A tussle between Europe and USA is poised to paralyze the International Monetary Fund or IMF. USA wants Europe to make way for emerging countries like China and India to reflect the reality of the times. The predominance of the two power blocs of America and USA reflects the scene as it surfaced following World War II. But now the scenario has changed.
The board of IMF comprises of 27 members â€“ it being the ace decision making entity. Recently it has seen to the disbursement of billions as emergency loans to countries mauled by the international financial crisis; Greece, Latvia, Romania as well as Ukraine were some of the recipient countries. The approval of the board is necessary for reviews from time to time on a regular basis. It also sees to the disbursement of these funds to borrowers.
Warning was given out by the officials of the board that unless a compromise was reached by the two camps,, Europe and USA, prior to the expiry of the present board on 31st October, the four seats of India, Brazil, Argentina and Rwanda would be cancelled because of their quota shares not being up to the mark.. One official of the board said â€œIt will be disorderly and everyone will rush to make deals with each otherâ€.
If Europe gave way then the smaller countries of European Union (Belgium, Netherlands and Scandinavian countries) could forfeit their seats.
Ted Truman, formerly Assistant Secretary of the Treasury of USA (senior fellow of Peterson Institute, Washington) said he did not think either Europe of USA would permit the situation to go out of control. He said â€œI am sure it will be sorted out. No one wants to be responsible for paralyzing the Fundâ€. He opined that there were two alternatives â€“ commitment by Europe to phase out their seat numbers or to immediately surrender two of theirs. He further said, â€œThe second option could be a down-paymentâ€. He also noted that the size of the board was so big that it has gnawed into its efficiency and expenses.
The IMF members are carrying on individual negotiations regarding increasing the voting power of emerging nations. The G-20 countries want this to be settled by the November meeting through quota shares. China is poised to get the most power; other countries too will benefit.
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