This panel was convened at 12:45 p.m., Friday, March 26, 2010 by its moderator, Daniel Bradlow, of American University Washington College of Law, and the University of Pretoria, who introduced the panelists: Jacob Werksman, of the World Resources Institute; Sean Hagan, of the International Monetary Fund; Domenico Lombardi, of the Oxford Institute for Economic Policy; Jo Marie Griesgraber, of the New Rules for Global Finance Coalition; and Anne-Marie Leroy, of the World Bank Group.
INTRODUCTORY REMARKS BY DANIEL BRADLOW *
Welcome. We're going to be talking about reforming the IFIs. Just to clarify what we're talking about, by the IFIs we mean the international financial institutions, particularly the World Bank, the IMF and the regional development banks.
By reform we mean that we're looking at questions of the mandate and roles of the IFIs as the global economy evolves, participation, decisionmaking procedures and structures, transparency, and accountability.
I think it's important to point out that the concern about governance and the mandates of the IFIs is not a new issue. It's been an issue under discussion and of concern, certainly to many stakeholders, for at least 30 years.
I'm sure there are many people here who, during the debt crisis of the 1980s, as the IMF was getting involved in structural adjustment lending, were concerned about questions of governance and what the appropriate role for the IMF in the crisis was. There are probably people here who can remember that as environmental concerns became a bigger issue, that in the World Bank, the environment and the consequences of that for governance of the institution became an important concern.
Moreover, as both the IMF and the World Bank became involved in reforming the way in which political economies work inside countries and the way governments work, there were concerns about the mission creep of the institutions. Interested observors also raised concerns about how the IFIs were beginning to become much more invasive and more active in policymaking in those countries and what some of those concerns might be--both about the role of the IFIs in the global economy and about the way that they function.
To be fair, the IFIs have not been unresponsive to these debates. There are a number of reforms that have taken place over the last 30 years. All of the multilateral development banks, beginning with the World Bank Group, now have independent accountability mechanisms which allow non-state actors to try and hold institutions accountable.
The IMF has created the Independent Evaluation Office, which serves an accountability and a lessons-learned function. All of those institutions now are much more transparent and have clear information disclosure policies. They're all much more actively and formally engaged with civil society in their the state members. In fact, I think it's fair to say that compared to the UN system, the IFIs are models of good governance--which is not to say that they're perfect by a long shot--but they're way better than most of the UN institutions.
I also think that it's fair to say that the attention paid to governance reform seems to vary inversely with the state of the global economy and the state of the world generally. So it's not surprising that in the last couple of years, given the financial crisis and the shifts in global power, more attention is being given to this issue than was the case before, particularly in the last couple of years. While the reforms in prior years focused mainly on participation, transparency, and accountability, more attention now is focused on decisionmaking and power in the institutions and the role that they should play as the global economy moves forward.
Recently there has been a lot of rhetoric about change, and there has even been some action. I thought as a way of laying the predicate for this panel, we should at least just lay out some of the measures that are talked about and some of the measures that have been taken.
In the case of the World Bank, the Bank has increased the size of its Board of Executive Directors by one member, to give Africa a third seat on the Board of Executive Directors. It has also agreed that in future, the President of the World Bank should be selected on the basis of merit, rather than nationality.
The IMF has agreed already to one small change in the quotas, and therefore to voting in the IMF and is a more substantial reform of the quotas. It has also agreed that there should be a change in how the Managing Director is selected.
There has been a lot more study. Those of you who are following these issues will know that recently the World Bank released the Zedillo Commission Report, headed by the former Mexican President, Ernesto Zedillo.
The IMF has had many more studies done. It had a report done by a high-level commission headed by the former South African Finance Minister, Trevor Manuel. Its Independent Evaluation Office has done a study of INF governance. The Board has conducted its own study of governance reform in the IMF, and it has gone so far as to have a fourth pillar of reform that looks at civil societies' views and how to change governance in the IMF.
So things are fermenting. There is clearly a lot of thought being given to these issues, and it seems that this year, much of these efforts will come to a head. So it seemed appropriate to have a panel focused on reform and restructuring of the IFIs at this year's annual meeting.
We are very fortunate to have an exceptionally well-qualified panel to talk about these issues, and I mean that not only because of their individual qualifications, but because the people on the panel are all in the thick of the action on governance reform. I will introduce each of them to you, but I thought that this was too good an opportunity to let them all off the hook so easily as to just come and give a set piece and then go back after having politely explained their views on the subject. So we've set this up as an interactive discussion, so it can be much more spontaneous and, we hope, thought-provoking and entertaining.
Let me begin by introducing the panel, and then I'll explain how the process will work.
Sitting at my extreme left, at least geographically--I will leave it to you to decide politically-is Jake Werksman, who is the Director for Institutions and Governmence Programs at the World Resources Institute. He has previously worked as the Associate Director at the Rockefeller Foundation and as a environmental institutions and governance advisor at UNDP.
Sitting next to him is Sean Hagan, who is well known, I think, to people in ASIL. He is the General Counsel and Director of the Legal Department at the IMF. Prior to joining the IMF, he was in private legal practice, both in New York and in Tokyo.
Sitting next to him on my immediate left is Domenico Lombardi, who is President of the Oxford Institute for Economic Policy and a non-resident senior fellow at the Brookings Institution. He's previously worked as a member of the boards of both the IMF and the World Bank and recently authored a report to the IMF Managing Director from Civil Society, the so-called "Fourth Pillar Report on Governance" in the IMF.
On my immediate right is Jo Marie Griesgraber, who is the Executive Director of the New Rules for Global Finance Coalition, which is a Washington-based network of activists and researchers concerned with reforms of the international financial architecture. She has held a number of activist positions in Washington, including as Director of the Rethinking Bretton Woods Project at the Center of Concern, and is the point person with the IMF on the Fourth Pillar process, the Civil Society Interaction on Reform with the IMF.
On her right is Anne-Marie Leroy, who is the Senior Vice President and General Counsel of the World Bank Group. Prior to joining the Bank, she was a lawyer in private practice in Paris and previously held senior positions in the French government as well as in the World Bank in an earlier stage in her career.
As you can see, everyone is involved actively in this issue. Just to explain the process, I had proposed seven questions to the members of the panel and have told them that we'll base the discussion on these questions, and that for 45 minutes, we'll have a discussion among ourselves, and then we'll open it up to discussion from the floor. If they are questions that I haven't asked, feel free to raise whatever topic you think is relevant.
Just so you have a sense of what the issues that we're going to focus on, the seven questions I asked are as follows:
(1) Do you think the work of the IFIs is changing, and if so, how responsive are the proposed governance reforms to these changes?
(2) What do you see as the biggest governance problem facing the IFIs and why?
(3) Do you think that these governance problems are sufficiently serious or serious enough to threaten the legitimacy, the relevance, and the effectiveness of the IFIs?
(4) Do you think that the reforms currently under consideration are likely to resolve the important problems that you've identified as the major challenges for the institutions, and are there any other governance reforms that are not being discussed that you think should be considered?
(5) What reforms do you expect to be implemented of the current agenda of items?
(6) Now that the worst of the financial crisis has passed, do you think that the impetus for reform is dissipating and that we're not likely to see much reform at the end of the process?
(7) What lessons, if anything, do you think we can learn from recent events in the world?
With regard to the last question, I am thinking about the increased involvement of the IMF in rich countries, which is not historically new but is certainly a recent development, and also some of the work in the World Bank relating particularly to the involvement in the power sector and climate change.
So that's our road...