Russia, China and other major developing countries — angry about the stalemate on Capitol Hill that has blocked approval of a reform plan that would give them a bigger voting share at the International Monetary Fund — are pushing to go ahead with the reforms without waiting for the United States.
U.S. and IMF officials insist that the reforms — including changes in voting shares designed to reflect shifts in the global economy and a doubling of the IMF’s lending authority — cannot go into effect without approval by Congress, as the U.S. continues to wield veto power over major decisions and activities of the IMF under current voting formulas.
Russia reportedly is leading efforts by the emerging nations to steer around the U.S. In February, Moscow secured a pledge from the Group of 20 major industrialized nations to move ahead if the legislation doesn’t pass before the annual meeting of the IMF, which starts in Washington this week.
“It is obvious that the quota of emerging-market economies and developing countries should be increased as their influence on the global economy has increased,” said Russian Finance Minister Anton Siluanov, who is leading the effort to set the deadline, according to the Reuters news service.
Most of the IMF’s 188 member nations have approved the reforms, which originally were negotiated in 2010, and have waited patiently for Washington to act before proceeding with talks on a second round of voting changes to further increase the power of rapidly developing countries.
But the failure of the two sides to reach a deal is now tarnishing the U.S. reputation at the IMF. The fight is even more puzzling given that the drive to reform the IMF started during the George W. Bush administration and is backed by many luminaries from the Bush and Reagan administrations, Mr. Truman said. Moreover, support for the IMF in the past has been overwhelmingly bipartisan in Congress. Leading Senate Republicans, including John McCain of Arizona and Bob Corker of Tennessee, were prepared to vote for the IMF reforms as part of the Ukraine aid package.
The White House has rejected the Republican demands, and congressional Democrats are vowing to keep pushing the IMF bill.
Russia challenged U.S. power at the IMF well before Moscow’s annexation of Crimea last month, a move that raised diplomatic tensions and prompted the leading Western powers to impose economic sanctions on Russia.
China has used more cautious diplomacy, even as it explores alternative financial aid mechanisms that eventually could make the IMF obsolete. China’s extensive loans and assistance to other developing countries already dwarf the aid provided by the World Bank and the IMF.
Even nations with historically friendly ties to the U.S. are losing patience. India’s finance minister recently noted that the congressional impasse reflects badly not only on Washington but also on the whole economic order set up by the U.S. and its Western allies after World War II.
Full article: Russia, China leading efforts to bypass U.S. as IMF reforms stall on Capitol Hill (Washington Times)