LETTERS TO THE EDITOR Fritz Fischer "Why Europe should spearhead IMF and World Bank reforms"
By Daniela Setton of World Economy, Ecology & Development in Berlin
Fritz Fischer’s article touched a sore point: the long overdue governance reform of the IMF and the World Bank has been blocked by its most powerful shareholders, and particularly by EU countries. He rightly refers to the huge credibility gap which opens up between their demands that developing countries adopt "good governance” while they themselves adhere to undemocratic and opaque mechanisms for maintaining their influence in the Bretton Woods institutions (BWI). Fischer’s call for a strengthened political initiative by the EU to give up their individual voting rights in favour of bundling them can therefore only be welcomed.
But the aim of a strong and pro-active European role in the governance reform of the IMF and the World Bank should not, as Fischer emphasises, simply be to counterbalance US foreign policy interests. A longstanding criticism from civil society has been that the credit allocation practice of both international financial institutions is already much too strongly influenced by the economic and foreign policy interests of the major shareholders, with often damaging effects on living conditions in developing countries.
Fischer hopes that increased EU influence will strengthen European social values and limit US dominance in the BWI. Whether the EU can actually advance policies based more on human rights and social and environmental criteria by strongly combining their votes remains to be seen. If development ministries lose their influence on World Bank policies, for instance, adequate European structures would have to be created to more effectively bring development policy objectives into the position taken by the European Union. This is certain to be a difficult process, but even if it cannot be achieved overnight, there is no way round it. If there is a realistic possibility of EU countries renouncing their formal voting rights, then the European positioning procedure needs to be pushed forward, a balancing of interests found between the various departments and the larger and smaller countries. This would have different implications for the IMF than for the World Bank.
It is essential that a broad public discussion in Europe should accompany and influence the development of a unified European vote, so the participation of national parliaments and civil society is crucial. The democratisation of the IMF and the World Bank does not end with reforming the voting rights in the institutions but requires stronger public control of European policies in the BWI at both national and European levels. An important first step would be EU coordination within the BWI, which is taking shape but still at a predominantly informal level; it could be more strongly institutionalised and thus made more transparent and accountable. This still does not provide any guarantee for the creation of a strong social and ecological European vote in the BWI, but it is a necessary prerequisite for one.
Erschienen in der Sommerausgabe 2006 von "Europe's World" als Reaktion auf den Artikel von Fritz Fischer, der nachzulesen ist unter: www.europesworld.org/PDFs/Issue2/EW2_1.3_Fischer_Why_Europe_should_spearhead_IMF_and_World_Bank_reform.pdf#search=%22Fritz%20Fischer%20Why%20Europe%20should%20spearhead%20IMF%20and%20World%20Bank%20reforms%22