IPE 2007 Takes on IMF / World Bank Reform
Monday, January 1, 2007
In early January of each year the Ford School runs a distinctive policy simulation called the Integrated Policy Exercise. All current students are required to participate by researching and representing the role of a particular stakeholder within a complex local, national or international issue. Experts are brought in to speak. Background and position papers are crafted. Tough negotiations take place. A resolution on the issue is prepared and voted on. In the past Ford School students have taken up everything from a treaty regulating the international trade in small arms to ideas for the expansion of US-Canada trade relations and the redevelopment of downtown Detroit. This year, guided by faculty advisor Jan Svejnar, students took a close look at reforming the Bretton Woods institutions, primarily the IMF and the World Bank.
The event kicked off with a speech from the economist Allan Meltzer, noted in recent years for his instrumental role in the 2000 US Congressional Committee study which, although far from the first study of its kind, in effect launched Bretton Woods institutional reform to the top of the international agenda. Meltzer, who advocates shrinking and sharply refining the missions of the IMF and the World Bank, was followed by economist Jeffery Sachs, director of Columbia University's Earth Institute and special advisor to Bono. Arriving at IPE via video teleconference, Sachs agreed with some of Seltzer's ideas on clarifying the missions of the Bretton Woods institutions but directed the majority of his time to advocacy for repositioning the Bank and the Fund in line with the aims of the UN's Millenium Development Goals. The two diverged on needs for additional development funding. Seltzer advocated greater efficiency with current resources while Sachs demanded a massive long-term increase.
Expert testimonials rounded out with a taped video interview between the Ford School's Jan Svejnar and Nobel Prize winner Joseph Stiglitz, a panel discussion featuring Manish Bapna of the Bank Information Center, Guy Pfeffermann of the Management Research and Education Center and Allan Meltzer, and a video teleconference on the second day with former IMF deputy managing director Stanley Fischer.
In the student-led sessions divisions erupted immediately between representatives of the developed world (US, EU, Japan), rapidly developing nations (India, China, Brazil, Mexico, Russia), Islamic countries (Saudi Arabia, Indonesia, Egypt) and the poorest nations (primarily Sub-Saharan Africa). In this particular simulation NGOs were given proxy voting power which enabled representatives of groups like Greenpeace, Human Rights Watch and Action Aid to influence the course of events. Loan conditionalities and voting shares became key points of contention. As the developed world closed ranks, a broad oppositional coalition formed among the representatives of the developing world. The outcome of the final resolution mirrored voting shares in the real-world Bretton Woods institutions. Developed nations won the day, but not before ceding vital ground on procedures for appointing the World Bank President and IMF Managing Director along with a host of reforms aimed at boosting developing world participation in future decisions.
If this year's IPE is any indication democratic reform and redistribution of power in the IMF and the World Bank are still a long way off, but they may at some point be possible.