The FT leader article on Seattle, talks about conceding ground in the
management of the world economy.
Although Seattle is about the WTO, significantly the FT tackles the
question of the IMF, seeing the structures for managing world capitalism as
interdependent. As indeed do the protestors.
[Any attempt to limit the protests to the WTO alone would be
short-sighted. On this the anarchists may be more correct in their
instincts than conscientious lobbyists for one of the progressive interest
groups. Th whole picture is about the whole working of global capitalism.]
The FT claims that the IMF already accepts that the unfettered rights of
short term fund holders were arbitrary. That of course is a big shift, and
it is still working through. (I note the Hang Seng index is over 15000 BTW)
But the FT expresses concern about the narrow consent base of the west and
signals strongly that for the first time the West should accept a
non-European as the successor to Michel Camdessus as managing director of
the IMF.
Note it presents this argument in terms of appeasing the third world.
However one of the likely candidates is Sakakibara from Japan who has just
won the sponsorship of the ASEAN countries. This would reinforce the
capitalist world being split into three main power groups, USA, Europe and
Japan, unable to work together efficiently for the greater accumulation of
Capital.
FT:-
>The IMF, though, is
>starting to see the virtues of transparency. In choosing
>the successor to Michel Camdessus, it has a chance to
>prove that it is not in the hands of western Europe.
>
>The WTO, despite the force of the protests against it, is
>probably the most inclusive of the three; its decisions are
>reached by consensus. The Uruguay round was
>weighted towards the west, but this was partly because
>the developing world did not do enough to push its own
>interests. Developing nations now have a much clearer
>agenda of what they want to gain from WTO talks.
>
> < snip >
>
>A perception that these three international institutions
>are properly reflecting the desires of the developing world
>would do much to defuse the critics' arguments.
So that is the FT's reformist solution. Already quite a shift.
Below is a more thoughtful reformatory solution, which would actually
address the formal power structures of the world economy:
It should be supported.
Open and democratic elections of IMF officials!
Note interesting points in this article.
Over 50 countries having their economic policy supervised by IMF.
Although India has only 2% of the IMF votes !!!!
the developing and post-communist economies have about
40 per cent of the IMF votes, enough to force the candidates
to confront issues of interest to the poorer countries.
- if the managing director was not appointed behind closed doors.
Note also the author's interesting sketch of three different perspectives
for the IMF, the USA's, Gordon Brown's and his own.
Financial Times, 15 Nov 99
by Jeffrey Sachs - Time to end backroom poker game
The IMF's new managing director must be chosen by an
open and democratic process, says Jeffrey Sachs
Michel Camdessus has wisely recognised that the International
Monetary Fund needs a renewal of vision and leadership.
The cognoscenti of the world financial system expect his
successor as managing director to emerge from the backroom poker
game of European politics, as has always happened in the
past. Will it be a German this time instead of Frenchmen,
they wonder breathlessly.
In the meantime, the developing world - 85 per cent of the
world's population and nearly 100 per cent of the receiving
end of IMF policies - is expected to stand by and wait for the
result. This is no way for a global institution that preaches
transparency, good governance and democracy to function.
The position of IMF managing director is one of the most
important in the world. The IMF, wrongly I would assert, now
has programmes in more than 50 countries, and is
negotiating with at least a dozen more. Hundreds of millions
of people depend on the quality of IMF leadership. In truth,
they often depend more on IMF leadership than on their own
political leaders, so intrusive has the IMF become in the
weak and vulnerable nations of the world.
Yet the IMF's legitimacy is dangerously low. It is already the
object of riots and unrest throughout the developing world,
as well as scorn in the US Congress and even in much of
the financial world. There is little chance of regaining
global legitimacy if the developing countries have no role in the
selection of a new managing director, including the real
possibility of a successful candidate from a developing
country.
At a time when the gulf between the world's richest and
poorest is the widest in history, one might expect some
more serious attention to ways to improve the prospects of
the poorest countries - including the appropriate roles of
international institutions. And yet, with the horse-trading to
fill the IMF vacancy already in train, not a word is heard in
Washington or the European capitals about the developing
world's role in this process. Since the US believes it owns
the presidency of the World Bank (a rational belief indeed, in
view of past practices), the Europeans believe they own the
position of IMF managing director.
According to the IMF's articles of agreement, the managing
director is to be chosen by the executive board of the IMF.
The board is, of course, not a fully democratic institution,
for two reasons. First, it is by design much closer to the
rule of one-dollar, one-vote than one-person, one-vote. Voting power
within the fund is allocated according to IMF country quotas,
which in turn are allocated roughly according to economic
size. India, with 16 per cent of the world's population, has
just 2 per cent of the votes within the IMF.
The second problem, more discouraging and less tractable,
is that many countries within the fund are themselves so
undemocratic that their votes can hardly be considered
representative of the aspirations of their own people.
Despite these serious shortcomings, an open campaign for
the position of managing director, followed by an open vote
of the executive board, is still vastly to be preferred to a
backroom deal in Europe. An open process would force
candidates to state their visions of the role of the fund; and,
even more importantly, would force the executive board and
the world community at large to focus on what the fund has
been doing and what it should be doing.
The developing and post-communist economies have about
40 per cent of the IMF votes, enough to force the candidates
to confront issues of interest to the poorer countries.
There are at least three distinct visions of the IMF. The US
government sees it as proconsul to the developing world, the
institution that dictates the terms so that laggard societies
are prepared for the global economy of the 21st century.
The UK position, set out by Gordon Brown, the chancellor,
has been to see the IMF as the repository of globally agreed
standards in monetary, fiscal and financial policies.
This is a
much more collegial vision, though it raises crucial
questions as to the appropriate borderline between global
harmonisation and the freedom of countries to choose their
own institutional forms.
A third position, espoused by a remarkably wide range of
ideologies, and a view that I share, is that the IMF should
stop being a nanny to the world and should focus on
monitoring the world's monetary system, including
exchange-rate arrangements and international capital
markets. Advocates of this position see comprehensive debt
cancellation as an effective way to end the need for
perennial IMF programmes in the poorest countries.
The cause of good governance would therefore be served by
a process of the following sort. The IMF executive board
could invite candidacies from all parts of the world
during the
next 60 days. The board could also select an outside body
of experts to review the candidates, in order to advise on
professional and ethical qualifications, a standard procedure
for important nominations to the US judiciary and other key
positions in many parts of the world.
The outside experts would designate candidates as qualified
or unqualified only in terms of professional knowledge and
international leadership experience, but would not rank the
nominees.
Early next year, the candidates would make public their
broad positions on the IMF's role and their views on issues
such as debt relief, exchange-rate arrangements, global
governance and management of capital flows. One would
expect them to meet groups of international civil society
during the period as well. Such groups would also submit
their opinions to the executive board.
By February or March, the executive board could take a
public vote on the candidates, with board members
explaining the reasons for the vote. The people of the world,
not just finance ministers, should hear the basis of this
decision.
The world is filled with promising candidates. Western
Europe boasts some outstanding figures, but so do other
parts of the world.
For a crucial global institution, it is time to tap our best
global talents, and to do so openly and democratically.
The author is director of the centre for international
development at Harvard University
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