Could China buy the IMF?
I missed this provocative thought from Simon Johnson last week. Imagine that the Euro crisis becomes systemic and that a bailout-averse United States won’t cough up the resources necessary for the IMF to handle the crisis: As an alternative, Europe could place a call to Beijing to find out if China would like to commit ...
I missed this provocative thought from Simon Johnson last week. Imagine that the Euro crisis becomes systemic and that a bailout-averse United States won't cough up the resources necessary for the IMF to handle the crisis:
I missed this provocative thought from Simon Johnson last week. Imagine that the Euro crisis becomes systemic and that a bailout-averse United States won’t cough up the resources necessary for the IMF to handle the crisis:
As an alternative, Europe could place a call to Beijing to find out if China would like to commit some of its $2.6 trillion in reserves to keep European creditors whole. This would be an enormous opportunity for China to vault to a leading global role…If China offered to recapitalize the IMF, become the largest shareholder, and move the organization to Beijing (according to the Articles of Agreement, the IMF’s headquarters should be in the capital of the largest shareholder), wouldn’t that make for an interesting chess game?
As quota-based organizations, the IMF and World Bank are potentially vulnerable to "hostile takeovers" by countries willing to pour in new capital. All quota changes have to be negotiated, of course, but in extremis you could imagine the United States and other key shareholders acquiescing in exchange for fresh capital.
It wouldn’t be absurd for China to try to capture, or at least get a much greater say in the management of other international organizations, even non-quota based ones, by agreeing to put up more money. China currently pays just over 2 percent of the UN’s regular budget. A measly $100 million would vault it into third place, behind only the United States and Japan. At the very least this kind of bidding war for influence in international organizations would give us a sense of how countries value them.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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