From Kati Suominen, the German Marshall Fund of the U.S.: In a move likely to please China, India, and Brazil, but force a confrontation with Europe, the Obama administration last month blocked plans that would maintain the current size of the board of directors of the International Monetary Fund (IMF). This is the strongest U.S. effort yet to boost emerging markets’ influence in the world financial body. Washington wants a 20-member board, down from the 24, with Europeans, currently holding nine chairs, incurring the cut. Europeans balk at the idea. The standoff will have to resolved by October 31, when the mandate of the existing board expires, and the institution will become rudderless. …
Europeans are correct to insist that emerging nations match any new rights with new responsibilities. But it may be that boosting emerging countries’ powers is the only way to ensure more responsible behavior. Absent a stake in the system, emerging markets are guaranteed not to play nice. Preserving the post-war multilateral economic order, a stunning transatlantic success story, requires reforming it by tying emerging markets into it.
The first step is for Western Europeans to give emerging markets the five percent increase in their voting share that has already been agreed upon.
Step two is a staged consolidation of the number of European seats on the IMF board. Granted, Europeans have a chance to turn the confrontation to advantage, by counter-proposing that they hold a single chair. That would force Europe to act in a united fashion and lend the continent powers to steer the emerging nations in the right directions.
Both Europe and the United States have a stake in a successful 21st century global order.. To ensure that, it is high time the Europeans acknowledge they need to curb their predominant role in the IMF.
Kati Suominen is a Transatlantic Fellow with the German Marshall Fund of the United States. (photo: Getty)
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