G20 Pushes for Reform of the Bretton Woods Institutions

Sources: G20 MEETING: Mbeki urges substantial reforms of IMF, World Bank; G20 MEETING: At-a-glance guide to the main points; World Bank Group President Announces More Aid for Trade

During the G20 meeting held at Cape Town this past weekend, Thabo Mbeki called on the member-state representatives to push for reform of the International Monetary Fund (“IMF”) and the World Bank. The President of South Africa expressed his concern that these two institutions appear to be maintaining an international economic system which favors few powerful countries at the expense of the rest. More specifically, Mbeki noted the growing inequality (1) between developed and developing countries, as well as (2) that between the rich and poor within any given country. Mbeki suggested that the Bretton Woods Institutions could remedy these problems by taking into account (1) the continuation of economic integration amongst countries; (2) the need for greater transparency in trade and investment; and (3) the rapid growth of emerging economies, such as South Africa.

To work towards a more equitable international economic system, the G20 demonstrated support for the continuation and successful completion of the Doha trade round. Robert Zoellick, current President of the World Bank, demonstrated his agreement with the G20 on this matter today at the Aid for Trade Meeting of the World Trade Organization.

Discussion:

The new heads of both the World Bank and the IMF won their offices based in part on their strong commitments to reform their respective institutions. Given that Robert Zoellick and Dominique Strauss-Kahn have pledged to address precisely the issues highlighted by the G20 members this week, what is the significance or weight of the criticisms brought by the G20?