Rising Asian giants seek their place

NEW DELHI: Asia in the world, the world in Asia”—that was the theme at the IMF-WB annual meeting that began in Singapore this week.

It’s the economy, stupid!” is what they say. And given the rise of new economic powerhouses, it would, inter alia, mean a radical restructuring of the world order. Or, at the very least, a place for the new giants among the pantheon of aged titans. And it’s our very own continent that’s staking its claim. “Asia in the world, the world in Asia”—that was the theme at the IMF-WB annual meeting that began in Singapore this week.

The fanatically clean streetscapes of Singapore saw 16,000 delegates from 184 countries descend on the city state. The authorities, however, turned restrictive by barring the entry of anti-globalists, even as the big boys came together to give emerging economies greater voting rights in the IMF. So, will the ancient regime give way to the rising Asian giants?

The IMF board has backed a comprehensive reform of voting rights to be based on a formula that’ll be worked out over the next two years. The proposal, expected to come up for a vote next week, seeks to first increase the voting shares and financial contributions, or quotas, of China, South Korea, Turkey and Mexico as an ad hoc measure. Later, it plans to rework the voting shares of all the 184 member countries. The plan was approved by IMF’s executive board, which said changes were necessary to recognise the rising economic might of emerging economies.

Current quotas are roughly determined by the size of a country’s GDP, openness to trade and reserves. The world’s largest economy, the United States, which commands veto power with more than 17% of IMF voting rights, wants a formula where GDP carries greater weight. But this proposal has run into stiff opposition. And it’s not just powerful European economies that are against this method of increasing voting rights. It is also opposed by more than 50 developing countries represented by Brazil, India, Argentina, Egypt, Malaysia, Iran and Saudi Arabia.

In another city, Colombo, finance ministers of Commonwealth countries came together this week, to put forth their plea to have a more equitable voting rights formula for all nations. The group, meeting in the Lankan capital, said that poorer nations should have a greater say in decision-making.

“It is widely believed that the present quota formula of the IMF is hopelessly flawed and outdated,” P Chidambaram, finance minister said at the Commonwealth meeting. India is opposed to IMF’s proposal of boosting voting shares for four countries, including China. According to the IMF ranking of countries sorted by their GDP in terms of purchasing power parity (PPP), the United States ranks first, followed by China, Japan and India.