Monitoring Policy Making at the United Nations
Global Policy Forum Monitors Policy Making at the United Nations.
 
Security Council UN Finance What's New
Social & Economic Policy International Justice Opinion Forum
Globalization Iraq Tables & Charts
Nations & States Empire Links & Resources
NGOs UN Reform  
Secretary General   DONATE NOW
 

Democratizing the World Bank and IMF

 IFI Democracy Coalition
February 7, 2005

As James Wolfensohn’s term as World Bank president nears its end, we alert the public that world leaders are preparing to appoint the head of a major international financial institution behind closed doors for the second time within a year. Just as we condemned the overtly undemocratic selection of the IMF Managing Director, we now warn that the same is likely to happen again at the World Bank. Recognizing that these institutions remain rooted in an outmoded model of governance, we call on the member governments and the institutions themselves to take responsibility for creating and following a process that is consistent with contemporary standards of democracy.

After World War II, it was widely considered acceptable for technocrats to make foreign aid and development policies in secrecy. But today citizens and civil society recognize an urgent need for greater democratic involvement in and improved governance of global institutions. This demands processes that provide for more transparency, direct civic input, and public accountability. We interpret the fact that over 50 countries have adopted freedom of information laws, with half of them doing so over the last decade, as a sure sign that citizens and civil society organizations are able interlocutors with full intent of meeting the responsibility of active democratic participation.

But it is widely recognized that democratic institutions at the national level alone will not solve the modern “democratic deficit”. Today, international financial institutions (IFIs) wield tremendous power over the economies of developing countries in matters ranging from trade policy to the level and composition of public expenditures to the role of the private sector. Yet, the IFIs are stuck in a 19th century model, with a few very powerful people operating as the ultimate authorities by “unwritten agreement.” In the 21st century, people demand transparency and accountability. Only by reshaping our global institutions can we accomplish these objectives.

We support the spirit of some recent governance reform proposals at the IFIs, although we recognize that they do not advocate the kinds of systemic changes that we find necessary. In 2000 broad-based public criticism of the undemocratic selection of Horst Köhler as the IMF Managing Director compelled the World Bank and IMF to establish a joint panel of board members to recommend guidelines for the next succession. However, even this limited reform proposal, presented to the IFIs’ boards in 2001, was ignored in the 2004 selection process of Rodrigo Rato as the new IMF Managing Director. The closed-door process prompted unprecedented criticism from within the institutions as eleven IMF board members (representing well over 100 countries) issued a public statement calling for a more open process without geographical restrictions. Similarly, recent proposals to improve the “voice and vote" of developing countries on the executive boards of the World Bank and IMF have also not been adopted. While these proposed initiatives would still fall far short of the structural changes required, we support their spirit of reform to bring outdated governance structures of IFIs up to modern democratic standards.

We strongly affirm the need for the public in both borrowing countries, whose citizens are affected by their operations, and rich countries, whose governments exercise disproportionate influence at IFIs, to have a far greater degree of input into the decision making processes than currently exists. As a starting point, we call on the establishment of a transparent and accountable process for the selection of the next World Bank President. The process should provide for the selection on the basis of explicit criteria, including the commitment to a genuine democratization of the institution, and be open to candidates from all countries. Furthermore, we call on the IFIs themselves to support such a process. This time around, IFIs will have to demonstrate that they are the appropriate channels for development resources, and one part of proving that is accepting responsibility for their own governance.

This statement was prepared by a group of civil society organizations who are committed to improving governance of the World Bank itself, and who reject perpetuating the “tradition” whereby the US government names the President of the World Bank.

Endorsed by the following organizations and individuals:

Individuals:

More Information on Social and Economic Policy
More Information on Global Governance and the Three Sisters

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C ß 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.

GPF home page