Sun Oct 21st, 2007 at 01:53:24 PM EST
The G-24 demand more supervision of rich countries and bigger control quotas.
El País: http://tinyurl.com/3d8tsx (My translation.)
Emerging economies have come out strengthened from the liquidity crisis that affects international financial markets. The good progress of China, India, Brasil, or Argentina has been barely altered and it´s the advanced economies that suffer the impact of credit tightening.
The G-24 demanded the Fund submit rich countries to the same supervision it imposes on poor ones.
Oscar Tangelson, current president of the G-24, was direct: "It is necessary that the Fund be impartial". For the Argentinian vice-minister of Finance, the consequences of the crisis by the collapse of the high-risk mortgage in the US are proof that the organization pays more attention to what countries like Nigeria, or Zimbabwe do, instead of setting the magnifying glass over industrialized ones.
"It´s a situation without precedent. It´s the developed countries that are in crisis and the emerging countries that balance the scale", noted Tangelson in presenting the G-24 conclusions on Friday evening.
"The situation is ironic: Countries that were a reference of good management of the financial system,
are the same countries with grave problems of fiancial fragility, risking global prosperity", added yesterday the Brazilian minister of Treasury, Guido Mantega. In his opinion, the Fund "is inadequately equipped to confront the situation" and has been "excessively prudent" with western countries.
US asks for (cost) cuts
The tone of the G-24 conclusions is a clear reflexion of the higher protagonism that developing countries want to reach in multilateral forums. "They must adapt to the new reality, if not they will atrophy." insisted Tangelson, for whom the changes presented until now by the FMI, are "cosmetic". They were already very critical with the reform implemented by still-director, Rodrigo Rato. And they don´t partake (swallow) of the timid project announced by his successor, Dominique Strauss-Kahn, to give them a higher power-quota.
In a meeting prior to the summit, US treasury secretary, Henry Paulson, tiptoed through this debate and concentrated on the "unsustainable" finances of the institution. "The Fund must reduce costs, concentrating on its basic mission and adjusting its staff." he said. This year´s FMI loans barely reach 14 billion, the lowest amount since 1980.
It´s refreshing to hear emerging countries calling it by its name and speaking "truth to power". The most transparent words that DC has probably heard in a while. Let´s take encouragement from non-G8 politicians that are not spineless and spinful yet.
Sour goodbye for Rato
Rodrigo Rato presented his successor, Dominique Strauss-Kahn to the assembly of the FMI and the WB. It´s the last reunion of the Spaniard as head of the Fund, after barely two and a half years of mandate, the shortest in the six decades of the.... organization. His exit comes in the middle of the hang-over from the summer´s credit crisis and in the middle of the discussion about the process of institutional reform.
Pedro Solbes, the (economic) vicepresident of the Spanish government, will be absent from the farewell and has not explained his motives. Larry Summers, (ex-)Tresury secretary with Bill Clinton, was very explicit about his criticism of Rato´s mandate, to the point that, in a conference prior to the reunion,
he said (Rato) "has no defense whatsoever". Summers considered that the organism´s supervision job is little serious and used the example of Rato´s behavior versus China´s currency manipulation.
Rato has given no details of what he will do in the future. ...family reasons and won´t take up politics.
Rato is a sharp and slick manipulator and I think he resigned to avoid dealing with the crisis, but it stuck to him. Now, he runs home to the family business and a permanent job in the PP, as anonymous and almighty influence peddler.