Wednesday, June 1, 2011

Whither Europe

Since the end of World War II and the establishment of the Bretton Woods system, international development and finance has been rudely divided between the Americans and the Europeans. To the Americans, goes the head of the World Bank; to the Europeans, goes the head of the IMF. Now, in the wake of the Dominique Strauss-Kahn scandal, The Economist, of all papers, is calling for a radical change in that modus vivendi:
To begin with, the stitch-up, whereby the head of the IMF is a European and the head of the World Bank is an American, is a disgrace. . . . And the growth of emerging economies makes it even less defensible.
. . . Moreover, the case against appointing a euro-zone finance minister as head of the IMF now is overwhelming. The main issue facing the fund is the euro zone. The fund is supposed to be an impartial arbiter of good economic policy. It is the only organisation likely to force a rethink of the euro zone's failed strategy towards Greece, Ireland and Portugal.

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