BRICS should get bigger say in IMF
The growing financial might of China and the other nations of the BRICS group is well known, but underappreciated. Their US$85 billion pledge this week to the International Monetary Fund's crisis-fighting reserves for Europe make plain just how important they have become. By boosting the war chest to US$456 billion, there is now a substantially better chance of the survival of the European Union and the euro. Gratitude has been effusive, but more than words of thanks are needed.
China, which has promised US$43 billion of the amount, has made plain what it, Brazil, Russia, India and South Africa should get in return - more say in the running of institutions like the IMF and the World Bank. The developed Western nations that set up both in 1944 and have controlled them since, agree, although they have yet to make good on a vow made in 2010 to reform quotas and voting powers. With the US being the key holdout on ratifying the IMF changes and a presidential election less than five months away, a shift any time soon is unlikely. But the principle that nations contributing to the fund get a corresponding amount of authority goes to the core of the American system, grounded in the 18th century revolutionary slogan against British colonial rule - 'no taxation without representation'.
Under the deal, the IMF quota for developing economies would rise from 39.5 per cent to 43.3 per cent, which in terms of voting shares translates as an increase of 2.6 per cent to 44.7 per cent. For China, with more foreign currency reserves than any other nation, it is an important shift. There is every reason that it and other BRICS nations should get a bigger say. Between them, they account for a quarter of the global economy and 45 per cent of the world's population.
The IMF's decisions deeply impact the global financial system. Western countries' having a greater say creates an unjust world order in which the rich call the shots and the poor suffer the consequences. The BRICS contribution has to be the impetus for change.