Analysis by Sanjay Suri, Inter Press Service, 4 September 2009
LONDON, Sep 4 (IPS) – Every one of these ‘G’ meetings becomes now an occasion for the developing countries – say the emerging economies – to turn that extra energy into a louder voice in the business of global decision-taking.
A day before the leaders of the wealthiest developed nations met at the last G8 summit in L’Aquila, Italy in July, the G5 met with announcements of consolidated positions. They held together jointly, and therefore that much more firmly, against a particularly European push for some binding commitments on actions towards curbing climate change.
And now on the eve of the substantive part of the G20 finance ministers meeting in London Saturday, the BRIC nations came together to make a collective announcement that would both inform the formal meeting in advance of common positions, and pre-empt increased pressure from the developed – the G8 part of the G20.
For the record, the G8 are the U.S., Canada, Britain, France, Germany, Italy, Japan and Russia; the G5 are Brazil, India, China, South Africa and Mexico; and BRIC are Brazil, Russia, India and China. The remaining members of the G20 are Argentina, Australia, Indonesia, Saudi Arabia, South Korea, Turkey and the EU represented by its rotating presidency (currently Sweden).
Russia belongs to both the G8 and outside, China some say should really belong to a G2 alongside the U.S., to sit above the G8. These numbers are not that serious; certainly they are not formal. That one or two may move this side or that is just a fallout of what everyone calls these days ‘the changing world order.’
Change has come outside of the U.S. too, and U.S. President Barack Obama is not the only one looking for change, even if that sort of push coming from others makes for smaller headlines. But the push is unmistakable – and change inevitable.
So the BRIC finance ministers did not just call for reform of the international financial institutions when they met in London Friday ahead of the finance ministers meeting proper. “The main governance problem, which severely undermines their legitimacy, is the unfair distribution of quotas, shares and voting power,” the BRIC ministers said in a statement following their meeting. That they have said before, but on Friday they went further.
“We propose the setting of a target for that shift of the order of seven percent in the IMF and six percent in the World Bank Group so as to reach an equitable distribution of voting power between advanced and developing countries. This would lead the overall share of emerging market and developing countries in the IMF and World Bank to correspond roughly to their share in world GDP.”
Six or seven percent may not sound like a lot. But the last time, three percent of votes shifted from rich to developing countries. Now they want the next shift to be twice as big. Push has not yet come to shove – the emerging economies are looking for change, not upheaval, for steps that will in time add up to a change that is certain to be revolutionary, but not looking for a dramatic revolution in the old ways.
The G8 governments have been dragging their feet since agreeing to reform of these institutions. At this G20 gathering, the pressure will be on for reform. U.S. Treasury Secretary Tim Geithner dropped in at the end of the BRIC ministers meeting to hear what the ministers had to say, and to reassure them the U.S. will back change. Brazilian Finance Minister Guido Mantega reported at the end of the meeting that Geithner agreed action to reform the international financial institutions, and to do so quickly.
And he agreed too, as the BRIC ministers demanded, that the next managing director of the IMF and the next president of the World Bank should be elected “irrespective of nationality or any geographical preference.” And that the executive boards of these institutions give more representation to developing countries.
This was always a good argument, but now strength speaks. As Indian Finance Minister Pranab Mukherji said after the meeting, BRIC nations between them have a higher gross national income (GNI) now than does the U.S. Sure, that is still four big countries that just about surpass the U.S. standing alone – but the U.S. giant stands less tall above others now than it did before, and looks more fragile than the smaller economies.
“Emerging market economies have shown resilience and helped the world economy absorb the impact of the deterioration of trade, credit flows and demand,” the BRIC ministers pointed out in their statement. “In many of them, growth is already back on track after a few quarters of recession or slowdown.”
And with 80 billion dollars of their money now going into the international financial institutions, it does not seem likely they will be able to resist change for long along the lines that the emerging economies are pushing insistently for.
The BRIC ministers held on to earlier positions on the principle of common but differentiated responsibilities in taking action on climate change. But they acknowledged too that there is much that needs to be reformed beyond voting rights and the lot within financial institutions.
“Permanent, stable reforms must still be implemented on multiple fronts,” they acknowledged. The need, they said, is to “change international practices, rules and governance structures to make the global economy more resilient to future crises.” They have an interest in this, suffering as they did from a crisis not of their making.
Few expect the developing nations to secure all the reforms they want in a hurry. But few doubt, either, that the developing world has taken at least some steps towards that end as never before. (END/2009)