Jim Lobe
Inter Press ServiceJune 26, 2003
The Bush administration is blocking proposed reforms to the World Bank's governance structure that would modestly increase the representation of African countries on the Bank's governing board, according to a non-governmental organization (NGO) that monitors the institution. The reforms are supposed to be discussed at an informal meeting of the Bank's executive board Monday, according to the British-based Bretton Woods Project, but the U.S. executive director to the Bank, Carol Brookins, has called for halting the discussion due to what she claims is an absence of consensus on the subject. Brookins' office declined to comment for this story.
''The U.S. government attempt to kill off discussion of proposals on reforms to rebalance Bank and (International Monetary) Fund (IMF) governance gives more ammunition to critics who say these institutions are just tools of the richer nations,'' said Alex Wilks, the Project's co-ordinator. NGOs and developing countries have long demanded reform of the Bank's governing board that would give poor countries a stronger voice. Now, the executive directors of the world's industrialized countries control about 60 percent of the vote, and the U.S. government, with close to 20 percent of the vote, can effectively veto changes in the Bank's charter that require a super-majority of 85 percent of voting shares.
On the other hand, the 46 sub-Saharan African member-countries together control just a few percent of the board's total voting power and, between them, have only two directors on the executive board of both the Bank and the IMF. The executive boards decide on what loans and credits are approved. The Bank is the world's largest single source of development finance: it provides about 20 billion U.S. dollars a year in loans, credits and guarantees.
For more than a decade, governments and NGOs have called on Bank members to reform the board's voting structure in order to give a proportionately greater voice to poor countries on the grounds of both fairness and of promoting a greater sense of responsibility and ''ownership'' of the institution and its operations to developing countries. In March 2002, the report of the Financing for Development summit in Monterrey, Mexico -- in which Bush himself participated -- stressed ''the need to broaden and strengthen the participation of developing countries in international economic decision-making and norm-setting''. It called in particular for the Bank and the IMF to enhance participation of developing countries in ''their decisions-making''.
The Bank's executive board has been discussing what steps it could take in this regard for some time, according to a 15-page discussion paper prepared for a Jun. 23 board meeting by Bank management that was obtained by the Project. The paper sets out various options for structural reforms that would not require amendments to the articles of agreement, therefore ''can be blocked by the U.S. government''. Citing statements by governments and the Bank's policy-making Development Committee during its April meeting, the memo notes that ''political will does exist'' for reforms. ''There is a willingness to give serious consideration to these more demanding options at this time in order to 'strengthen the international dialogue and the effectiveness of these institutions' (i.e., the Bank and the Fund)'', the memo states. The paper goes on to propose a number of changes, the most important of which include raising the combined voting shares of developing countries from the current 39 percent to 44.3 percent and increasing the number of executive directors who represent sub-Saharan African countries from two to three.
But Brookins has reportedly circulated a memo that opposes further discussion on such structural reforms and instead proposes creating a fund to provide extra research capacity for the executive directors from developing countries. That is ''more than ironic'', considering the proposals would not have far-reaching implications on how the Bank operates, says Pam Foster, Coordinator of the Halifax Initiative Coalition. The United States would retain its veto, for instance, she said in an interview. But she fears the U.S. move will have a ''chilling'' effect on reformers on the Development Committee, led by South Africa. "It puts a significant damper on any enthusiasm that was bubbling around reform efforts,'' adds Foster, whose Ottawa-based group is made up of Canadian civil society organizations working to transform the international financial system.
The U.S. memo could also effectively remove governance reform from the agenda of the Bank-IMF annual meetings in September, she speculates. According to Wilks, ''this example of a large country throwing its weight about in global institutions shows precisely why reforms are needed''. ''If the U.S. gets its way, then international summit commitments will again prove to be worth less than the paper they're written on.''
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