Short Notes: Satellite State, Bailout & Global Development Initiative (GDI)


Short Notes: Satellite State, Bailout & Global Development Initiative (GDI)


Satellite State

A satellite state is a country that is formally independent in the world, but under heavy political, economic, and military influence or control from another country. The term was coined by analogy to planetary objects orbiting a larger object, such as smaller moons revolving around larger planets, and is used mainly to refer to Central and Eastern European countries of the Warsaw Pact during the Cold War or to Mongolia or Tannu Tuva between 1924 and 1990, for example. As used for Central and Eastern European countries it implies that the countries in question were "satellites'' under the hegemony of the Soviet Union. In some contexts, it also refers to other countries in the Soviet sphere of influence during the Cold War-such as North Korea (especially in the years surrounding the Korean War of 1950-1953) and Cuba (particularly after it joined the Comecon in 1972), and to some countries in the American sphere of influence such as South Vietnam (particularly during the Vietnam war). In Western usage, the term has seldom been applied to states other than those in the Soviet orbit. In Soviet usage, the term applied to the states in the orbit of Nazi Germany, Fascist Italy, and Imperial Japan. The Oxford English Dictionary traces the use of the phrase satellite state in English back at least as far as 1916. In times of war or political tension, satellite states sometimes serve as buffers between an enemy country and the nation exerting control over the satellites.


Bailout is a general term for extending financial support to a company or a country facing a potential bankruptcy threat. It can take the form of loans, cash, bonds, or stock purchases. A bailout may or may not require reimbursement and is often accompanied by greater government oversee and regulations. The reason for bailout is to support an industry or country that may be affecting millions of people internationally and could be on the verge of bankruptcy due to prolonged financial crises. Bailout policies come in various forms, the most common being direct loans or guarantees of third-party (private) loans to the rescued entity. These direct loans are often on terms favoring the entity being rescued. Direct subsidies are provided to the parties concerned. Stock purchases are also not uncommon. The government or the financing body places strict requirements such as restructuring of organization, no dividend payment to shareholders, change of management and in some cases a cap on salaries of executives till a stipulated time period or the repayment of dues. Bailouts have several advantages. First, they ensure continued survival of the entity being rescued under difficult economic circumstances. Secondly, a complete collapse of the financial system can be avoided, when industries too big to fail start to crumble. The government in these cases steps in to avoid the insolvency of institutions that are needed for the smooth functioning of the overall markets. Bailouts also have their disadvantages. Anticipated bailouts encourage a moral hazard by allowing not only promoters but also other stakeholders (customers, lenders, suppliers) to take higher-than-recommended risks in financial transactions.

Global Development Initiative (GDI)

The Global Development Initiative, announced by President Xi Jinping September 2021, is a promising response to help the world recover from recent setbacks and accelerate the achievement of the SDGs worldwide. The effort is welcomed, especially the proposed alignment of many GDI priorities with the SDGs, including in the areas of poverty eradication, food security, health, financing for development, climate action, industrialization, digital economy, and connectivity. China, as the second-largest economy in the world, has a significant role to play in sharing its lessons, experiences, and resources with other developing countries. Having served many years in Africa, I have seen first-hand the difference China has brought there. The UN Country Team in China stands ready to assist in making this ambitious development initiative a best-in-class endeavor that accelerates the realization of the 2030 Agenda. In addition, the United Nations in China is also committed to leveraging the GDI as an opportunity to advance a series of cross-cutting areas of the 2030 Agenda, including gender equality and women's empowerment, youth employment, vulnerable populations, and digital education, in order to leave no one behind. We stand ready and will continue to provide the best possible technical assistance and support to ensure the GDI's alignment with the SDGs and recognized international norms and standards. Global challenges require global solutions, and global solutions are found through multilateralism.

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