Friday, May 18, 2007

After the Storm: Why the World Bank and IMF Must Change

"I have concluded that it is the best interests of those whom this institution serves for that mission to be carried forward under new leadership."

- Paul Wolfowitz

The World Bank is no stranger to controversy and stories of corruption. But the recent fire storm surrounding Paul Wolfowitz and his alleged favoritism has invited a larger conversation about the distribution of power with in the World Bank and its sister the International Monetary Fund. The World Bank president has traditionally been appointed by the US government, while the Europeans have chosen the head of the IMF. Developing nations and organizations are calling for a more fair and open process in deciding the leadership of the world’s preeminent financial institutions asking for, "transparency of process, and competence of prospective leadership without regard to national origin".

The calls for a non- U.S. or European dominated structure have resonated for years now as the economic emergence of countries like China and India have challenged the very nature of the current economic world-system. The National Intelligence Council, a U.S. government think tank, predicts that by 2025, China and India will have the world's second- and fourth-largest economies. This growth is opening the way for a multi-polar era in world politics. This tectonic shift will pose a challenge to the U.S.-dominated global institutions that have been firmly in place since the 1940s. Votes in the World Bank are said to reflect the size of a countries economy and not its’ population, however Europe still maintains an over-represented position on the bank’s board as compared to the China and India who are underrepresented.

In light of the Wolfowitz scandal and beyond voices will continue to push for the World Bank and IMF’s leadership to begin reflecting the people and world views of the poor nations they claim to serve. Even more importantly as non-western nations begin to take more substantial roles in the world-system it remains to be seen if the current distribution of world economic authority will remain in the benefit of the global north.

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