Global Policy Forum

United States and the European Union need to adapt to global changing economic reality and for their own good give up their leadership monopolies at the World Bank and the International Monetary Fund, according to a report from the Atlantic Council of the United States.

"What the US and the EU really need to do, in a major way, is to recognize the shift of economic power, of energy power, of GDP power to Asia and Latin America and the emerging economies" underlined former US Deputy Treasury Secretary Stuart Eizenstat from the Atlantic Council.

Eizenstat who served under former President Bill Clinton, and Grant Aldonas, a former commerce undersecretary in President George W Bush's Republican administration, co-chaired the Atlantic Council commission that produced the report. The report looks at how to reinforce US and EU leadership in response to the rise of China and other economic powers in the developing world. It comes as the United States prepares to host EU leaders at an annual summit on April 30.

"The world is passing us by every day and we don't realize it. We still think we're the dominant powers and we are to a point. But the world is shifting" Eizenstat said adding that the US and EU need to shift and make global institutions like the IMF and the World Bank more representative of their broader membership. "If the Europeans and the US don't do this, we're going to forfeit our world economic leadership" as other countries grow increasingly frustrated with current multilateral institutions and create regional rivals, he said.

The call for change at the sister institutions come as the IMF's membership weighs changes to its voting system to give developing countries more say in its policies. The Atlantic Council report recommends the EU and the US give up their longstanding monopoly on appointing the heads of the IMF and World Bank, respectively. Traditionally Europe names IMF Director General and the US the head of the WB.

According to the report the US and EU should convene a meeting of major and emerging economic powers to chart the future of the World Bank and IMF, with a goal of merging the two institutions by 2030. The report also calls for the US and EU to negotiate a series of investment and trade agreements leading to a barrier-free trans-Atlantic marketplace. It urges completion of the Doha round of world trade talks, but says future negotiations need to shift to a more flexible format because of the difficulty of getting 150 World Trade Organization members to reach agreement. "We're basically saying the era of the multilateral round is over after Doha".