Reform the IMF, don't reinvent
The following editorial appears on Bloomberg View.
If last week's BRICS summit in Durban, South Africa, passed you by, we don't blame you. The leaders of Brazil, Russia, India, China and South Africa met, as they do once a year, to advance their common interests. They found, as they do once a year, that they don't have many, so not much happened.
One common interest is to give big fast-growing nations - a group that extends far beyond the arbitrarily selected club of BRICS - the voice they should have at the World Bank, International Monetary Fund and other global economic bodies. In pursuing this goal, the BRICS leaders would be wise to be less ambitious for their ill-sorted alliance and more ambitious for the developing world as a whole.
Summits must have something to discuss and this week's gathering focused on plans to create a new development bank, supposedly to rival the World Bank. One wonders how seriously even the BRICS' leaders are taking this idea.
The BRICS don't need their own development bank. What they need is to pool their influence with that of other big and fast-growing nations so that existing development institutions aren't run for the sole convenience of the United States and Europe.
This is a legitimate grievance. It's scandalous that an arrangement formed decades ago in a different geopolitical era still controls representation and appointments to the top jobs. Under this deal, an American always leads the World Bank and a European always leads the IMF. That's indefensible - yet the BRICS couldn't line up behind an alternative candidate for the World Bank job last year (it went to Jim Yong Kim, an American) or for the IMF in 2011 (Christine Lagarde of France got the nod).
These countries' export markets, import requirements, industrial structures, sources of finance, problems, prospects and levels of development are all quite different. In geopolitical terms, the alliance is even more pointless.
It's usually good to meet and talk, but institution-building - such as the plan to create a new bank - involves an outlay of money and effort that would be better spent on repairing the institutions we already have.
The editorial board is composed of the publisher and four journalists of varied editing and reporting backgrounds. The board's discussions and information gained from its meetings with political, civic, and business leaders drive the institutional voice of The Day, as expressed in its editorials. The editorial department operates separately from the newsroom.
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