Editorial right on IMF/WB

DEAR EDITOR — You are very right—in your recent editorial—in pointing out the deficiencies of the twin institutions (IMF/WB). It might be interesting to point out that these institutions are marketed as institutions that aim to stabilise global financial stability, yet serve Europe and U.S. interests first and foremost.

This is evident from the fact that the World Bank president is always an American and the IMF president always a European. This means the United Nations officially supports this monopolistic control of international finance by institutions that advocate anti-monopolistic trade practices. This means these two institutions get to play Russian roulette with developing countries prescribing policies that bind them, yet do not bind western economies to the same stringent measures which could have prevented the current credit crisis from escalating out of control.

These institutions born out of the Gold Standard philosophy seem not interested in pointing out that fiat money is the real reason that created inflation and the resultant fractional money causing credit bubbles as central banks happily print out notes backed by nothing, but their word that the resultant money is good.

The Bretton Woods institutions were born out of the ruins of the World war to bring stability back to Europe, but this evolved to world stability when Europe became stable enough.

If you look closely you will realise that these institutions are profit-making banks that are supposed to be answerable to their major shareholders which happen to be the U.S. and the EU, which in itself is reason enough to question its impartiality, because if any country differs their ideology with the above two they are quickly sanctioned—their way of serving a subpoena. So effectively the U.S. and E.U. are the accusers, judges and juries rolled into one and an effective machine at that.

So my view of these institutions is that they are self-serving and do not have the world’s interests as their core duties but U.S. and Europe before all else.

Reform might not go far enough because of conflict of interest. For example Donald Rumsfeld, the former U.S. Defence secretary served as World Bank president and left in 2005 under a cloud, but the point here is he was an influential politician who oversaw the invasion of Iraq and then went on to head the World Bank which might need to work with countries like Iran or Syria whose invasion might have spearheaded had he not been forced to quit the Bush administration.

Maybe China and other emerging countries should spearhead an alternative organisation to counterbalance the monopolistic grip of the IMF/WB. After all China is projected to surpass the US GDP by 2040, having become the fourth biggest economy measured by GDP in 2006.

India is also catching up fast and has a more diverse economy than China which might help it push for the top spot in the long run.

As the Old World economies have reached a mature stage that doesn't support comparable growth to emerging markets, it’s imperative emerging economies take steps to control their own destiny into their own hands.

Next up for reform should be the U.N. Security Council having 3 allies US, UK, France then China and Russia, but Africa has no seat and Asia with world’s biggest population only one seat.

Munhumutapa