In the midst of a tense US presidential election race between Democratic nominee Kamala Harris and Republican candidate Donald Trump, the US’s role within the Bretton Woods Institutions (BWIs) – the World Bank and IMF – is one among a large number of issues in play.
As former US Executive Director to the World Bank Karen Mathiasen highlighted in a recent blog published by the Council on Foreign Relations, US-led reforms at the World Bank via the recent Evolution Roadmap designed to create a bigger multilateral development banks system (see Observer Spring 2024) have been undermined from within, as US Republicans in Congress have repeatedly blocked requests from the Biden administration for additional World Bank funding.
A blueprint for Trump’s second term developed by the US-based Heartland Institute, entitled Project 2025 – A mandate for leadership, further ratchets up Republican attacks on multilateral institutions, including the BWIs. In a claim that will be met with derision by countries currently under the yoke of IMF-mandated austerity (see Observer Winter 2022), Project 2025 argues that “the World Bank…and the International Monetary Fund espouse economic theories and policies that are inimical to American principles of free market and limited government principles.” It calls for the US, the largest shareholder at the BWIs (see Background, IMF and World Bank decision-making and governance), to withdraw from both institutions and terminate its financial contributions.
[The US-led liberal international order of which the BWIs form a part] is now under heavy strain, buffeted both from outside the West and within the West.Walden Bello, Focus on the Global South
While the Trump campaign has distanced itself from Project 2025, former Trump administration officials were heavily involved in developing it, per an investigation from the Centre for Climate Reporting. Even if these proposals don’t come to pass, there are signs that shifting geopolitical realities are reshaping the BWIs’ governance landscape.
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Filipino scholar and activist Walden Bello, co-chair of the board at international civil society organisation Focus on the Global South, argued at an IDEAS conference in Rio de Janeiro, Brazil, in August that the US-led liberal international order of which the BWIs form a part, “is now under heavy strain, buffeted both from outside the West and within the West.” He argued that when discussing “access to capital for emergency and development financing, the new debt crisis, and policy space for developing countries, it is imperative that we see them in this broader geopolitical context or we might miss some of the key features of the new situation.”
Bello noted that despite key differences in the Harris and Trump agendas, from a Global South perspective it is difficult to escape the conclusion that whatever the result of the US elections, we are likely to see a continued trend towards more inward-looking, insular policy approaches from the US and Europe. This is evident, for example, in continued cuts to overseas development assistance in key BWIs shareholders such as the UK, Germany and France.
Despite much talk of a ‘new Bretton Woods’ in recent years (see Observer Summer 2022), uncertainty surrounds the ultimate shape of a new multilateral order. Current events, including the political fallout from bloody conflicts in Gaza and Ukraine, the continued expansion of the BRICS, the prospect of an unresolved developing world debt crisis, and the dearth of concessional and grant financing for climate and development efforts, would appear to pose a challenge to any renewed multilateral consensus.
Bello argued that this could open up space for new configurations, despite the risks: “We live in very dangerous times, but it seems like great opportunities for real change and great danger have always been twins.”