Struggle for power may paralyse IMF
Reuters
Posted: Friday, Aug 27, 2010 at 2252 hrs IST
Updated: Friday, Aug 27, 2010 at 2252 hrs IST
Washington: A power struggle threatens to throw the International Monetary Fund into disarray unless a compromise is reached soon between the United States and Europe over how to give more say to emerging powers.
The United States wants Europe to give some of the seats it occupies on the 24-member board of the global lender to emerging market countries to reflect their growing global economic weight.
Europe has balked at the idea of yielding some of the nine chairs it holds because it is divided over how to do it.
The sides face an October 31 deadline when the mandate of the existing board expires. “The IMF will be in crisis unless a solution is found in time,” a senior board official said.
Frustrated with Europe’s resistance to yield power, Washington took an unprecedented step on August 6 by blocking a resolution which would have kept Europe’s board dominance.
The US move also reflects broader economic tensions with Europe over new global liquidity rules for banks and Europe’s emphasis on fiscal austerity while Washington has stressed the need to ensure economic recovery before belt-tightening.
There are concerns in Washington that the IMF might become irrelevant and lose its legitimacy if it fails to change with the times and become fully representative of both rich and poorer nations.
The US treasury department has said the election of the IMF executive board was an opportunity for broader governance changes in the Fund and has left the ball in Europe’s court.
A senior European Union official said representatives of the 27 EU finance ministers will discuss the issue on
Tuesday. “Inevitably, the discussion will be about giving more room for emerging economies, but the question is how much,” the official, who has knowledge of the talks, said.
Reuters
Posted: Friday, Aug 27, 2010 at 2252 hrs IST
Updated: Friday, Aug 27, 2010 at 2252 hrs IST
Washington: A power struggle threatens to throw the International Monetary Fund into disarray unless a compromise is reached soon between the United States and Europe over how to give more say to emerging powers.
The United States wants Europe to give some of the seats it occupies on the 24-member board of the global lender to emerging market countries to reflect their growing global economic weight.
Europe has balked at the idea of yielding some of the nine chairs it holds because it is divided over how to do it.
The sides face an October 31 deadline when the mandate of the existing board expires. “The IMF will be in crisis unless a solution is found in time,” a senior board official said.
Frustrated with Europe’s resistance to yield power, Washington took an unprecedented step on August 6 by blocking a resolution which would have kept Europe’s board dominance.
The US move also reflects broader economic tensions with Europe over new global liquidity rules for banks and Europe’s emphasis on fiscal austerity while Washington has stressed the need to ensure economic recovery before belt-tightening.
There are concerns in Washington that the IMF might become irrelevant and lose its legitimacy if it fails to change with the times and become fully representative of both rich and poorer nations.
The US treasury department has said the election of the IMF executive board was an opportunity for broader governance changes in the Fund and has left the ball in Europe’s court.
A senior European Union official said representatives of the 27 EU finance ministers will discuss the issue on
Tuesday. “Inevitably, the discussion will be about giving more room for emerging economies, but the question is how much,” the official, who has knowledge of the talks, said.