Wednesday, September 6, 2006

By Gyan Pathak

The International Monetary Fund and the World Bank have always been keen on “reforming” the world but not themselves. These have, in fact, become the instrument of the big countries, especially the United States, to control the world in the name of cooperation, good governance and development. The leaderships of the poor and developing countries fall prey to it in their bid to avoid their own domestic crises and for their own survival at the cost of their people. They, obviously, are not in a position to force “reform” in these two world bodies and aligning with the big countries even banning protests from the suffering people. It precisely is happening in Singapore also, where the government is doing its best to stop any protest demonstration during the scheduled joint meeting of these bodies on coming September 19 - 20.

Who will reform these two world bodies? It is the moot question. They want us to believe that they are functioning in a democratic way but it is not the truth. They preach transparency for the world, but they do not apply it to themselves. Internal meetings, processes, and file notings are secret things. Whatever we know is the edited diplomatic versions. They are known to be interfering into various countries' affairs including administration and finance while maintaining that they only give suggestions. They are undemocratic even in their structure and voting rights, and their free and fair exercise. If a country wants to get money from these bodies it is bound to follow its dictate.

Take the example of the IMF. There has been much ado about reforming the IMF for the last few days which is likely to continue even after its governors meeting in Singapore scheduled to be held on September 19-20. It was triggered this time by a proposed reconfiguration approved last week by 24-member executive board of the organization to be ratified by the governors' meeting.

The recent decision to boost the voting powers within the International Monetary Fund (IMF) of four developing countries - China, South Korea, Turkey and Mexico - is too little to be democratic, albeit, it has been applauded by its head, Rodrigo de Rato and the pro IMF lobbies. However, the question remains if this organization could ever come out of the unfair control of the big nations.
Mr Rato was telling the world the other day that it would be the only first step of reforming the IMF and he would be proposing more 'far reaching changes' after the Singapore meeting (September 19 - 20) of the governors of the organization, and “the (proposed) changes are based on fairness”. However, the fact remains that the IMF voting power is apportioned to members based on economic strength of the specific country. “Richer the nation, higher it's voting share” is the rule. They also control the shares of votes of other countries through various bilateral and multilateral instruments.
Even with the changes for the four countries, the 184 member financial cooperative will remain firmly under the control of the major industrial democracies, collectively the United States, Canada, Japan and Europe who account for 63 percent of the votes within the IMF. The United States alone controls 17 percent.
The proposed reconfiguration approved last week by the Fund's 24-member executive board has already become contentious not on account of “its undemocratic sharing of votes” but on account of Europe and the United States' unwilling attitude of sharing their own share of votes. They do not want to lose their control over the world through the IMF instrument. Given the objections raised by European countries, it is clear that no “far reaching” reform is possible in the IMF, at least for the moment.
Virtually, this body is run by seven industrialized countries - the United States, Japan, Germany, the UK, France, Canada and Italy, called G7 nations. They have their own agenda while promising to help the poor and developing countries and their people.
Many distortions have cropped up in the IMF since its inception in 1944, and many of them are undemocratic. All the members have not the same value of votes. By default the United States exercises veto power, because it has 17 percent of votes while a major decision in the IMF requires 85 per cent of votes.
Just for a show, this organization has an ombudsman but its decision is not final. The management is the highest authority who changes the decision of ombudsman to suit its policies, or the policies of the big nations, who often blame the borrower countries for failures of their policies.
The policies of the IMF was fine-tuned in 1978 to the advantage of the big nations, and with the fall of the USSR and the end of the cold war the United States emerged as the major player in this organization having indirect powers to interfere any client country's affairs. Since the last one and half decades, the US is controlling most of the poorer and developing nations' policies through IMF.
It is a very serious matter of the day. Why should people suffer the policies of the World Bank and the IMF? Why should these bodies not be reformed on the principles of democracy? #