OECD and IEA May Separate After Years of Dispute

May 12, 2016International Organizationsby EW News Desk Team

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The Organization for Economic Cooperation and Development (OECD) is the parent organization for the International Energy Agency (IEA). The two bodies have apparently been locked in an internal feud for years, and this dispute has finally led the two bodies to consider a full and formal legal split. Of course, such a split could come with a complicated morass of funding and governance issues.

The primary source of disagreement between the two organizations appears to be cooperation with China. According to a report by Reuters, the OECD’s governing council sent a letter to the IEA in April suggesting the separation, citing the decades-long dispute between the IEA and the OECD regarding administrative rules, financial audits, and relations with China.

The China dispute relates to the complexities of the Paris-based OECD’s mission of advancing capitalism and democracy mingling with the IEA’s role as the world’s energy watchdog. Apparently, the gulf between the two agencies has grown so wide that they both began negotiations with China to open offices there without consulting the other.

“The IEA started negotiating with China in 2016 to establish an IEA center in Beijing, without prior consultation with the OECD which, as the IEA was aware, was itself negotiating with China to create a policy center and a country office," a letter from the OECD to the IEA stated. When asked about the possible separation, the OECD declined to comment, while the IEA would only acknowledge that any separation between the two groups would have to be a decision made by the member states of the OECD.

Created in 1961, the OECD’s mission is to stimulate economic growth and trade around the world. It grew out of the Organization for European Economic Cooperation (OEEC), founded in 1948 to help administer the Marshall Plan for the reconstruction of Europe following the Second World War.

The IEA, on the other hand, came into existence in 1974 at the urging of the United States. Its mission was to help industrialized nations combat the oil crisis that ensued after an embargo caused supply to dwindle and prices to skyrocket.

The ensuing decades, however, have changed the world, its markets, and politics. This has caused the aims of the two organizations to drift apart. Should the two organizations separate, the OECD said it would continue to support the IEA’s aims and help it to become a fully independent organization.

Some analysts, however, doubt the split will be approved by the OECD’s member nations. According to Douglas Hengel, a former US diplomat, "I think it's a tempest in a teacup kind of issue…I don't think the member states will want to change."