The Multilateralist

Would a smaller IMF board be better?

I spoke today with Ted Truman, a longtime U.S. Treasury Department  official now at the Insitute for International Economics, about the ongoing controversy over board seats at the International Monetary Fund. The backstory, in short, is that the United States has refused to reauthorize the current 24-member IMF board unless Europe agrees to some kind ...

I spoke today with Ted Truman, a longtime U.S. Treasury Department  official now at the Insitute for International Economics, about the ongoing controversy over board seats at the International Monetary Fund. The backstory, in short, is that the United States has refused to reauthorize the current 24-member IMF board unless Europe agrees to some kind of reallocation of seats (at any given time, Europe has between 8 and 10 seats on the current board).

The issue has been simmering now for several weeks and has become an important, if still not very loud, issue between Washington and European capitals.  In the background to this particular squabble are much deeper questions about the structure and representativeness of today’s international institutions.  How this standoff is resolved could be an important bellweather for future struggles.

Truman points out a couple of interesting dynamics. First, he argues that the American gambit was not sudden but is a response to what he characterizes as longstanding European intransigence. He believes that Europe has failed repeatedly to respond to American signals of discontent over the past five years.  "In 2008 and 2009, they basically said that this issue was not on the table," he recalls. In that context, the new U.S. position is "an aggressive move in the context of a pretty aggressive defense."

He also emphasizes the oddity of current European policymaking in a body like the IMF. It’s not as if each of the European seats offers a unique policy perspective. Through the EU, individual member states coordinate their positions in advance. "They just get eight to ten voices every time an issue comes up," he says. Truman contends that it might actually be better to revert to a smaller board, not least for reasons of cost. IMF executive directors and their staffs are relatively expensive, and in today’s environment of budget-slimming there could be some non-trivial savings for the Fund in a pared-down board.

On this issue, Washington is aligned with India, China and Brazil in an effort to tame traditional European prerogatives. If that trend continues, it could spell trouble for Europe in the world of multilateral institutions. 

 

 Twitter: @multilateralist
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