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
filmPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
News
Katie Hopkins makes a living out of courting controversy
people
News
General Election
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Ashdown Group: Head of Client Services - City of London, Old Street

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders