For much of the past two decades (and longer) the IMF and World Bank have been the targets of ire of developing country activists and governments alike. I hope that I’m remembering this correctly – but when the IMF delegation would arrive in successive Southeast Asian countries in the 1997-98 economic crisis to negotiate bailout plans (and the corresponding macroeconomic conditionality) the local joke was that IMF stood for I M Finished.
Demands for greater accountability and transparency of the two major international financial institutions to developing countries have been constant, chipping away at the dominance of Western states in the running of these banks (the IMF managing director has always been a European, and the World Bank president an American). But you can envisage two different directions of change and reform, both of which highlight the disjuncture sometimes present between developing-country governments and civil society.
The first is that the WB and IMF simply fade into irrelevance as developing country governments seek alternative sources of international finance and methods of cooperation. Ngaire Woods puts it this way, writing in 2008:
“They have alternatives: they are stockpiling their own reserves (and hence have little need of the IMF); in some cases they are setting up their own multilateralised swaps arrangements (the CMI); they have access to multiple sources of development financing (and hence little need for World Bank loans); they are planning new multilateral development initiatives (the Bank of the South); and several now have their own aid programmes. They are not formally disengaging from the IMF or World Bank but in practice the institutions have slipped to the margins of their policy-making since they have little confidence that the agencies will act as multilaterals rather than as agents of the OECD, G7 or G1 economies.”
Or secondly, these institutions can become more representative, and in doing so, become agents of developing country governments – and particularly those of the emerging BRIC/BASIC powers. But the upshot is that the agenda of these institutions may then mimick even more closely the traditional, sovereignty-hugging priorities of these countries. In a recent post, with reference to WB funding of coal power projects, David Bosco at Foreign Policy suggests that “more developing world power at the IMF and World Bank will almost certainly mean less emphasis on the environment, and certainly less attention to issues like climate change”.
As the first intergovernmental negotiations on climate change began some two decades ago, one major bone of division was (and perhaps it still is) over the institutional form of how promises of ‘new and additional’ aid would be delivered. Western countries preferred the Global Environmental Facility, a World Bank-led institution. Developing countries wanted brand-new institutions where they would have a much greater say over the allocation of resources, to match their priorities that were construed very much in ‘development’ rather than ‘environment’ terms.
At a time when we’re constantly being prodded by thoughts of change in world order, especially in the uncertain balance between the West and the rest, what both these thoughts underline for me is the conservative nature of what lies at the heart of emerging power demands. The system of international cooperation and regulation that they foresee is very much unchanged from that of the 20th century, apart from the crucial factor of who holds the chips (i.e. them, rather than exclusively the Western states). Or at least the system that they hope for is unchanged – led by states and limited in its agenda. There’s little revolutionary in here, and certainly no great transformation of the system of states proposed. Global institutions may look different – but in their distribution of power, rather than form and function.
In the comments to the FP post, a staffer at the Bretton Woods Project activist watchdog writes that better democratic governance of international institutions remains a major priority: “In other words, we want to see greater representation for developing countries as a matter of principle – they are a majority of the world’s population, and the countries most affected by World Bank and IMF decisions – regardless of whether we will agree with every position these countries will take at the institution”.
That’s true, and laudable – but global democracy is intrinsically tied up with global power, and as the balance of power slowly shifts in coming decades, the stuff of international cooperation can only get messier.