October 2009 (GEAB N°38)
With one third of IMF voting power, the Europeans have the key to reorganizing it and making room for the BRICs. As they clearly indicated that they didn’t want Washington to negotiate in their name, without any authority to do so, they only have one possibility left: negotiate directly with Beijing, Moscow, New Delhi and Brasilia. Indeed “not moving” is no longer an option given the increasing pressure exerted by the events linked to the crisis.
The range of possible choices is not very large. In fact, in order to avoid a stalemate, the only viable solution would for the US to surrender its right of veto36 (and to reduce its voting power to 10 percent) and reduce the EU’s share of the vote to 25 percent. If we base the calculation on each country’s share of the global economy averaged over the last decade with decennial recalculations, mathematics should help in implementing changes. In 2010, various considerations in relation to the financing of US deficits should help to find the necessary compromise.
The role played by the Europeans in this regard will be crucial. Not that they will pro-actively offer a new vision, but they will be reacting to a number pressures (from the US on one side, and from the BRIC on the other).
The new Japan should prove an influential ally for the EU in these negotiations. Indeed Tokyo has now decided to move closer to Beijing and the rest of Asia.
Finally, as previously mentioned, the current acceleration of events due to the crisis, enables us to envisage the holding of an EU37-BRIC meeting in the course of 2010 with a view to making the new global equilibrium public. Even if they were not very successful in pushing forward their interests at the last Pittsburgh G20 summit, the EU’s unanimity against Washington’s stance came as a relative surprise. The crisis, millions more jobless and the fall in the dollar will unfortunately be good enough reasons to « stimulate » the European’s will in this regard.
Most surprising is that, obviously, the Chinese, Russians, Indians and Brazilians, seem to be waiting for this opportunity to start working out together the emergence of a post-crisis world.