U.S.-WORLD DIFFERENCES GROWING
Washington rejects efforts to expand IMF, World Bank activities and defends attack on free trade pacts
WASHINGTON
THE growing split between the United States and the rest of the world spilled into the annual meetings of the International Monetary Fund (IMF) and World Bank, here, last week.
The US administration showed a diminished view of the Bretton Woods institutions that shaped a US-led order after World War 2, rejecting efforts to expand their activities and defending its attack on free trade pacts as part of President Donald Trump’s “America First” agenda.
And at the same time, the US continued to stymie China’s ambitions to elevate its global role via an expanded stake in both the IMF and World Bank.
The Trump administration spelled out its view by rejecting a capital increase that the World Bank wants to expand its global anti-poverty mission.
“More capital is not the solution when existing capital is not allocated effectively,” said Treasury Secretary Steven Mnuchin in a statement on Friday, one day after World Bank President Jim Yong Kim said he believed the Trump administration was now supportive of the move.
There was also no movement on the IMF’s long-planned boost in its lending resources that would come with a shake-up of its shareholder quotas. Last year, the Republican-controlled Congress effectively vetoed the move, but the Trump administration has not supported bringing it back to life.
Instead, Mnuchin took aim at the IMF and World Bank bureaucracies, calling them inefficient and suggesting their staffs were overpaid — a longstanding view among many US conservative critics of both.
“We see scope for further budget discipline, especially with respect to compensation and the executive board budget,” he said of the World Bank.
The new US stance on globalisation under the Trump administration also came through in the meeting of the G20 finance ministers and central bank chiefs that took place during the IMFWorld Bank meetings.
In the past, the group regularly raised the alarm over protectionist and anti-free-trade sentiment. But last week, the Trump administration appeared to stifle such talk.
After presenting a tepid G20 statement with no mention of trade or protectionism, German Finance Minister Wolfgang Schaeuble quipped that the G20 lacked expertise in the matter.
Because of that, he said, “at this time, global discussions are much more relaxed”.
However, in statements to the steering committees of IMF and World Bank, many countries made clear their differences with the US. Most said they backed a capital hike for the World Bank. Schaeuble called it “urgent”.
He also was tough on the trade issue. “We should all be concerned about slow global trade growth and increased anti-freetrade rhetoric. Both are a threat to our common economic prosperity,” he said. AFP