David Prosser: A golden opportunity to embrace proper IMF reform at last

Outlook: Where was the International Monetary Fund's advance warning of the most severe financial crisis in its history three years ago?

The Dominique Strauss-Kahn case is a story of personal tragedies – for the International Monetary Fund chief, of course, but more so for his alleged victim. But at an institutional level there is a golden opportunity to grasp here. This is the moment to fully embrace reform of the IMF, to transform it into an institution that reflects the economic world order of the 21st century rather than the Second World War environment in which it was created.

The most powerful way to do that would be to acknowledge that almost 70 years after the IMF was set up, Europe no longer has an automatic right to select one of its own as its managing director. That right, given as a counterbalance to the American right to choose the head of the World Bank, is indefensible in a world where, on the IMF's own figures, Europe accounts for only a quarter of the global economy. Until now, Europe's leaders appeared to believe that having thrown some bones to the developing world on voting reform, they would be able to choose at least one more leader (David Cameron, who has publicly called for a non-European, is an honourable exception, though cynics may wonder whether he is motivated by Gordon Brown's candidacy for the job).

The circumstances in which Mr Strauss-Kahn's term of office is now coming to an end ought to fatally weaken the Europeans' ability to retain power. And once it has installed its first non-European leader, the IMF should also find it easier to go much further on voting-rights reform. China, India and other developing economies have not yet been given sufficient recognition – they have been granted more voting rights than in the past but the US and Europe retain the same tight control over the IMF's decisions that they have always enjoyed.

Reform is not simply a question of good governance. The IMF must become more representative because it will become ever-more dependent on China and the rest – for the funds they can provide, but also for global economic co-operation and collaboration.

Opponents of reform will be mustering their forces as we speak. But they should ask themselves whether the record of the Western-controlled IMF justifies maintaining the status quo. Never mind the resentment around the world of countries that have had the IMF's solutions imposed upon them – including some in Europe itself right now. Where was this august body's warning of the most severe financial crisis in its history three years ago?



The battle for the world's exchanges

There's a certain curiosity about the way in which the world's stock exchanges, which have so often been cradles of free-market capitalism, are currently playing host to some raging arguments about protectionism and competition.

On the one hand, you have the United States, where despite widespread dislike of a German takeover of the New York Stock Exchange, Nasdaq, a potential American bidder, has been unable to put together a credible counter offer because of competition concerns. On the other, you have Canada, where opposition to the London Stock Exchange's takeover of TMX, which runs the Toronto and Montreal bourses, is running so high it looks as if regulators may waive the competition worries surrounding an emerging domestic bidder.

Neither approach is necessarily wrong. But those who describe the Canadian approach, including critics in the country itself, as parochial certainly have a point.

The US, for all its nationalistic fervour, has a good record on cross-border M&A. Foreign buyers have occasionally been blocked from making US acquisitions but only in very specific circumstances – on national-security grounds, say.

That makes sense in a country where businesses are so keen to make foreign acquisitions of their own. Kraft, for example, got a tough enough ride as it was when it bought Cadbury in Britain – imagine what opponents to that deal would have said if the US was in the business of routinely blocking foreign buyers of its companies.

With the greatest of respect to Canada, its companies are not global players in quite the same way. The Canadian authorities can thus afford to be more interventionist – if they put the very real questions over competition aside to favour the Maple Group's bid for TMX above that of the LSE, they will be following the example set when they vetoed BHP Billiton's bid for Potash.

What does this mean for world trade? Well, protectionism is not healthy, but Canadian reluctance to cede control of their companies to foreigners is not a new development. The LSE will be frustrated, no doubt, just as BHP was before it. But in the end, Canada's determined parochialism will do it more damage than anyone else.



Brickbats and a bouquet on Equitable

Just one cheer for the Treasury following yesterday's announcement that it will make the first compensation payments to the victims of the Equitable Life scandal next month. At least this Government is coughing up – the last administration spent the best part of a decade dragging its heels.

Still, the decision to pay people what they are owed in installments, rather than as an upfront lump sum, looks pretty shoddy. One of the worst things about this affair is that so many Equitable victims have died while waiting for a pay-out: making the survivors wait until 2016 to be paid in full will just add to the number of savers denied a complete settlement.

This is not, on any reading, a generous package. The terms of the scheme mean many Equitable savers will miss out altogether. And those who are getting redress will receive substantially less than they lost when the insurer came so close to collapse.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?