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In a Financial Times column published today, Goldman Sachs Chairman Asset Management Chairman Jim O’Neill argues that Europe—and not Europeans—needs a stronger voice at the international Monetary Fund.His appeal comes ahead of joint IMF-World Bank meetings that will begin this Friday in Washington, DC.
O’Neill argues that representatives of specific European countries dominate IMF discussions rather than officials who back centralized European objectives. A recent proposal would diminish Western Europe’s power at IMF meetings by forcing it to give up two seats to emerging markets.
Thus, an IMF leadership devoted to the unity of the eurozone—potentially led by Germany, France, and Italy—is absolutely necessary to secure current and future support and aid for European bailout measures. O’Neill writes:
The move would signal a long-overdue shift towards a proactive strategy vis-à-vis IMF governance reforms whereby Europe could finally break with the current “wait-and-delay” tactic, precisely at a moment when it needs powerful allies within the fund membership in order to erect a credible global firewall. France, Germany, and Italy would together help set the right tone for ongoing G-20 and IMF negotiations, where many non-European shareholders are expected to contribute to a sizable increase in the IMF’s financial capacity
While O’Neill’s analysis does not directly contradict arguments from the likes of Mohamed El-Erian that the IMF should stand up to Europe and let the monetary union bail itself out of trouble, he does suggest that Europeans should continue to rely on IMF support.