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(Bloomberg) -- http://www./news/articles/2015-03-30/summers-says-u-s-imf-inaction-gives-china-s-aiib-legitimacy Former U.S. Treasury Secretary Lawrence Summers said congressional inaction on a plan to overhaul the International Monetary Fund has helped China gain support among other countries for its own regional development bank. http://www./news/articles/2015-03-30/summers-says-u-s-imf-inaction-gives-china-s-aiib-legitimacy “They can quite legitimately ask, ‘excuse me, you guys have had 5 ? years to support a reasonable role for us in the IMF, and you have not done it,’” Summers, a Harvard University professor, said at a campus forum in Cambridge, Massachusetts. “So we have basically ushered in that change with legitimacy on China’s part, and it is a terrible reflection on our political system that we have not been able to find a compromise.” European nations including Germany and the U.K., along with other U.S. allies such as Australia and South Korea, are seeking to join China’s new institution in defiance of U.S. warnings that it may lack the standards of institutions such as the World Bank, based in Washington. While China made it clear it would welcome the U.S. in the Asian Infrastructure Investment Bank, the U.S. still prefers to collaborate through existing international financial institutions, a U.S. Treasury official told reporters in Beijing on Monday after Treasury Secretary Jacob J. Lew held a day of meetings there with leaders including Premier Li Keqiang. China, the world’s second-largest economy, currently ranks sixth in its voting shares at the IMF, behind Japan, Germany, France and the U.K. Under a plan forged in 2010, China would jump to third, while India would climb to eighth from 11th and Brazil would move up four spots to 10th. Global Order“While we have all this rhetoric about shaping a new global order -- the truth is that China still only has 2.5 percent of the vote at the IMF -- and we have taken the position unsuccessfully that China should not be able to start a global development bank to do infrastructure in Asia,” Summers said. Republican lawmakers in the U.S. Congress have declined to approve the changes that would recognize the growing economic might of countries including China, India and Brazil. Most of the IMF’s 188 member nations support the 2010 plan, as does the Obama administration. The lack of U.S. approval for the IMF changes is also “holding down the capacity of the IMF to add confidence to the world at a moment when there are substantial questions in emerging markets,” Summers said. “It is a symptom of a broader problem, which is that we have great difficulty getting the executive branch and the legislative branch together on international organizations, international trade agreements and the kinds of steps that are necessary for the United States to be a leader in the global economy,” he said. To contact the reporter on this story:
Brendan Murray in Washington To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net Gail DeGeorge, Alister Bull |
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