♠ Posted by Emmanuel in Bretton Woods Twins at 3/05/2012 03:16:00 AMTake up the White Man's burden--
Have done with childish days--
The lightly proferred laurel,
The easy, ungrudged praise.
Comes now, to search your manhood
Through all the thankless years
Cold, edged with dear-bought wisdom,
The judgment of your peers!
Well here is more discouraging news for those wishing for more diversity and better representation of LDCs at key international organizations. Just a few months back, the unexpected departure of Dominique Strauss-Kahn from the IMF revealed the hollow rhetoric behind calls for change in the tradition of Europeans having discretion over choosing the IMF head. While perhaps sudden, the unceremonious departure of le grande seducteur showed that when the opportunity finally came for change at that IO, none was forthcoming. The excuse then was that having several European nations in dire financial straits made it only natural to have a tried-and-tested European figure as IMF managing director.
Again, PIGS countries are not suffering primarily from balance-of-payments problems the IMF was meant to address. Even Wolfgang Muchau, euro-hater, concedes as much:
However, it is hard to understand why everybody feigns surprise at the fact that current account imbalances can be financed indefinitely in a monetary union. Is this not one of the characteristics that distinguish it from a fixed-exchange rate system?And so we come to the announcement of current World Bank head Robert Zoellick that he will leave that institution shortly. While he is departing neither under inauspicious circumstances nor at an entirely unanticipated moment, the jockeying to keep the status quo intact is similar to the DSK situation. That is, pressure to keep the World Bank head an American choice remains. This time, the excuses are as follows:
As long as banks have access to the central bank, and can provide good collateral, countries can run current account deficits for an infinite period. A friend of mine once remarked – when I asked about the significance of intra-eurozone current account imbalances – that the way to solve the problem sustainably was no longer to publish the figures. He was only half joking.
- It is politically unlikely that the US, which remains the World Bank's largest funder, would countenance a non-American head during an election year;
- The United States is wary of relenting on World Bank leadership lest it be perceived as yet another sign of American decline;
- The implicit understanding that the US will insist on having its way means that no LDC candidates have put their names forward (which in itself indicates regression from the IMF succession race in which some at least entertained the notion of an LDC head despite the inevitable outcome)
Also see John Kerry on this matter. The more things change, the more things stay the same, indeed.