Marketplace Report: Wolfowitz's Anti-Corruption Plan
MADELEINE BRAND, host:
Back now with DAY TO DAY. There has been a shake-up at the World Bank and the International Monetary Fund. Those organizations are holding annual meetings in Singapore this week. Steve Tripoli from MARKETPLACE joins us now to tell us what's happened, and Steve, what's changed, what's happened?
STEVE TRIPOLI: Well, Madeleine, what's changed is that the world economy isn't just about the U.S. and Europe and Japan anymore. So everyone agrees that other countries should get more say. Of course the devil's in the details with all this, but it has been announced today that the member states approved bigger IMF voting shares for China, Korea, Mexico and Turkey. Those countries also have to increase their financial commitments to the fund.
Next up, they're going to recalculate how lots of other countries' financial shares and voting stakes are calculated, and that can't come soon enough for India, Egypt, Brazil and a few other countries who say it should have all been done today.
BRAND: Right. And you say this is largely about power and how it's divided between the countries. And so who's concerned about what there?
TRIPOLI: Well, keep in mind, Madeleine, that the main purpose of the IMF is to foster stability in the global economy and to be there when economic crises erupt. So the worry for countries that have traditionally run the fund is that power becomes too fragmented for quick action when there's a crisis. And don't forget, this also comes on the heels of this summer's failure of the global trade talks, so the concern is that cooperation may be slower, which opens the door for trade and other tensions to go up.
BRAND: And do countries that want increased clout see that differently?
TRIPOLI: Well, yeah, but you know, no one is against this larger role for more countries in principle, but you could say that the counter to the big countries' concerns is that poorer countries are worried about being bossed around; they always have been, especially in their borrowing. A lot of African countries recently had big debts written off, for instance, and over the weekend in Singapore the American head of the World Bank, who is Paul Wulfowitz, defended the bank's decision to withhold some further loans from these countries. He says they need to do more first about fighting corruption.
BRAND: But the smaller countries have chafed at restrictions on their loans in the past, right?
TRIPOLI: They certainly have, and they especially didn't like being told in the past that they had to enact austerity measures or they had to privatize sections of their economy in order to get those loans. And they don't want to repeat that experience. So what we're seeing now, Madeleine, is that even as these poorer countries get more say in these institutions, they're doing a little bit of an end-run around them by getting some loans from countries that have big surpluses like China, and this may not thrill countries like the United States, which says the borrowers could get in over their heads all over again.
But you know, not everyone agrees with the rich countries' formula for how to fight poverty or sustain growth globally.
BRAND: And speaking of China, tell us about U.S. Treasury Secretary Hank Paulson's visit to Beijing.
TRIPOLI: That's tomorrow, and a whole 'nother Rubik's Cube of concerns awaits him there, Madeleine. Trade and the value of China's currency top that bill. You know, as we saw with the global trade talks and all these negotiations, it's not so much about agreeing on goals as who has to sacrifice what to get there.
So stay tuned, and on later - later today on MARKETPLACE, Madeleine, we're going to learn why a lot of politicians want to follow in former Vice President's Al Gore's footsteps. Suddenly everyone wants to make their own big-screen documentary.
BRAND: Thank you, Steve. Steve Tripoli of public radio's daily business show, MARKETPLACE, produced by American Public Media.