Strategic Panorama 2009 - 2010 - IEEE

Federico Steinberg Whesler
to GDP measured in Purchasing Power Parity, which would result in a
much bigger increase in the quotas of the developing countries. In short, in
view of the developed countries’ reluctance to lose votes, it was decided
to adopt a minimum agreement that marks a small (but symbolic) step
forward, but merely postpones the real and necessary debate. Instead of
having agreed on a permanent formula that could be used for the coming
decades, the minimum agreement ensured that there will be more tough
negotiations over the next years. Indeed, the crisis itself—and the effort to
provide a coordinated international response—have already set in motion
a new quota review process which will need to be concluded in 2011.
If it is furthermore considered that the reform did not include changes
to make the system for designating the Managing Director more
merit based (so that a European is not always chosen in the IMF and an
American in the World Bank) and that mechanisms were not put in place
to ensure the involvement of a larger number of prominent figures from the
developing countries in the decision making bodies, it may be said that the
reform was incomplete.
What is more, in order for the emerging countries to consider the institution
legitimate, above and beyond the formal changes it is essential to progress
in changing the Fund’s culture. This would involve incorporating the
economic-policy sensibilities and practices of the emerging countries into
the economic analysis conducted by the Fund’s staff. So far this analysis
has been dominated by a transatlantic-liberal approach that is fairly impervious
to external influence, which has led to certain political prescriptions
that many developing countries consider inadequate (for example, the ban
on using capital controls irrespective of circumstances. In any event, this
change will take time, although the formal reforms may help speed it up.
Lastly, above and beyond the debate on legitimacy, it should be pointed
out that there is a certain amount of consensus on what the goals of
a renewed IMF should be, but not on the best way of achieving them.
In particular it is politically unfeasible to convert the IMF into a global
supervisor capable of anticipating crises, issuing binding recommendations,
settling conflicts, imposing sanctions and promoting cooperation to
manage global financial risks in a multilateral and coordinated manner. Its
members, both rich and poor countries, are not prepared to hand over so
many responsibilities to it.
But what we can aspire to is to ensure that the different national regulations
are compatible and share common principles agreed within the IMF
— 59 —