On the 15th of November 2008, in the midst of the global financial crisis, the leaders of the G-20 countries met in Washington DC. In the meeting’s final declaration, they committed to reforming the international economy governance – in order to steer their countries out of the crisis, boost economic growth and restore trust – by (among other things) overhauling the Bretton Woods institutions, i.e. the World Bank and the International Monetary Fund.
The structure of the two institutions, created in 1944, had been discussed before, but never so firmly and by such a high-ranking forum.
In fact, the earliest reforms date back to the Seventies and were followed by regional financial crises that had global effects and sparked a debate among academics and politicians alike. New impetus came from the anti-globalization movements – particularly active during the Nineties – that put the Bretton Woods institutions on trial. The claims for more “voice and representation” by the developing countries,especially the emerging ones, whose economic success was fostered precisely by the contested globalization, came later on. These demands were echoed by major international conferences and groups such as the G24.
All this brought about a series of small actions through which the two organizations have begun to rethink their roles and structures.
Two subjects were on the agenda: how to make the Bretton Woods institutions (i) more effective, so that they can successfully face the challenges of development gaps (World Bank) and crisis prevention and management (IMF) and (ii) more democratic and less opaque, so that all their members and stakeholders can have a voice in and be represented, be they large or small, wealthy or not.
As a consequence of the 2008 global financial crisis, each of the Bretton Woods institutions convened groups of wisemen and committees of experts, and so did governments and other international institutions. The results of their work can be found in the Manuel Report; the Report of the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System; the Zedillo Report. It’s also worthwhile to mention technical documents such as the FMI governance evaluation document by its Independent Evaluation Office and a series of reports from the civil society like the 4th Pillar Report
All these debates had, as a consequence, IMF quota and governance reforms adopted on December 2010 and not yet in force because of the resistance by the main shareholder of the two organizations: the United States.
I have published – a couple of years ago- an e-book to examine the governance systems of IMF and World Bank and above all what I reckon is the core issue: their decision-making process. My analysis is based on the firm belief that the decision-making process affects the efficiency and also – indirectly – the outcome of the international organizations’ decisions. In other words, their governance systems are bound to influence and shape the results of the actions of the international organizations themselves.
Unfortunately – as the debates and the reforms stagnate – my book and my proposals are still up-to-date. Here they are, in a nutshell:
EIGHT SUGGESTIONS TO IMPROVE DEMOCRACY AND EFFICIENCY
IN THE BRETTON WOODS ORGANIZATIONS
- Separate IMF and World Bank (autonomous memberships and attributions of shares, different quota formulas);
- Introduce a double majority (of states and votes) in the decisional bodies (Boards of Governors, Executive Boards and Ministerial Committees);
- Entrust Ministerial Committees with a role of political guidance similar to the one currently played by the G20, eventually foresee their possibility to meet (also) at head-of-state level;
- Rethink constituencies to reflect – when possible – regional integration and cooperation gatherings, as a first step towards multilevel governance;
- Give Executive Directors the only status of international officials and guaranteed independence while national interests will be reflected and balanced in Ministerial Committees;
- Give the Board of Governors the power to appoint and collectively dismiss the Executive Boards;
- Envisage membership of international organizations;
- Give civil society an advisory role, by publishing on the Internet the first drafts of policy and strategy documents and collecting comments and reactions. The final version of all documents should reflect in the motivation how and why decisions were made.
On all of these points I could speak for a long, if you are interested you can read it all in my book.
PS Good news: José Antonio Ocampo just released a paper about a reformed architecture for the international monetary system. The debate is officially re-opened!