G20 roundup

The latest G20 summit seems to have gone off as well as could be expected – and perhaps a little better. Markets are up today.

It’s always hard to know how much was decided in advance, but damn near all of it would be a pretty good guess. The final communiqué is now available and it’s clear to see that the expanding role of the G20 itself is the most significant outcome, on the face of it, at least. More on that later. Interesting as well to see Nicholas Sarkozy continues to speak in quite progressive terms about banking reform and the decline of (what he would call) the Anglo-Saxon economic model (‘le laisser-faire, c’est fini’). Together with Angela Merkel, he’s been leading Europe’s push for firmer regulation and bonus caps. In comparison to these right-wing leaders, Gordon Brown (leading a social democratic party) has been dragging his feet somewhat on the caps, though seems to have relented in the end. However, The Economist believes that the outcome was a ‘fudge’:

Going into the summit they [France and Germany] had pushed hard for firm numerical limits on bonuses as a proportion of revenues or capital. The language of the communiqué, however, was closer to the Americans’ position.

Other key outcomes of the meeting included a declaration of intent to reform IMF voting structures by 2011. Any change will be at the expense of European board members, who will have to give up at least 5% of their voting weight, in part to China. Blake Hounshell is:

interested to see if Geithner’s ideas for reforming the IMF gain any traction. The micro story is a technocratic one, but the macro story could be yet another sign that China is being welcomed into the inner circles of global power. The scuttlebutt is that the Treasury secretary hopes to persuade China to sign on to his priorities on capital requirements and other reforms in exchange for getting a larger share of control of the fund. Anyone know the Chinese word for “bribery”?

The Fund is also getting another funding boost of $500bn. The IMF’s twin – the World Bank – was also discussed and noises (though no committments) have been made about small voting changes there too. More details will be available in the run-up to the Bank’s spring meeting next year.

Broader questions about banking regulations got a good deal of attention, though nothing firm came out of the meeting. However, it is important to note that since the London Summit, G20 leaders haven’t taken the easy route and gone quiet on the subject. This is presumably partly due to the domestic political benefits of looking tough on bankers. Somewhat surprisingly, though, the G20 does seem to be serious about real united reform and progress on tax havens has been substantive. The idea of ‘living wills’ for too-big-to-fail institutions has also been addressed in order to set up special regulatory regimes for systemically crucial firms.

On fiscal stimulus, politicians seem to be taking the necessity of working in concert more seriously. The EU fears that the US will ‘turn off’ its stimulus too early, perhaps fostering a much-feared ‘double-dip’ recession. However, the Group pledged not to pull pack on countercyclical policies just yet. The FT heralded ‘a striking area of consensus, given the arguments about stimulus that raged ahead of the previous G20 heads of government meeting in London in April.’

Outside, the protests apparently lacked focus, which is no real surprise. This is the danger of setting yourself up as ‘The Movement’. It’s not meant to be a secret society. On the other hand, Pittsburgh did witness what seems to be the first public use in a democratic country of the sonic blast cannon.

The really interesting point, as mentioned above, is the ascendance of the Group itself. Pittsburgh, in its own words, ‘designated the G-20 to be the premier forum for our international economic cooperation’. This is a body that theoretically represents 90% of world economy and 2/3 of its population. Summits will take place in Canada and South Korea next year and – in theory at least – annually thereafter. Brookings has a paper out on this (but I’d skip straight to the bottom of page four if I were you). Martin Wolf writes (FT leaflet) that ‘for the first time since the industrial revolution, economic power is no longer concentrated in western hands.’ One would have expected Wolf to be more sceptical of the idea that de jure power will translate to anything meaningful. Paul Collier certainly is:

In a world that needs collective action but is composed of 194 governments, the overarching problem is free-riding. The burden of global leadership inevitably will fall on those few governments that are manifestly too big to free-ride. There will be only five such governments: America, China, India, Japan and the 27-in-one European Union. Over the next decade each of these governments will realise that it can be a deal-breaker: if it tries to free-ride, the other four will refuse to step up to their responsibilities. These five will be the G5, the group that runs the world.

As Wolf acknowledges:

The whole point of the G20 is to allow the world’s most important leaders to have a proper discussion about the world’s most difficult problems. But with 29 people, plus support staff, in the conference room, it will be very difficult to break through the formalities. One diplomat involved in the planning for Pittsburgh points out that if everybody around the table insisted on making a three-minute opening statement, it would take an hour and a half before the discussion could even begin.

Marc Weisbrot has suggested that the move from the G8 to the G20 is not as significant as has been made out, since the G20 lacks any (formal) power of enforcement. For Weisbrot, the G20 issue distracts from the structural iniquities of power at the IMF, World Bank and WTO.

The G20 is not a permanent body, nor does it have a headquarters or secretariat. This might help it in terms of flexibility – in global governance, there’s actually something to be said for ad hoc decision making (what wonks call variable geometry – but it won’t do much for equality between rich and poor countries. There’s also a danger that as ‘the premier forum’, the G20 starts to feel entitled to make decisions affecting non-members without consultation. Before this becomes too gloomy, though, it’s worth saying that 20 voices are better than 8  in democratic terms, so at least this is a move in the right direction, more or less.

From the scene, Paul Mason wrote that ‘bit by bit the world is moving from an order based on treaty and formal sanction to one based on consensus, horse-trading and the diffusion of power’, adding that ‘here inside the Pittsburgh G20 Summit it feels like being there at the birth of a postmodernist medieval empire.’ Has Mason been reading Hedley Bull? Either way, I suspect he’s right.

The new transatlantic dialogue, trade wars, China and the IMF

I’m currently snowed under with work (Czechoslovakian democratisation, the prognosis for US hegemony, miscellaneous presentations and dissertation planning, since you ask), so apologies for the lack of posts. Things should even out from the beginning of June. In the meantime, there’s a few things I’d like to flag up.

• The Friedrich Naumann Stiftung für die Freiheit is running another online conference, this time on ‘The New Transatlantic Dialogue’. It is ongoing until 16 May and looks sure to be informative and useful.
• The epic beef-hormone conflict looks like it is coming to an end, while the nascent cheese war seems to have been nipped in the bud too.
• The Financial Times has an interesting profile of President Obama’s trade brinkmanship.
• The Guardian’s business section on Monday contained the headline ‘Europe accused of protectionism‘.
• The Catholic Times reports that ‘Pope accused of Catholic leanings’.
• Ngaire Woods discusses the influence of China on Bretton Woods reform.

Leopards and spots

Marc Weisbrot of the Center for Economic and Policy Research has written an op-ed on the IMF’s increased funding and possibilities of reform. At the core of his argument is the belief that the Fund simply hasn’t changed since the bad old days so excoriated by the likes of Stiglitz and Sachs:

in spite of the depth of the world recession, the Fund is too willing to sacrifice employment, and increase poverty, in pursuit of other goals. A country can always reduce a trade deficit by shrinking its economy, since that causes households and businesses to import less. The main purpose of IMF lending in the current crisis should be to enable low- and middle-income countries to do more of what the rich countries are doing: adopt stimulus packages that counter the downturn.

It’s not often that an article comes along with that you can agree with without reservation or qualification, but I think that this might be one of them. In the meantime, The Economist worries that all the attention the IMF is getting runs the risk of sidelining the World Bank. Over at the Bank, Shanta Devarajan insists that ‘even though it is the least integrated with the global economy, Africa may be the worst hit region by the global economic crisis’, due to falling private capital investment inflows, falling remittances, falling commodity prices and falling foreign aid. Owen Barder addresses this last point when he notes that while Wednesday’s Budget didn’t cut aid, it didn’t raise it either. Duncan Green is right to suggest that with Britain’s fiscal condition the way it is, this demonstrates the Prime Minister’s genuine (and somewhat exceptional) commitment to international development.

Across the pond, Simon Johnson argues that the current financial crisis is a similar one to those that plagued middle-income countries in the 1990s:

In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. Just as in emerging-market crises, the weakness in the [U.S.] banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

It’s been widely observed that the US (and other western countries) are now engaging in the very economic recovery strategies denied to the likes of Argentina, Malaysia, Thailand and South Korea. (See Marc Weisbrot’s article for more on this – even now, El Salvador’s agreement with the IMF prevents it from using expansionary fiscal policy.) But for Johnson the financial sector has learnt little from the crisis:

there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive.

Plus ça change, plus c’est la même chose.

Boutros-Ghali: IMF reform flagging

Youssef Boutros-Ghali, chair of the IMF’s policy steering committee has spoken out against what he sees as the failure of G20 members to act on their commitments earlier this month to reform of the Fund.

Around the time of the London Summit, both the Financial Times and the Economist spoke out against reforming international financial institutions. They argued that the first concern should be dealing with the financial crisis, not dealing with ‘peripheral’ issues. As Boutros-Ghali puts it, ‘in a crisis, you want to put out the fire and not bother with plans to redecorate the living room.’ Nonetheless, he added that ‘reform needs to be done in a time of crisis’. This is the position I myself have taken.

A recent CEPR report is also far from sanguine:

the proposed quadrupling of IMF resources will have implications for many years to come, even after the world economy recovers. Although the new resources are unlikely to reverse the trend of governments avoiding, whenever possible, the Fund’s lending and influence, they will help to re-establish an unreformed IMF as a major power in economic and decision-making in low-and-middle income countries, with little or no voice for these countries in the IMF’s decisions. This could have long-term implications for growth, development, and social indicators in many countries.

The will to reform the Fund’s wildly disproportionate voting rights seems to be flagging already. This is both concerning and, if we’re honest, unsurprising. Those countries that gain from the status quo have little incentive to push for change. It is easier and more beneficial to sideline these issues of global governance while they focus solidly on domestic economic recovery. This is the kind of short-sighted attitude that has become par-for-the-course when it comes to global governance. Domestic politicians have no need to look beyond the next election and will therefore never side with long-term gain over short-term pain. The same phenomenon can  be seen in climate change negotiations or social security reform at the domestic level.

Aside from a benign world dictatorship, or politicians showing genuine leadership, both of which I think we can dismiss, perhaps it is necessary to use a system whereby unpopular or disadvantageous reforms are agreed, locked in and then ‘grandfathered’ into practice some time later, thus—to a degree—reducing the immediate disincentive for politicians to make hard decisions. Politicians do not need to worry so much about upsetting their constituents if the changes they agree are scheduled to come into force some years later. This is by no means a perfect plan – it is slow and open to abuse. But it might be one of the only ways to get around the short-termism of the politics of global governance.

On a more postivie note, Boutros-Ghali also said that:

In future, [the IMF] should vary its policy recipes… “I want an institution that is more involved not only as a global policeman but as a global witchdoctor.”

This is an encouraging confirmation of the Fund’s increasing tendency towards more heterodox economic thinking, though I’m in two minds about whether a ‘witchdoctor’ is quite what we’re looking for.

The return of the bancor? Chinese ascendancy and the global monetary system

I have an editorial at e-International Relations entitled The return of the bancor? Chinese ascendancy and the global monetary system.

Established in Nov 2007 by students from Oxford, Leicester and LSE, e-International Relations (e-IR) is an independent, student-run website for people who are interested in international politics.

The G20 at the close of play

First, here’s the final communiqué and here’s the BBC’s Q&A on what’s been agreed. Their ‘at a glance’ summary is here.

Aside from the recovery measures—the quality of which I do not intend to speculate upon—the success of the summit shows that a larger grouping such as the G20 can be effective. Hopefully this should encourage further substantive reform of the IFIs and a greater momentum towards a more truly equitable form of global governance. There will be a review of the IMF’s voting structure in 2011 and DSK stated yesterday that ‘he believed that the G20 was shaping up as the board of governors for the world economy, and said he favoured an even bigger grouping to give more representation to poor countries.’ This may turn out to be one of the more lasting and significant legacies of the London Summit.

If you want a laugh, check out the BBC’s vox populi on the summit. Oh, and it’s always nice to see Berlusconi getting told off, too.

Photo by Downing Street, via Flickr (Creative Commons, Crown copyright).

P.S. According to Kabir Chibber:

The G20 summit could go down as the turning point when the distinction between the developing and developed world, already blurry, ends for good.

Many of the developing nations – China, Brazil, India among them – came to the summit in London with a list of demands to make a more multilateral world.

Unlike the past, this time they actually got most of them.

This prompted Brazilian President Luiz Inacio Lula da Silva, whom US President Barack Obama called the world’s most popular politician, to say that the richer nations had finally negotiated with emerging countries on “equal terms”.

A G20 roundup

The London Summit

Alex Evans at Global Dashboard is reporting on the current state of negotiations at the summit and all-round good egg Adam Groves interviews Mr Billy Bragg in the City of London. While just about every respectable politician in the world is sounding off about the importance of avoiding protectionism (with their fingers crossed), a contrarian Noreena Hertz in The Times calls for protectionism. Though, on that note, prospects for Doha are predictably bleak.

The crisis and the developing world

Jeremy Seabrook thinks Gandhi had the right idea (he really didn’t).The FT has a nice supplement on the the financial crisis in Africa and the UK is boosting foreign aid (a bit).

Global governance

There’s some big academic thinking from Saskia Sassen at oD about a world economy powered by finance. Stiglitz et al. at the UN are arguing for the G20 to be replaced by a Global Economic Council, while the Sec-Gen is afraid of total meltdown. On the subject of disaster, we should apparently be expecting a ‘”perfect storm” of food energy and water shortages’ sometime before 2030. More broadly, Timothy Garton Ash highlights the G2 (US and China) in the light of the EU’s failure to work cohesively. The New Statesman, on similar lines, believes that ‘no-one rules the world’ and CEPR welcomes us to a truly multi-polar state of affairs.

Bloggers at the G20 London Summit

The people at the Global Call to Action Against Poverty are ‘inviting 50 influential and knowledgeable bloggers from around the world to join us at the London ExCel centre with the G20 leaders and the world’s press.’ More details here.

So if there are any fans of this blog out there, I would humbly say that I’d appreciate any nominations. You can nominate From Davos to Seattle to attend the London Summit by clicking here – just fill out the short form. Thanks.

P.S. I’m currently working on an extended article on what the world needs from the G20 – I’ll link to it on the blog when it’s finished.

Representation at the London Summit

Some of you will have read my previous post on One’s campaign to ensure African representation at the G20 meeting in April. Well, mission successful. In the end, Downing Street acted before the petition could be delivered, so it was converted into a thank you note! According to the One blog, ‘32,319 ONE members around the world, including 1,104 in the UK, signed that thank you message.’

The London Summit’s official website reports that invitations have been sent to ‘the Chair of The New Partnership for Africa’s Development (NEPAD), the Chair of the Association of South East Asian Nations (ASEAN) and the President of the EU Commission are also invited. The Chairman of the African Union Commission will also attend.’

There’s also an interesting interview on the site with Lord Malloch-Brown, Foreign Office Minister for Africa, Asia and the United Nations (a suspiciously large portfolio?). One thing that strikes me is how comfortable he seems with articulating the desires and interests of Africa. Speaking on behalf of an entire continent seems to come a little too easily to the minister.

Africa and the G20 summit

Ngaire Woods profiles what’s on Africa’s agenda for April’s meeting. The list is fairly modest and the matter of institutional reform is eminently reasonable. The worry is the funding:

To deliver on these, obviously the IMF and World Bank will need significant resources. Food security alone will require a step increase in donor support in the light of higher food prices ( World Bank paper detailing this). The IMF and World Bank should be measuring and informing the G20 of the scale of these new needs, and seeking adequate finance to meet them.

Obviously we’ll have to wait and see. But if there was some kind of priority considering being given to this, we might have heard something more about it. It just worries me that all that seems to be going on is a lot of talking about talking. Check out this press conference with the Foreign Secretary:

The global financial crisis at the institutional level: an update via links

The Economist and the ICTSD note that despite G-20 promises, Russia and India are increasing industrial tariffs.

A Reuters report is sceptical of the seriousness with which Bretton Woods reform is being taken. DFID’s view is fairly predictable, not least because the Minister was addressing the CBI. The BBC’s Robert Peston has an extended piece on what he’s calling the ‘New Capitalism’.

Robert Zoellick’s new multilateralism

Robert Zoellick writes in the IHT that, given the current financial crisis, what is needed is a ‘New Multilateralism’. Among other things,

We should consider a new steering group including Brazil, China, India, Mexico, Russia, Saudi Arabia, South Africa and the current G-7, that holds regular formal and informal dialogues. The group should not just replace the G-7 with a fixed-number G-14, and should evolve to fit changing circumstances. We need this new network so that global problems are not just mopped up after the fact, but anticipated.

What bothers me most about this is that last sentence. Knee-jerk reactions and attempts to deal with crises after the horse has bolted are indeed a problem. In fact, it’s something I’m noticing more and more. No-one talked much about Islamic fundamentalist terrorism until 9/11. It was not on the agenda. Had no-one noticed that there was a problem until it arrived on the US’s doorstep? Similarly, no-one in the upper echelons of the financial and political structures had thought that there might be some kind of imbalance in the financial system until the whole thing began to unravel this summer. Now, all of a sudden, Robert Zoellick has decided/noticed that international economic institutions might need to be more receptive to the input of the rest of the world beyond the G7. Funny how that only cropped up as a serious issue at the same time as the IMF started to beg for funding from Saudi Arabia.

Bretton Woods II

It is often said that human beings are only capable of acting when action is forced upon  them. That is, people tend to remain apathetic until a crisis occurs. Climate change is a common example – it is only in the wake of an event that affects one personally (as, say, Hurricane Katrina did for many Americans) that the gravity of a given situation or problem becomes apparent. The leaders of the advanced industrialised nations have found that the current financial crisis is affecting them very personally.

In contrast, when, in 1997 the newly industrialised economies of East Asia were suffering a crisis of their own, western governments dismissed the situation as one due to the lax fiscal policies of Asian governments. Despite contagion, Thailand was seen as very far from Washington.

This new crisis is being viewed very differently. Now that western governments have been so severely affected by instability in the financial markets, we hear that an entirely new financial system is suddenly necessary. At last, the problems of the system as it stands have been brought well and truly home in the most visceral way.

The IMF has lacked a real role for many years. Ever since Dr Mahathir bin Mohamad of Malaysia refused to borrow from the Fund – and thus incur an obligation to keep its conditions – various nations have shunned the institution. (Though the Wall Street Journal might disagree.) According to the FT,

experts and former IMF officials say the problem is not just with the current architecture but that the world’s leading countries have either ignored or misused the fund to further their own interests.

In a discussion on the fringes of the fund’s annual meetings last weekend, Stanley Fischer, governor of Israel’s central bank and former number two at the IMF, said rich countries had deliberately bypassed the fund by creating the Financial Stability Forum – an association of rich-nation regulators and policymakers – after the Asian financial crisis of 1997-98.

“It was an industrialised country move to keep the fund in its place … That was simply a mistake,” he said.

It seems increasingly clear that there is a strong desire for a new Bretton Woods-style arrangement to be constructed. As I have argued elsewhere, there is great potential here to make this a turning point. If this historical opportunity is fully grasped, we may be able to see a far more equitable system formed.

I had intended to write this post in order to survey all the various proposals and discussions that are currently surrounding the potential new architecture, but in the course of my research I’ve become somewhat overwhelmed. Of course, creating new forms of global governance is a hugely difficult and complex task, somewhat akin to creating a new constitution for a country that’s just undergone some kind of revolution. As Martin Kettle says,

it is tempting to imagine the great latterday economists – Ha-Joon Chang, Paul Krugman, Amartya Sen, Joseph Stiglitz and the rest – all gathering in the New Hampshire mountains 65 years after Keynes and White to hammer out a new ideal framework of banking and credit reform for the world to follow. It would certainly be a fascinating exercise. But the reality is that the first decision about Bretton Woods II would be an entirely geopolitical one: which countries would get a seat at the table?

Additionally, lobbying groups of all persuasions, as well as governments, will attempt to insert their own pet projects and ideas to the discussions. For example, Linda Yueh is arguing that the WTO should be reformed at the same time as the IMF. Others will talk about the environment – see Jeffrey Sachs’ thoughts. These side issues are to be expected and whilst it will slow down proceedings, perhaps that’s no bad thing.

For my part, I would make one suggestion. I attended a debate last night between Robert Keohane and Anthony McGrew and the topic of the Tobin Tax came up. That is certainly something that should be considered very seriously, especially in light of both the MDGs and the way that such a tax could usefully ‘throw sand in the wheels’ of capital flows.

In the end, I must admit that I am sceptical that a ‘Bretton Woods II’ would actually produce substantively different forms of global economic governance than those we see today. We won’t see revolutionary change – as Seumas Milne reports, ‘a Financial Times-Harris poll conducted across the advanced capitalist world this month found large majorities believe the financial crisis has been caused by “abuses of capitalism”, rather than the “failure of capitalism itself’. While I would agree with this assessment, change, even if merely in institutional culture(s) can only help.

As DSK put it, ‘I like the words Bretton Woods II, but we have to have something behind the words.’

See also: The Bretton Woods Project’s coverage; The Guardian’s ongoing public debate at Comment is Free; Choike’s views; the proposals of Michael Bordo and Harold James.

World Bank presidency now open to all nations

The US has foregone its traditional powers of appointment over the presidency of the World Bank. By (absurd) convention, the Bank is run by an American while the IMF is managed by a European.

According to the Guardian’s report, the British Secratary of State for International Development, Douglas Alexander played a crucial role in extracting the concession. I’ve long been impressed by the work of the British government in the field of international development. Not only do we as a nation punch well above our weight in terms of financial efforts, but we do sometimes find the courage to stand up to, or moderate (even mitigate?) American interests.

At any rate, the surrendering of the power of appointment is a significant improvement. Even as a gesture, it is a good one. The reform of the Bretton Woods twins is becoming increasingly urgent and yesterday’s development indicates a real readiness for substantive change.

P.S. Speaking of DFID, it’s worth highlighting the new DFID bloggers site. It’s a promising project and I’m looking forward to what they have to say.

The Commonwealth and institutional reform (part two): a new Bretton Woods?

Further to Saturday’s post, I’ve been looking at Ngaire Woods’ advisory paper to the Commonwealth Secretariat regarding the reform of the IMF and World Bank.

Professor Woods outlines the main problems with the institutions, especially their much-maligned Amero-centrism and “prescriptiveness”. She also highlights the ways in which some countries are shunning the Bretton Woods twins and making their own arrangements: “where countries are able, they are turning away”. Some of these countries believe that “[the IMF] do not have the expertise to advise us”.

In my interpretation, if changes are not made soon, it may be too late. Lack of faith in the institutions is becoming determined and endemic.

Woods lays out three scenarios. The first is that the existing reform agenda continues, with the Commonwealth’s support. For Woods, this is unsatisfactory, particularly as the “World Bank is pretty much untouched by the current governance reforms.” Additionally, as I have hinted at above, “incremental reform risks consigning the IMF to terminal irrelevance before the reform process bears any fruit”.

The second scenario sees the Commonwealth lobby for greater reform, but to be discussed outside Bretton Woods, at more egalitarian and informal organisations like the G20.

The third scenario, favoured by Woods, is by far the most ambitious. She calls for nothing less than a new Bretton Woods conference. This would be a truly global meeting at which the very constitutions of the IMF and World Bank could be rewritten to reflect the ways the world has changed since they were originally drafted. (Woods mentions, more than once, the salient truth that in 1944 the US was the world’s largest creditor, yet today it is the greatest debtor.)

It is beyond the remit of Woods’ paper to go into the details of the reforms, yet the boldness with which she demands them – and the means by which she would implement them – is admirable. A new conference would probably result in a far more equitable system, would surely bolster faith in Bretton Woods and would certainly invigorate the global debate on institutional reform in ways that are essential to workable change.

IMF reform: code words and the Commonwealth

As I wrote last Friday, the likelihood of serious progress on Bretton Woods reform just might be increasing.

The Bretton Woods Project reports that the IMF’s Independent Evaluation Office (IEO) has released a critical new evaluation of the Fund’s governance. The document highlights unclear divisions between departmental remits, over-centralisation and a lack of ministerial scrutiny.

The Bretton Woods Project’s article draws attention to some of the more interesting findings. One of the most extraordinary aspects – in my view at least – is Jeff Chelsky’s account (located in a background paper to the IEO’s main evaluation) of the use of so-called “code words” in summaries of executive board decisions. The phrase “a few” means two to four members of the board. “Nearly all” means around 20. Yet the summary phrase “the view is held that” is explicitly code for the opinion of the member representing the US. What more telling terminology could there be? Is it too much to suggest that this subtle phraseology may belie the nature of US dominance at the Fund?

Needless to say, Chelsky finds these code words harmful to the transparency of IMF decision-making. However, the Bretton Woods Project remains stoic as to the impact of the IEO report: “Dominique Strauss-Kahn has indicated that he plans to announce some measures on governance reform in the coming weeks… But as with most IMF reform, not much is expected to happen quickly.”

Somewhat better news comes from London, as Simon Maxwell at the Overseas Development Institute emphasises the priority accorded to discussions of reforming global governance at June’s Commonwealth “mini-summit”.

It must be admitted that the leverage of the Commonwealth is limited. The BBC’s Mike Jarvis asked the assembled Heads of Government “what sort of clout, or what sort of influence does the Commonwealth have… if the reforms… are not forthcoming fast enough?” As far as I can tell from the transcript, he received no real reply.

Whilst the capability of the Commonwealth as an organisation to force change is small, words do count for something, especially when those words come from the mouths of prime ministers and presidents. An assertion of intent from the organisation is better than nothing. The Marlborough House Statement declares that:

“We intend to pursue the redefining of the purposes and governance of the Bretton Woods institutions, including working towards a Commonwealth consensus and wider international support for an international conference to achieve these goals… We intend, individually and collectively, to carry forward our reform agenda to relevant international fora.”

Institutional reform: Monterrey, Doha and Financing for Development

Barry Herman, senior advisor at the UN Financing for Development (FfD) office writes at Policy Innovations about progress being made in the run-up to the FfD Doha meeting, to be held in November/December.

The conference is due to examine the extent to which the Monterrey Consensus of 2002 has been implemented. However, Doha could herald the emergence of something more dramatic.

Herman reports the proposal of Ambassador Eduardo Galvez of Chile, who called for “an integrated multi-stakeholder forum”. According to Herman, by November we may be in a position to see, for the first time, the creation of a genuinely systematic and coherent high-level forum for discussions of the reform of international economic institutions.

So far so good. But Galvez’s commendable words are, unsurprisingly, somewhat vague. Only time will tell the degree to which these developments have any real significance. Nonetheless, Herman is right to suggest that “it is time for a political meeting on international economic reform at the global level” and the FfD Doha conference is a step in the right direction. Of course, as always, the success of such a “political meeting” will depend upon a willingness to compromise, as well as an abundance of both political capital and willpower.