Tuesday, September 19, 2006

Another Farce of a IMF / WB Meeting

Critics Denounce IMF "Vote Fiddling"
Meaningless Realignment Will Not Restore Damaged Credibility

Civil society critics reacted to news that the IMF had board had approved minor changes in its voting allocations with criticism and indifference. The measure, approved by 90.6% of IMF voting shares, was touted by the IMF as way for middle income countries to play a greater role in decisions.

"The power of the U.S. and other G7 countries on the board is entrenched, and the `consensus decision-making' process is manipulated to quell any dissent before it can even be articulated," said Sameer Dossani of 50 Years Is Enough: U.S. Network for Global Economic Justice. "Giving China or Turkey an extra percentage point will not contribute to changing IMF policy, and it will not empower developing countries."

The U.S. controls over 15% of the votes at the IMF board, giving it effective veto power over major decisions, which require approval by 85% of the board. Its share is unaffected by the reform announced today.

Sub-Saharan Africa, the region where the IMF is most active in designing and imposing economic policies, will lose out significantly. Its 45 countries are represented by just two board members, and together they control less than 5% of the vote. After the reform, their share will be reduced to about 2.1%. Pledges to address this loss through an increase of "basic votes" have yet to be fulfilled.

The disparity in voting shares was underlined by the fact that the 23 countries that opposed the measure controlled only 9.4% of the votes.

"This is no victory for developing countries," said Jenina Joy Chavez of Focus on the Global South. "It is a psychological boost for four countries, but more than anything a confirmation that the more a country is affected by the IMF's policies, the less voice it will have in determining them."

The IMFC also continued the effort started at its last meeting (April 2006) to add a new role to the IMF's agenda. Like the slight shift in voting percentages, it is a reaction to the IMF's widely-perceived credibility crisis, fostered by early repayments of loans by several large countries, which have claimed financial independence of the IMF as a result.

"The IMF wants us to see it as a re-made institution, one that is useful to the world," said Soren Ambrose of Solidarity Africa Network. "But the vagueness of this new role confirms that the effort is more about public relations – window-dressing to preserve the IMF's power and flexibility. No serious observer of the IMF will accept that it has changed its nature because it might host some meetings. It remains a rule-maker and enforcer for developing countries, but one that is rapidly losing both its credibility and relevance. Rather than devise vague new identities, the institution should be allowed to die a natural death."

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