IMF and World Bank, getting rusty.

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Throughout the 20th century to this day, the United States of America has been a great world power (if not THE most powerful, as many would argue) with astounding political and economic influence that are particularly evident in its quotas and contributions in the World Bank and International Monetary Fund. The size of these contributions allows it the luxury of having veto power. The US was once seen as a nation that is in charge of creating and maintaining world order. 

However, the current 21st century is considered a time of change that is witnessing the rise of an extremely dynamic, heterogeneous and interdependent world. As such, would it still be appropriate to justify the influence that the US still holds in major international institutions and in other countries? 

The international financial institutions and the main multilateral organizations that control, stabilize, and transform the economy and world politics were created- the majority of them- to rebuild world order after the world wars. This was in Bretton Woods, 1944. Nevertheless, back then the world had different needs and expectations compared to the different issues that worry us today. 

The US has always fought to protect its interests, and now it finds itself in a role of a leader that is crucial for the outcomes of the important international issues and debates, alongside the the institutions in which it holds an extremely firm position. As a result, the US fears the rise and autonomy of multilateral organizations that are increasingly emerging.

Informal groups such as the G20 or the G8, are examples of the advent of multilateralism. Informal groups are often born when the “big” institutions are in crisis, so as to formalize suggestions or to advise a transformation of the current economic or political order. Although the recommendations of these groups are not binding for its members, and despite the fact that these groups lack a sufficiently formal and solid structure to affirm their legitimacy, informal groups are also a place where developing countries can form alliances so as be heard and have a more important role within the international community. 

Experts debate that the world still needs the World Bank because developing countries continue to require its assistance and aid, but even they agree on the fact that some internal changes are required so that become more efficient. These institutions should shift their focus; not only are they in charge of giving loans but they should also provide the tools (education, health, nutrition) that the countries that need it can become independent. 

This is what institutions such as the World Bank or IMF should do, but unfortunately they continue providing aid with unsustainable interest rates that leaves the borrowing countries in a worse condition than how it began. 

Another facet that could be improved is how these institutions are so adamant on applying the same policies to aaaaall countries. These measures, customs, programs and conditions are primarily of western vision and are greatly impacted by the US’ stance. This homogenization for the sake of harmonization is extremely flawed. International economic policies should be more specific and nationally organized so that each country improve the coordination and respond to its needs. 

We have to remember that the main international financial institutions were created for a world that was still licking its wounds left by WWI and WWII. This was the time when the US established its position as the creator of the new world order, in charge of maintaing the order thanks to its influence in the aforementioned institutions. But those institutions cannot continue to apply and implement the policies that were created decades ago; they have become rusty and decadent, unable of providing adequate responses to problems. 

It is evident that the world has undergone some drastic transformations since 1944 (who, back then, would have guessed that in 2014 China was going to be one of the strongest world economies?), but as it continues to evolve, so should the institutions in charge of maintaining peace and stability.  Perhaps it is time to take into consideration some serious reforms, and re-consider the position that the US continues to hold. 

Chiara Romano Bosch. 

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