Guest post from Tim Newman, Campaigns Assistant at International Labor Rights Forum:

As finance ministers from the G-20 nations prepare to meet in London, reports are emerging that 425321 Western nations are ready to accept some proposals for an increase in power for developing countries in the International Monetary Fund (IMF).  The Washington Post stated this morning that “the big winner will be the developing world, with the United States, Europe and Japan offering China, India, Brazil and other emerging nations unprecedented new influence in global financial decisions.”  The notion that industrialized nations currently holding sway in the IMF have to ability to “offer” developing countries a voice in the lending policies that deeply affect their economies highlights some of the power imbalances within international financial institutions — it also brings to mind Brazilian President Luiz Inacio Lula da Silva’s controversial comments last week about the global economic crisis.

The issue of representation in the decision-making bodies at the IMF is a real concern.  Currently, Europe holds a third of the chairs in the executive board and continues to follow the “tradition” of filling the managing director position with a European while the US has veto power at the IMF due to its large voting share.  The power structure at the IMF, and other international institutions, needs to be changed, but the bigger question is how will these changes can result in a qualitative shift that promotes policies that support poor and working people globally?

As Walden Bello writes of many of the international financial institutions:

Among the mantras they thus legitimized were that capital controls were bad for developing economies; short-selling, or speculating on the movement of borrowed stocks, was a legitimate market operation; and derivatives — or securities that allow betting on the movements of an underlying asset — “perfected” the market. The implicit recommendation of their inaction was that the best way to regulate the market was to leave it to market players, who had developed sophisticated but allegedly reliable models of “risk assessment.”

In addition to encouraging some of the policies that contributed to the economic crisis, IMF conditions on loans to many developing countries have had devastating impacts on poor and working people.  For example, ILRF did this report that explains how loans from the IMF to Cote d’Ivoire required the country to adopt policies that lowered labor standards and increased child labor in the cocoa industry.  The International Trade Union Confederation (ITUC) also just released a new report about how the policies of multinational corporations as well as the IMF have contributed to the global food crisis as well as lower working and living standards for agricultural workers globally.

Just last week, the IMF announced some changes in its conditionality policies on loans, the changes are only a small step in the right direction.

So, while changes in representation and the power structure at the IMF are important, there is an Failworld urgent need to change the actual policies of the IMF.  It is crucial that the G-20 seriously examine the proposals put forth by the ITUC as a starting point for designing an economic recovery that supports workers globally.  The Decent Work, Decent Life campaign put out a similar list of recommendations.  They articulated the challenge very well by stating, “The crisis must provide the trigger for a wholesale reform of the global economic order. As such it could be a turning point for the goal of achieving sustainable development and social justice. The central objectives of a new economic architecture should be shared prosperity with decent jobs and income for all.”  Meanwhile, 35,000 people marched over the weekend in London to call on the G-20 to create a global economy “based on fair distribution of wealth, decent jobs for all and a low carbon future.”  Will the G-20 be putting people first this week?

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