Brics must unite in a bid for the top IMF job

Posted on June 03, 2011

This is particularly relevant for SA, the undisputed minnow of the grouping, lacking the economic might of its Bric partners but having long "punched above its weight" in international forums. A proposal has been made for Trevor Manuel, former finance minister and now minister of planning in the Presidency, to be the developing world's nomination for the International Monetary Fund's (TM's) top job. The IMF, a Bretton Woods institution born in the aftermath of the Second World War, has traditionally had a European at the helm, balanced by a US at the head of its sister organisation, the World Bank. This reflects the historical balance of power manifested in the financing of these institutions.

But the world has changed dramatically, and with it the poles of global power. Economic growth has shifted decisively east and south, while debt has shifted west and north. The global economic future appears to be increasingly in the hands of dynamic markets in Asia, Africa, Latin America and the Middle East. Despite this shift, the financing of Bretton Woods institutions is still predominantly in the hands of the "old" powers which thus determine their institutional heads. Nevertheless, economic momentum is expected to translate into global political power and core decision-making concentrated around the Brics configuration if they are able to establish a common voice and consensus on global issues. And herein lies the problem. The Brics countries and SA in particular were quick to suggest that Brics is no longer merely an economic acronym or reference point. It has graduated from a market collective to one with political imperatives on the world stage, and is geared towards reshaping the global architecture. But such a unified voice has long eluded developing nations especially those with some power and influence which have little in common when it comes to political values and approaches to economic development. Ideology (sadly) trumps pragmatism when it comes to decision-making in the global context.

There is little chance that a South African candidate will be backed universally by the disparate developing world or even the Brics grouping, which appears reluctant to endorse Manuel's outright nomination. Even in SA, there are murmurs from the ideologues that a South African candidate (or any developing world candidate for that matter) should not be at the helm of what they call an "institution rooted in imperialism". This is shortsighted. Bridges between mature and dynamic markets need to be built through the reforming of existing institutions and not the creation of new institutions that look to exclude others in much the same way as their predecessors did. If SA struggles to gain national consensus or a logical bid in its very own constituency not to mention the developing world how can we expect the global decision-makers and leading nations to take our "Brics nomination" seriously?

French Finance Minister Christine Lagarde, the frontrunner for the IMF job, has already gained the support of her European counterparts and is now touring Brazil, India and China seeking their backing. Meanwhile, Brics simply insists the selection process should be "merit-based". This is a lame response. Instead, Brics should nominate an outright candidate to contest the Eurocentric dominance of the process even if this is not how it has been done in the past. If Brics is to finally graduate from a mere market acronym, it needs to move beyond being a talk shop of rhetorical promises and suggestions for universal economic development and get into the mould of global agenda setting. A bid for the IMF's leadership might not be ideal. But it is a starting point, and a test of unity, legitimacy and relevance for Brics as it seeks to forge a leading role for itself in a new world order.
Dr. Lyal White is director of the Centre for Dynamic Markets at the Gordon Institute of Business Science.

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