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Back | Programme Area: Special Events (2000 - 2009) | Event: Regulating Global Institutions: Financial, Corporate and Non-Governmental Organizations

Regulating Global Institutions: Financial, Corporate and Non-Governmental Organizations

  • Date: 3 - 4 Feb 2002
  • Location: Porto Alegre, Brazil
  • Speakers: Deborah Eade, Peter Evans, Reinaldo Gonçalves, David Korten, Thandika Mkandawire, Peter Utting
  • Counterpart(s): Brazilian Institute of Social and Economic Analyses (iBASE)
  • Project Title: Geneva 2000: The Next Step in Social Development

Can the South Save the Fund? Redefining the South's Role in the Governance of the IMF, Peter Evans

Conventional views of the South and the International Monetary Fund portray the countries of the South as either passive clients that the Fund is trying heroically to “save” or as passive victims whose developmental possibilities are being destroyed by the Fund. In the client model, subversion of the Fund’s salvage efforts due to the irrationality, ineptitude and political incapacity of Southern governments is defined as the problem and “reform” of Southern governance models is the solution. In the victim model, the political cowardice of political leaders in the South and their inability to resist the Fund’s demands is the problem and “Fora FMI!” is the solution. The fact that neither solution has proved feasible or fruitful to date, suggests a need to redefine the problem.

Redefining the South-Fund relationship is as important to the Fund as it is to the South. The Fund is under attack from both North and South. In the South it is seen as “the creditor community’s enforcer”, an alien entity that imposes policies on Southern governments that not only cause social devastation but undermine the core of economic development as well. In the North, the Fund is seen as not only superfluous to the supply of capital to the South in normal times (which is seen as better done by private capital) but as introducing a level of “moral hazard” that exacerbates financial crises. Unless it succeeds in redefining its role in a way that generates greater political legitimacy, the Fund is in danger of becoming marginalized, economically as well as politically.

This paper suggests that improvements in the South-Fund relation must be grounded first of all in more active, organized, collective efforts on the part of the countries of the South to reshape Fund policies. Both the informally exercised political power of the United States vis-à-vis the Fund and the undemocratic structure of formal voting rights within the Fund are, of course, formidable obstacles to the South’s ability to exercise agency. Without denying this, it is still possible to argue that the South has failed to “push the envelop” of possibilities for power within the fund.

The substantial extent to which norms of consensus prevail in executive board decision-making processes, the Fund’s increasing recognition that programme success depends on “local ownership”, as well as the Fund’s own political vulnerability all create potential space for initiatives from the South. Exploiting this space depends first of all on crafting agendas that can not only attract broad support from the countries of the South but also find allies among the more progressive countries of the North. The paper outlines some simple proposals, focused on demands for changes in the Fund’s internal organizational structure, that might serve as starting points for developing a broad agenda of collective action vis-à-vis the Fund.

Peter Evans is Professor of Sociology at the University of California at Berkeley.