Like so many issues before the G20, the hope and optimism for global coordination seemed limitless in 2008 when the finance ministers' club was upgraded to the leaders' level. After the cusp of the global financial crisis, the G20 meetings promised to fix many of the structural flaws of the global system. One of the most striking shortcomings of the global financial architecture was the relative weakness of emerging market economies' voice and votes at the leading global financial institutions like the IMF and World Bank.
How could we rationalize that China's technical voting power at the IMF Executive Board was weaker than Italy's? How could we make sense of the fact that Belgium has a seat at the Executive Board, but Nigeria shares a rotating seat with some 20 countries? The Netherlands has arguably more voice at the Executive Board than Turkey, India, South Korea, or Mexico?
Shifting global economic power to emerging market economies was a key promise of the honeymoon era of the leaders' G20 meetings. Moving 5% of IMF votes from developed countries to underrepresented EMEs and a corresponding 3% of World Bank votes, are not a lot to ask for. But, with resistance from European powers who do not want to see their entrenched position change or shift to help emerging market economies, the reform of the IMF and World Bank has slipped in an out of the G20 agenda. When the United States first proposed a conciliatory idea to give up some of its weighted votes to transfer that to emerging market economies. Many of us political scientists who were idealists, were happy to see the honeymoon of the G20 produce the kind of agreement that could lead positive change. Make no mistake, the US proposal would have shifted some of its votes, but its veto power would remain. But even this technical shift of giving up votes for the public good of increasing emerging market economy buy in, was a welcomed one for those looking for a break in an impasse where weighted voting means that a country has to give up voting power for another to gain voting power.
We have watched the squabbles in the US Congress, the political impasse and polarization of the country, transfer to debates about reform at the IMF and World Bank. Waiting and waiting for the US Congress to pass this legislation has pushed the deadline further and every G20 meeting, the reform item reappears on the G20 agenda, only to be unfinished.
An exacerbated Christine Lagarde, the Managing Director of the IMF, said a few months ago that she would belly-dance for Congress if that is what it takes to get the reform agenda passed. Now the US Congress is firmly in the hands of the Republican Party who do not want to see emerging market economies, or what they perceive to be rogue states, like China and Russia to be beneficiaries of the reform package. So Madame Lagarde will have to do more than just bellydance, I'm afraid she will need to be a witchdoctor and resurrect this deal from the grave.