As the uneven recovery from the Covid-19 pandemic and the war in Ukraine exacerbate pre-existing economic, climate, social and political challenges (see Dispatch Spring 2022), the multilateral order is once again in the spotlight. Calls now abound for a new Bretton Woods moment, recalling the establishment of the United Nations, World Bank and IMF at the resort town of Bretton Woods in New Hampshire in 1944 by 44 nations in the aftermath of World War II.
Calls for a new Bretton Woods overlook the system’s imperialist origins
On April 18, the FinancialTimes published a article support US Secretary of State Janet Yellen proposal for a new Bretton Woods deal in an April 13 statement. Secretary Yellen stressed the need for a multilateral system that supports “free but secure trade”, in which countries are not able “to use their market position in key commodities, technologies or products to gain the power to disrupt our economy or exert undesirable geopolitical effects”. leverage.” The American think tank Atlantic Council recently launched a Bretton Woods 2.0 Project. Discussions on the need for a new international order have once again clearly exceeded the limits of its ‘usual reviews‘ – i.e. those negatively impacted by the environment, human rights and social aspects of the economic system it perpetuates (see Bretton Woods at Conference 75; Observer summer 2019) and the countries of the South which have long calls for the reforms.
Secretary Yellen’s remarks about the need for a new Bretton Woods moment to address global power imbalances and “unwanted geopolitical leverage” are rather odd considering the origins of the Bretton Woods system and the interests that he was supposed to protect. As Professor Celine Tan of the University of Warwick notes, “the governance and operational structures of the Bretton Woods institutions continue to represent contemporary geopolitical and economic realities rooted in colonialism and imperialism”. Professor Tan’s focus on the origins of the BWIs and their policies is echoed by Professor Jamie Martin, who argues in his new book The intruders: sovereignty, empire and the birth of global economic governance that the interventionist powers of the IMF and the World Bank are rooted in empire and colonialism. In a month of June interview with Daniel Steinmetz-Jenkins on the Committee for the Abolition of Illegitimate Debt website, he pointed out that “we continue to live in a world shaped by older practices of informal financial imperialism…Structural adjustment is not only a kind of distant relative of the empire, but its direct descendant.
“The governance and operational structures of the Bretton Woods institutions continue to represent contemporary geopolitical and economic realities rooted in colonialism and imperialism. »Professor Céline Tan, University of Warwick
Given the clear disparity between the mainstream critique of established international relations actors and proponents of the current global North-dominated system and those of social movements and their supporters, the pressing question is therefore what vision of an order reformed international will prevail: a vision that perpetuates or furthers the interests of international and domestic elites and finance capital with roots in empire, or that democratizes global governance, redistributes power between states of the South and North, is capable respond to the climate crisis, enable all citizens to claim their human rights and reverse the growing financialization of the global economy and the related commodification of essential public services?
Calls for a new international order are not new. In February 2014, on the occasion of the 70th anniversary of the Bretton Woods institutions (BWI, i.e. the World Bank and the IMF), and in the aftermath of the global financial crisis of 2008, Christine Lagarde, then director general of the IMF, delivered a speech in which she stressed the need for a “new multilateralism for the 21st century”. In her speech, she also stressed the need to ensure that the multilateral system which – she argued – has served the world so well since its inception by a small number of countries and colonial powers, has remained well-suited to address pressing challenges such as demographic trends, the climate crisis and growing inequality. Lagarde called for a more inclusive multilateralism, based on the “values of a global civil market economy” and stressed that the system must support “a financial system that serves the productive economy rather than its own objectives.”
As widely documented, the claims of the former managing director of the IMF about the benefits of the system have been widely and vigorously disputed (see Observer Winter 2020, Fall 2019; Report Bretton Woods at 75) both by the people who have suffered and continue to suffer from its consequences, but also by the volumes of scholarly work. Despite Secretary Yellen’s calls for a new “values-based” multilateral system that legitimizes the status quothe importance of responding to his persistent criticisms has only grown stronger in the aftermath of the Covid-19 pandemic and food security (see Observer Summer 2022) and the energy crises exacerbated by the war in Ukraine.
In response to multiple crises, supporters call for system reform, not a new Bretton Woods
In addition to persistent calls from civil society for the BWIs to accept their responsibility under international human rights law and recent documentation from the United Nations Conference on Trade and Development (UNCTAD) that commodity dependence remains a problem trap and has increase since 2009, it should also be noted that the so-called poverty reduction claimed by proponents of the current system is contested. To research shows that the vast majority of poverty reduction from 1981 to 2017 can be primarily attributed to China, which actively resisted BWI political orthodoxy (see Observer Winter 2017-2018). In other words, the current system has failed to deliver on its promises to reduce poverty and bring about the economic transformation that would allow citizens to claim their human rights and live within ecological limits.
Any effort to develop a new Bretton Woods must therefore tackle the inherently undemocratic governance structures of the BWIs by ending the gentleman’s agreement (see Background, What is the gentleman’s agreement), by radically adjusting their voting and advisory structures and by strengthening the capacity of countries in the South to influence their policies and programmes. A new Bretton Woods would also address the IMF and World Bank’s equivocal interpretation of their position within the United Nations system, where they refuse to accept their responsibility under international human rights law and force them develop a human rights framework and related policies.
A conference on financing for development could be an opportunity to make progress in these areas. As Farwa Sial of the Belgian civil society organization Eurodad has pointed out, “the current overhaul of the Bretton Woods institutions is driven by its most powerful members serving their own interests. A Financing for Development summit at the UN would be a much more egalitarian and effective framework, giving every country the opportunity to negotiate the draft of new rules and institutions governing global finance, economy and trade. This would be an opportunity to get out of this energy impasse.
In this context, the efforts of global social movements and allies such as those based in the Philippines Ibon International and the Asian People’s Movement on Debt and Developmentand women’s rights organizations such as Development alternatives with women for a new era to reframe the discussion and call for a people-centred, just and environmentally sustainable global economic order remain essential.
As Jason Braganza of the African Debt and Development Forum and Network noted, “A rules-based system can no longer ignore the voice of developing countries like Africa. The pandemic, climate, conflict and other systemic challenges are all evidence of Africa’s growing role in global politics, the economy and more broadly. Thus, any reform must have African leaders around the table as decision-makers and not as rule-makers. Indeed, Professor Tan pointed out that “a reformed international economic architecture would reflect the impact that industrialized countries and their powerful financial actors have played in creating collective global problems ranging from climate change to sovereign debt and financial crises to trade wars and military conflicts. The responsibility to deal with these crises must rest with these powerful actors and they must be accountable for their actions and make the appropriate reparations” (see Observer Fall 2020).
FfD4: A rare opportunity for concrete structural change?
While the exchanges at Eurodad 2022 conference in Brussels in June ranged from vaccine inequality to “Ensuring the primacy of human rights in times of systemic crisis”, discussions also took place regarding the importance of supporting calls for the likely fourth UN Conference on Financing for Development (FfD4) in 2023 to seek the urgently needed structural reforms to the international architecture.
While acknowledging that the UN system is not immune to the power imbalances on which the current global economic order is anchored, participants noted that a 4th conference could provide an important mechanism for structural changes. , like a UN tax agencya UN Debt Restructuring Mechanism or one global financial transaction tax. They pointed out that the governance structure of the UN – which, unlike the BWIs – allows each state to have an equal voice and has a unique ability to make legally binding decisions that affect the international financial architecture, makes FfD4 an important forum for collective action.
Participants in the discussion also recognized that, given the interests aligned on significant structural changes, as set out in the “Billions to Trillions” agenda (see Observer fall 2017), the World Bank Green, resilient and inclusive development framework and increased use of ESG investments as a tool for development, a real concerted effort by social movements, civil society, trade unions and progressive academics will be needed to counter efforts to use the “new Bretton Woods moment” to deepen the current failing model and take concrete steps towards a just economic system.