Nations elbow for influence in world finance organizations

By , Staff writer of The Christian Science Monitor

Geopolitics -- questions of nations' power, pride, and prestige -- is stirring up some of the world's major financial blocs. Both great and medium-size powers are jockeying for position and influence in institutions like the World Bank and the International Monetary Fund (IMF) and in less formal but powerful multinational groupings.

These organizations, through their influence on international finance, third-world development, world trade, and relative currency values, can have major effects on a nation's economic welfare. Some nations are feeling wrongfully excluded from the policymaking councils of the organizations.

Here are a few signs of the turmoil:

Recommended: Default

Canada and Italy want the Group of Five to be expanded to include them.

This informal group includes the United States, Japan, West Germany, the United Kingdom, and France. At a secret meeting in New York last September, the finance ministers and central bankers of these powerful industrial nations decided to intervene in the foreign-exchange markets to weaken the dollar.

Both Canada and Italy were affected by the decision and want to be part of the decisionmaking apparatus.

Australia and Spain would like to become affiliated with the Group of Ten.

The Group of Ten is another informal grouping of industrial nations that includes the Group of Five plus Canada, Italy, Belgium, the Netherlands, Sweden, and Switzerland.

Japan wants to play a larger role in the World Bank, thereby obtaining greater recognition of its status as the No. 2 economic power in the noncommunist world.

The Soviet Union is seeking observer status in the General Agreement on Tariffs and Trade (GATT), the Geneva-based institution which regulates world trade.

Each of the above moves reflects a desire by the respective governments to be in on the international economic action and be seen by citizens at home as a participant.

When Canada's Prime Minister Brian Mulroney met with President Reagan last month, he won a promise that the President would support his admission to the Group of Five.

After expressing public displeasure at being left out of the dollar decision in New York, Italy's prime minister, Bettino Craxi, obtained a similar pledge from West Germany's chancellor, Helmut Kohl.

The United Kingdom, however, opposes accepting Canada and Italy in the Group of Five. It figures the grouping will lose some of its informal character should it become larger, and if the group should become larger, real decisions will more often be made by the US, Japan, and West Germany.

As for the Group of Ten, officials do not expect full membership for Australia and Spain. However, they may become associates to the group.

The Group of Ten is pledged to lend as much as $17 billion to the IMF in the event the 149-nation institution needs the money to deal with an extraordinary crisis in international payments.

Presumably, as associates, Spain and Australia would take on some lending arrangement with the IMF, but they would not participate in all the meetings of the group.

As the provider of 5.2 percent (second only to the US) of the capital of the World Bank, which makes development loans to developing nations, Japan has just a slim edge over West Germany, which provides 5.1 percent of the bank's capital. Japan, though, has an economy which is much larger than West Germany's, and it would like its role at the World Bank to reflect its global economic stature.

The problem is finding nations willing to take a lesser share of the bank's capital. Such a shift would reflect politically on the lesser relative economic significance of that nation.

The Soviet desire for observer status at the GATT was voiced several days ago by Mikhail Pankine, head of the Soviet Foreign Ministry's department dealing with international economic institutions, in Geneva.

However, the industrial nations are likely to block admission of the Soviets. They are afraid that the Soviet Union will attempt to politicize the GATT, as they have many specialized agencies of the United Nations.

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...