West faces 'fractious week' of talks over surrendering World Bank votes to China

As the Bric countries jostle for more say at the IMF, G20 ministers face dilemmas– not least how to travel

A "fractious week" of talks faces those world leaders able to attend the annual meetings of the World Bank and the IMF and a simultaneous G20 summit in Washington this week.

The World Bank and IMF say they expect to go ahead with the meetings of global finance ministers and central bankers, which begin today, despite air travel disruptions across Europe caused by volcanic ash.

The Chancellor, Alistair Darling, and the Governor of the Bank of England, Mervyn King, are due to attend formal sessions at the weekend on behalf of the UK, but their travel plans are subject to the same disruption as any other traveller.

A levy on the banks and aid to Greece are among the subjects on the agenda, though if many European figures are absent many crucial decisions will have to be deferred.

World Bank president Robert Zoellick told Reuters in an interview that his organisation – which offers assistance to the poorest nations in the world – will soon benefit from a further $3.5bn (£2.29bn) in capital from member states, much of it from newly emerging economic powers such as China. This is the first increase in the World Bank's capital in twenty years, and will help replenish its reserves, depleted through some $100bn in lending during the worst global downturn in three quarters of a century.

The problem, however, is that the Brics in particular – Brazil, Russia, India and China – are also seeking a bigger say in the running of the World Bank and the IMF.

The voting rights allocated to China are in line with their financial contributions to the two bodies, but are some way below where they might be if they were on par with China's importance in the world economy. Whereas China accounts for about 11 per cent of global GDP, it only has 2.8 per cent of World Bank voting – less than Britain or France and the same as Canada. India has the similar voting power; Brazil scarcely more than Belgium. China and the others can only gain influence at the expense of the established powers, and many developed economies remain wary of losing influence – hence the "fractious" talks ahead.

At crucial points in the revival o f the world economy, Mr Zoellick added that "the strength of the recovery is a serious question mark".

The British government has long supported radical reform of the IMF and World Bank – Gordon Brown has even gone so far as to call for a "New Bretton Woods" to replace the institutions founded at the original conference in 1944.

In an informal stitch up that has lasted ever since, the Europeans are traditionally allowed to choose the head of the IMF, while the US is allowed to pick the presidency of the World Bank. However, the rise of Japan, now China and the slump in the advanced economies has altered that dynamic forever.

Mr Zoellick has sought a two pronged solution to the problem – a general increase in subscriptions plus an adjustment in favour of emerging economies.

"People are coming together on the capital increase and I think people are looking at about $3.5bn for that," Mr Zoellick said. "That, to me, would be a good result."

At the G20 leaders' Summit in Pittsburgh last year, government agreed a 3 per cent shift in overall voting power in the World Bank and at least 5 per cent for the International Monetary Fund for emerging economies. They are, however, demanding a 6 per cent shift in voting power at the World Bank.

Asked whether it was possible for an agreement to be concluded on at least a 3 per cent movement in votes from developed to developing countries, Zoellick said: "I believe the shareholders are committed but it's a fractious process."

Mr Zoellick acknowledged the problems in getting nations – shareholders in the Bank – to agree to reform: "It's a shareholder decision and one where I have less levers because they have to decide. On this one, the allocation remains a difficult issue for the shareholders to work out."

At a recent summit the BRICs declared that "the IMF and the World Bank urgently need to address their legitimacy deficits. Reforming these institutions' governance structures requires first and foremost a substantial shift in voting power in favour of emerging market economies and developing countries to bring their participation in decision-making in line with their relative weight in the world economy."

While supportive of their claims, Mr Zoellick has also urged the emerging developing nations to offer more flexibility in the Doha round and other forums in return. In a speech last week Mr Zoellick said: "Modernising multilateralism isn't all about developed countries learning to adapt to the needs of rising powers. With power comes responsibility."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvSpoiler alert: It has been talked about for months
Arts and Entertainment
James Hewitt has firmly denied being Harry’s father
arts + ents
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
news
News
Sir James Dyson: 'Students must be inspired to take up the challenge of engineering'
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Catherine (Sarah Lancashire) in Happy Valley ((C) Red Productions/Ben Blackall)
TV
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

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?