David Woodward on the need for democratic principles at the IMF

IMF watchers have been following the drama of the selection process, Ministers are getting ready to decide which way to cast their vote, the pundits are ready to comment, but what about the other 6 billion + people who will be at the sharp end of decisions made by the new MD?  In a response to the Guardian’s poll, long-time IMF campaigner David Woodward makes a compelling case for real democratic principles to be placed at the heart of the selection process.  It’s worth quoting at length:

“…the only alternative [the Guardian poll] presents to the status quo is reform to “reflect the shift in global economic power towards emerging markets”.

As the Commission on Social Determinants of Health said,

“It is only through such a system of global governance, placing fairness in health at the heart of the development agenda and genuine equality of influence at the heart of its decision-making, that coherent attention to global health equity is possible.”

Nowhere is this more true than the IMF: it has virtually run the economies of much of the developing world (with serious adverse effects on health) for much of the last 30-35 years, while itself being run by the developed country governments, who have some 60% of the votes – four times their share either of population or of membership. The US, and the US alone, has a veto on all major policy decisions – including voting reform. The voting system was created in 1944, when only a handful of developing countries were members (most still being under colonial rule), they rarely borrowed from the Fund, and IMF lending did not carry any policy conditionality.

Of course the voting system is out of date. And most certainly, power needs to be shifted from the developed to the developing world. But shifting political power to those who are becoming economically powerful is a very long way from “genuine equality of influence”. It is not the emerging market economies which are most under-represented, but the “submerging markets” which have been critically damaged by decades of wrong policies imposed through the neo-colonial governance systems of the IMF and World Bank.

As I have argued before on The Guardian on-line , we would not consider a system like this for a moment at the national level – a system where rich people’s votes are weighted in proportion to their incomes. So why do we continue to put up with it at the global level? Why do Northern governments which proclaim their own democratic credentials continue to defend it? “

Pretty hard to argue with that.

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