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."
Diving in at the deep end is no excuse for shirking the style stakes
- 2 Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Tommy Ramone dies: Last surviving founder and drummer seminal punk band The Ramones dies aged 62
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...