The U.S. and Europe Are Blocking Global Cooperation

Leaders of the world’s largest economies are off for a G-20 get-together June 18 in Los Cabos, Mexico. No doubt, their closing communiqué will declare that the governance of the International Monetary Fund and the World Bank should “more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness.”

We know that because the statement has been repeated in pretty much every G-20 declaration since the first one in 2008. But thanks to the shortsighted foot-dragging of the U.S. and Europe, this important ambition is proving difficult to realize. As the economic crisis rumbles on, hitting the old, very rich of Europe and North America far more than the new, somewhat rich of Asia and Latin America, the traditional order of global financial governance is looking increasingly frayed. Still, for all the talk of reform, the U.S. in particular can retain its veto power at the World Bank and the IMF, if it is willing to pay the price of those bodies being less effective.