Roberto Bissio, ITEM, Uruguay
On August 28, in Bariloche, Argentina, the presidents of twelve South American countries met to discuss a life-or-death issue for their newly created Union of South American Nations (Unasur): the Colombian-US agreement allowing for extra-regional military to set up a chain of bases very close to the heart of the Amazon. It was a highly contentious issue and a difficult one for a newly created institution like Unasur, touching sensitive aspects of national sovereignty, security, drugs and terrorism. So what did the presidents do? Hide behind closed doors to broker a secret agreement? No. They decided to broadcast the whole 6-hour meeting, including putting it live on the internet. Under this intense public scrutiny, the presidents reached a deal that managed to save all faces and keep Unasur alive and perhaps even strengthened.
How does that compare with the procedures of the Bretton Woods institutions that keep trying to teach developing countries how important good governance is for their future wellbeing? The World Bank and the IMF not only keep press and NGOs out of their meetings, but they also keep the transcripts secret. While decisions are announced, it is impossible to know who was for or against, making accountability to parliaments, civil society, and the people that they are supposed to represent practically impossible.
how to get rid of the veto without the vetoer vetoing is the key question to be addressed
Thus, when the ‘fourth pillar’ consultation was carried out, trying to elicit civil society views on the governance reform of the IMF (see Update 66), the Latin Americans that were consulted seemed less interested in the details of the increase of votes within the same opaque voting system and more in the notions of integrity and impunity from national level prosecution of IFI officials.
In most Latin American countries, if a high ranking public servant leaves her position, it is against the law for her to be hired by any company with which she or anybody under her authority might have done business. That prohibition extends from six months to several years, depending on the different anti-corruption approaches. Yet, it is a common practice for finance ministers to be hired by the IMF as soon as they leave office, frequently under political pressure after having signed some deal with the Fund. And there are cases of Fund (and Bank) officers becoming ministers or central bankers, in what many have called a ‘revolving door’ practice.
“What if the votes required to pass decisions were lowered from 85 to 83 per cent?” asked a participant in the consultations. The question was not naïve, but points to the heart of the matter. With 16.7 per cent of the votes, the United States has veto power in the IMF and the World Bank. In fact, veto power is an expression that originates from the UN Security Council, where the five permanent members have the ability to cast a no vote to block any decision. In the Bretton Woods institutions it is the other way around: no important decision can pass unless the US casts a yes.
Is there some relation between the enormous power of one country over the two pillars of international finance and the fact that the global financial crisis originated precisely in that country? And that it happened without the Bretton Woods institutions seeing it coming and warning the world about it? Well, think of the story of the emperor without clothes. Could anyone else have run around naked without anybody pointing a finger?
How to get rid of the veto without the vetoer vetoing is the key question to be addressed in the new Byzantium, a city that gave its name to the practice of discussing endlessly futile matters while denying the really urgent.