Global Policy Forum

By Adam Jackson & Charlotte Denny

The International Monetary Fund and the other institutions in charge of the global are "fossils from a pre-democratic era" and have sidelined the United Nations, according to a new report published today on the eve of a key summit on the UN's future.

Global economic problems, like the financial crisis which rocked Asia three years ago and the failure to deal with poverty are the result of a huge democratic deficit in the world economy, according to the New Economics Foundation.

The world's seven leading industrialised economies control almost half the votes on the IMF's board because they are its biggest shareholders, a division of power which NEF describes as corruption at the highest level.

"If you tried to buy votes in a national election it would be gerrymandering and you could go to prison," said Andrew Simms, co-author of the report and head of the global economy programme at NEF. "But buying votes at the World Bank and IMF is considered a virtue." The economies of most developing countries are effectively run by the IMF - as a condition of its lending programme it requires countries to stick to a detailed programme of economic policies - yet the developing world controls just over a third of votes on the IMF's board.

"They are 17th-century parodies of representative government," the report says, "from a time that recognised only the rights of aristocrats and big landowners."

The UN, the most democratic institution in the global system, has been squeezed out of its original mission to balance the interests of rich and poor countries by the IMF and the World Bank, according to NEF.

The solution is for the Bank and the IMF to apply the same requirements of democracy and accountability they expect from developing countries to their own organisations. "We have to end the minority rule of the global economy by an aristocratic economic elite," said Mr Simms.

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