British premier Gordon Brown signaled Thursday he would support ending a six-decade-long gentlemen’s agreement under which leadership of the World Bank and IMF has been divided up between Americans and Europeans.
“The International Monetary Fund, the World Bank and all the international institutions must change now to meet the new realities,” Brown said during a visit to Brazil. “The next head of the World Bank need not be an American. The next head of the IMF need not be a European,” he said, referring to an implicit deal upheld since the creation of the two Bretton Woods institutions in the 1940s.
Since then both multilateral institutions have effectively formed the post-World War II global financial architecture, always with a European at the helm of the IMF, and an American at the head of the World Bank.
But with the emergence of Brazil, Russia, India and China as capitalist powers in recent decades, both institutions have come under increasing pressure to change the way their leaders are selected.
Brown called for changes “in the mandate and effectiveness" of both bodies, to make sure the voices of emerging and developing countries are heard. He added those voices had been unheard for “too long.”
Brown has called for the institutions to be reformed to better deal with global capital flows, reflecting the importance of China and the wealth amassed by Gulf states, whose sovereign wealth funds have pumped billions worth of liquidity into global markets.
His comments echo those of Australian prime minister Kevin Rudd, who said during a recent visit to Washington that the time was right to reform the IMF.
“When I look at the mood and temperament of global leaders in the G20 to wide-scale IMF reform, it’s bigger now I think than any time since ‘44,” Rudd said. “The world will call on surplus nations such as China to bolster the IMF’s resources,” Rudd said, adding that voting rights also needed to be reformed. “It is unsustainable that Europe has eight times the (IMF voting) quota but only 1.7 times the GDP.”
Reformers have called for the Security Council to include non-Cold War powers from Africa and Latin America as permanent members -- currently limited to nuclear powers Britain, France, China, Russia and the United States. (The Economic Times)