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18 May, 2009
The German social-democratic organisation, the Friedrich Ebert Foundation (FES), released a briefing paper entitled “Comeback of Global Governance,” outlining the need for reform of mechanisms for global political and monetary governance. The current financial crisis is seen by many as the opportunity to reform global financial bodies, which fail both in terms of representation and of effectiveness.
The past year has seen a list of failures in terms of global governance, from the Doha round of world trade talks to follow-up of the Monterrey Financing for Development Conference. Even the preliminary rounds of discussion at Posnan, Poland, environment and sustainability forums have illustrated significant obstacles in commitments over combating climate change.
Arguably the most vital changes needed are inside the International Monetary Fund (IMF), whose failings have become all too apparent during this current global recession. The current financial crisis is a clear indication of how urgently an effective global regulatory framework is needed in order to come to grips with the present crisis and to contain future excesses. The days of the World Bank and IMF governing the world on a neo-liberal agenda now must end.
The IMF’s system of quotas and voting rights gives European countries an imbalanced amount of power that is no longer justified by their order in the world economy. Despite the limited voting-rights reform carried out in March 2008, the Benelux countries, for example, continue to have a higher quota than China. The reforms to the IMF that are on the agenda will go some way towards creating a fairer system, although they do not go far enough in ‘giving a voice to the voiceless.’
The current economic climate offers many alternatives for change. US President Barack Obama seeks to establish a new disarmament and non-proliferation treaty. German Chancellor Angela Merkel calls for a world economic council. French President Nicolas Sarkozy and British Prime Minister Gordon Brown advocate an international banking oversight commission. Germany and France, together with Russia and Brazil, promote a new global economic and financial architecture that has a special focus on regulating financial markets.
Find the FES briefing paper here.