatures, it is found that the challenges of International financial cooperation today may encircle not only about the readiness of the nation states, institutions, and related projects in utilizing the International financial cooperation, but it may also include other variuos aspects such as an optimal structure of cooperation agreement, a pattern of compliance with cooperation agreements, principles for cross border cooperation on crisis management, sharing rules of the costs of future interventions, and perhaps specific issues and barriers. All of these challenges and barriers certainly need coordinated actions to ensure that the optimal objectives of the International financial cooperation are achieved. Thus, these pre-requisite conditions should be embraced in the more advance guiding principles of the International financial cooperation. As such, the relevant authorities, including supervisory agencies, central banks, and finance ministries will also be able to tackle a severe stress in case of sudden financial crisis and managing them successfully.

Thus, the arrangement of international financial cooperation may no longer encircle around the prudent use of the financial itself such as loan funds, financial aids and other form of financial cooperation and effective debt management, but it should also include an optimal structure of cooperation agreement that optimize benefits of the international financial cooperation for each party involved, a pattern of compliance with cooperation agreement, principles for cross border cooperation on crisis management, sharing rules of the costs of future interventions, and perhaps specific issues and barriers which need coordinated action that may arise in handling severe stress that may happen during the period of financial cooperation beside sharing information where ever necessary and possible, and to ensure that financial cooperation develop adequate contingency plans. In addition, the issue of foreign debt and its impact on human rights and development and sound risk governance practices must also be taken into consideration.
It is true that the international financial cooperation may differ in nature, depends on the types of the financial institution involved and the objective of the cooperation, while the literature on international policy coordination is vast and multifaceted (there is no one size fits for all). However, there are some basic conditions that can be shared in common.
Aware to such phenomena, a more advance international financial cooperation is a must if countries involved in the cooperation want to achieve optimum benefits, otherwise only one country gain benefits at the expense of others. Therefore an analysisregardinganoptimalinternational cooperation deems relevant with the objective of finding the common basic priciples that can help improve the future financial cooperation and provide solution to the growing breakdown of global cooperation. This research is based on various literature studies which aimed at finding the universalities of the international financial cooperation.

LITERATURE STUDIES Domestic Conditionality In International Cooperation
Svolik. (2004), stated that. An international financial cooperation agreement between governments that cannot perfectly observe their domestic circumstances reconciles a trade-off between political efficiency of international cooperation andincentives to misrepresent domestic circumstances. The possibility that some governments would misrepresent their domestic circumstances in order to achieve a more favorable cooperation outcome leads to the inability of reaching efficient cooperation outcomes in a range of plausible scenarios. Therefore, he suggested that there are two central aspects of international cooperation that must be taken into consideration: (1) the optimal structure of international cooperation agreements which can perfectly provideoptimum advantages for domestic circumstances, and (2) the pattern of compliance with international cooperation agreements which determines commitmentlevels,avoidingconsequencesofviolation/risks, and high quality of monitoring capability.

The New Feature Of Crisis Today
Niepmann and Eisenlohr. (2011) concern and improve global crisis management.

Beneficial Cooperation Between Government
Studies by Freixas., et al (2011) have made the case that cooperation between governments can be beneficial when financial stability is shared across countries.
Their analysis shows that without financial stability, there is no guarantee that at least one country gains from cooperation while no country loses. This may limit the willingness of countries to stick to the agreement when a crisis actually happens.
However, they argued that the willingness of policy-makers to agree in advance on institutions for crisis management and sharing rules for the costs of future LQWHUYHQWLRQV LV DOVR OLPLWHG EHFDXVH RI FRQFHUQV UHODWHG WR ¶PRUDO KD]DUG·

Countries Joint Policy
Meyer (2002), stated that two countries can both be better off if they take policy decisions jointly³with concern for the welfare of both rather than each pursuing its own goals independently. Ghosh and Masson (1994)  Moreover, the debt of these countries has continued to grow and to constrain not only their development prospects but also to undermine their capacity to establish the conditions for the realization of human rights, particularly economic, social and cultural rights.

Indonesia Case
Related  to repay its external debts without sacrificing its ability to perform its international human rights obligations. Other objectives that are remotely or tangentially connected with this aim should be avoided. Whenever such policies are deemed necessary by a debtor State, adequate social security measures to mitigate the adverse impact thereof, especially on vulnerable or marginalized groups, must be put in place.
More importantly, under an international financial cooperation, creditor States and the international financial institutions must not take advantage of an economic, financial or external debt-related crisis as an opportunity to push for structural reforms in debtor States, however useful such reforms might be perceived to be in the long term. Such reforms should be initiated, formulated and implemented by the debtor States themselves, if they deem appropriate, in pursuance of an independent process of national development. It can be said, that international financial cooperation must beconsistent with country-designed development strategies.
It should be noted, that when one country arranged a loan agreement, the success of the agreement will be depending on a variety of factors, such as responsible lending and borrowing, the loan terms and conditions, prudent use of ORDQV DQG SURSHU GHEW PDQDJHPHQW GHEW ILQDQFLQJ WKDW FDQFRQWULEXWH WR FRXQWULHV· economic development and the establishment of conditions for the realization of human rights. Nonetheless, empirical evidence shows that in many of the poorest countries the fulfillment of debt service obligations is often undertaken at the expense of social investment, including investment in services that contribute to the realization of human rights. In addition, excessive debt service burdens and harmful conditions linked to loans and debt relief often limit investment in and undermine the provision of accessible public services. Apart from undermining obligations on economic, social and cultural rights, excessive debt burdens pose major obstacles for some countries in achieving the Millennium Development Goals. Therefore, in order to avoid an excessive debt burden, the creditors and debtors should share responsibility for preventing and resolving unsustainable debt situations, and both parties need to ensure that funds will not be used for non-public purposes or for a non-viable project.In the case of international financial cooperation is related to lending and borrowing, it can be stated that any debtor states experienced difficulty in repaying their external debts, the debtor states should have a right to renegotiate these to creditors with the aim of reaching a restructuring agreement that enables the debtor state to service its external debts without compromising its capacity to fulfill its international human rights obligations or implement its development goals. The renegotiation and restructuring should be conducted in good faith and should cover all types of external debts owed to all types of external creditors, including international financial institutions. Then, for the heavily indebted countries, the alleviation of debt and debt service burdens should be made possible through debt relief efforts such as debt forgiveness, debt rescheduling, debt service reduction and interest moratorium. Again, it is important to note that debt relief efforts must not compromise the provision of basic services. In particular, debt relief conditions that may adversely impact the realization of human rights or undermine development in the beneficiary State must be avoided, and financing from debt relief mustneither replace official development assistance nor be considered as such. When there is any disputes between parties involved in international financial cooperation, the disputes must be resolved by an independent mechanism. In this regard, States and all relevant actors including international financial institutions, bilateral or multilateral lenders and private financial institutions should consider the establishment of an international debt workout mechanism to restructure unsustainable debts and resolve debt disputes in a fair, transparent, efficient and timely manner. The main aim of such a mechanism is to ensure that debtor States can achieve economic viability and growth, and restore their capacity to service their external debts without compromising the fulfillment of their international human rights obligations. The establishment and operation of such a mechanism should be guided by the foundational principles s as well as the following specific considerations: (a) The international debt restructuring mechanism should be independent of crHGLWRUV DQG GHEWRUV E 7KH DVVHVVPHQW RI WKH GHEWRU 6WDWH·V economic or financial situation shouldbe made by a neutral body; (c) The mechanism should ensure that a debtor State, during and after the restructuring process should be able to fulfil its international human rights obligations, implement its development programme and provide basic services to all persons living in its territory and under its jurisdiction; (d) The mechanism should have the mandate to rule on the alleged ´RGLRXVQHVVµ RU ´LOOHJLWLPDF\µ of particular external debts.Finally, it is understood that international financial cooperation is always related to the project financing as it has been illustrated in the Indonesian case study above. In order to ensure the effectiveness of the cooperation in project financing, it is necessary to ensure that the international treaty which binding the project financing shall cover, among others, the following areas : (1)   It is understood that international financial cooperation may be related to the project financing as it has been illustrated in the case study above. In order to ensure the effectiveness of the cooperation in project financing, it is necessary to ensure that the international agreement which binding the project financing need to establish effective mechanisms to address potential crisis situations in a spirit of solidarity, and the project should provide wide access for the benefit of the public.
Finally, it can be stated that if the central part of achieving the optimal international financial cooperation is depent on the willingness of the member states involved to consider the domestic interests and the inherent risks of the cooperation.
Besides, no countries in the international financial cooperation is allowed to dominate the other member states if the success of long-run cooperation want to achieve optimally.

Policy Recommendation
1. An international financial cooperation agreement between governments thatcannot perfectly observe their domestic circumstances reconciles a trade-off between political efficiency of international cooperation and incentives to misrepresent domesticcircumstances. Therefore, the domestic circumstances should be well understood before undertaking an international financial cooperation in order to ensure that the internationalfinancial cooperation provide optimum advantages for domestic circumstances.
2. An international financial cooperation should emphasize the importance of providing the principles for Cross-border Cooperation on Crisis Management.
Through the seprinciples, relevan tauthorities, including supervisory agencies, central banks, and finance ministries, commit to cooperate both in making advance preparations for dealing with financial crises and in managing them proportionately.
3. Without financial stability, there is no guarantee that at least one country gains from cooperation while no country loses. This may limit the willingness of countries to stick to the agreement when a crisis actually happens. Therefore, policy-makers need to agree in advance on institutions for crisis management and sharing rules for the costs of future interventions in the case of crisis.
4. The States involved in international financial cooperation are obliged to achieve progressively the full realization of economic, social and cultural rights requires States to move as expeditiously and effectively as possible towards the full realization of these rights.
5. The availability of guiding principles is of utmost important in international financial cooperation. The guiding principles should be designed to assist States and all relevant actors including private and public, national and international financial institutions, bilateral lenders and organized groups of bondholders in the conduct of their respective activities and pursuit of their respective interests relating to external debt.
6. Excessive debt service burdens and harmful conditions linked to loans and debt relief often limit investment in and undermine the provision of accessible public services. Apart from undermining obligations on economic, social and cultural rights, excessive debt burdens pose major obstacles for some countries in achieving the Millennium Development Goals.
7. The International Financial Institution such as World Bank and IMF should be able to provide appropriate policies in accordance with the real need and condition of the developing countries being assisted to ensure that theproposed program can be implemented.
8. Itis essentialto underline that Country ownership ofnational development strategies is the foundation of developmenteffectiveness. It implies that national governments should have the ability to freely choose the strategies which they design and implement, and take the lead in both policy formulation and implementation.