PREVIEW-Emerging nations push for say in global economy

* Developing countries keep up push for more influence

* Face resistance in gaining parity at IMF, World Bank

* G20 may be better forum to reassert power

By Ana Nicolaci da Costa

BRASILIA, April 20 (BestGrowthStock) – Developing countries will
this week demand a louder voice at the World Bank and the IMF,
now that they are contributing more funds and it’s a euro zone
country, Greece, that is in need of a rescue plan.

The United States and Europe, which have long dominated the
Washington-based international institutions, acknowledge the
growing clout of the emerging market economies such as China
and Brazil but are loathe to part with their power.

Brazil, Russia, India and China, the so-called BRIC club of
big emerging economies, called for swift reforms in the global
institutions when their leaders gathered in Brasilia last week
ahead of key financial meetings in Washington. [ID:nN15250971]

That was like “a pressurizing device to make it obvious to
the developed world that our global organizations are no longer
representative of the world economy,” said Goldman Sachs
economist Jim O’Neill, who coined the term BRIC in 2001.

Brazil and other developing countries have been calling for
a 6.0 percent shift in voting power at the World Bank. That
would bring the representation between developing and developed
countries at the institution to parity.

“We can no longer accept a situation in which the majority
of the world’s people remain inadequately represented in such
bodies,” South African President Jacob Zuma said during a
recent visit to Brazil.

A Brazilian government source conceded that Brazil was
pessimistic about achieving an equal say for developed and
developing economies at the World Bank. [ID:nN15154776]

Brazil would keep pushing for parity in the long term but
that a smaller shift of a little over 3.0 percent and up to 4.0
percent would be acceptable for now, Rogerio Studart, who
represents Brazil and other developing countries on the World
Bank’s board, told Reuters.

“We will try to push for as much as we can but we are aware
that we are at the end of the negotiations,” Studart said.

The shift would not achieve parity but would help
rebalance a breakdown that now stands at roughly 40 percent for
developing countries and 60 percent for developed nations.

“A profound change in the structure of the IMF is needed so
that all countries can trust in it and know that it is
objective,” said Nestor Stancanelli, deputy secretary for
international economic negotiations for Argentina.

CHANGING TIMES

When the financial crisis in 2008 pushed rich economies to
the brink of a depression, the world turned to emerging powers
like China to spend more to cushion the global economic slump.

Now that the BRICs are helping to drive global economic
growth and to fill International Monetary Fund coffers, there
is a growing consensus that the international institutions
should reflect their new importance.

Brazil has committed to buy up to $10 billion of IMF bonds
and China up to $50 billion.

But Europe and other rich countries are concerned about
shifting voting power. Europe has long dominated the IMF and
selects its head. Many in Europe see a dilution of voting power
equal to losing sway over global economic issues.

Analysts argue that the longer emerging economic powers are
denied a greater say in the institutions, the more likely it is
these institutions will become irrelevant and ineffective.

“Increased income and growth in the developing world means
increasing influence,” World Bank President Robert Zoellick
said last week said in a speech. “Today’s discussion requires a
big table to accommodate the key participants, and developing
countries must have seats at it.”

While emerging economies bounced back more quickly from
the financial crisis, the Greece’s debt problems and the risk
that it may have to be bailed out by the IMF highlighted how
fragile developed economies remain.

G20 ALTERNATIVE

As well as pushing for change at the IMF and World Bank,
analysts say emerging economies should also help foster the G20
group of leading developed and developing economies.

“Perhaps the question is not so much how hard they should
push for greater representation in international financial
institutions but how they should try to strengthen the G20,
increase its clout and make that clout sustainable,” said
Matias Spektor, who coordinates the center for international
relations at the Getulio Vargas Foundation in Rio de Janeiro.

Last year, G20 leaders agreed the group should take over
from the G7 as the main forum for managing the world economy.

“Everyone’s talking about the death of the G7 but it’s very
plausible to think that within the next five years, if the G20
fails to deliver, then to see a return to some more traditional
ways of managing the global economy,” Spektor said.

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(Additional reporting by Louise Egan in Ottawa, Gordon Bell
in Johannesburg and Lesley Wroughton in Washington)

PREVIEW-Emerging nations push for say in global economy