U.S. should lead institutions reform: Commonwealth

from Reuters

LONDON - The next U.S. president should take a lead in reforming the International Monetary Fund and the World Bank so they protect poor states and help them develop in a globalized world, the head of the Commonwealth said.

Commonwealth Secretary-General Kamalesh Sharma said the so-called Bretton Woods institutions should acknowledge the links between poverty, energy supply, the environment and food security -- and work to support marginalized states.

"The question of the leadership of America, and by America, of the whole multilateral system is an extremely important thing in the world today," said Sharma, a former Indian diplomat who became Commonwealth Head in April.

"If America leads the multilateral system, or gives indications that it is ready to do that as an equal but as a strong partner, I think its going to be a very useful development," he told Reuters in an interview.

Calls for IMF and World Bank reform have been growing as the organizations dominated by the U.S. and Europe face a crisis of legitimacy. Set up after the Second World War, there is a growing view they are out of date in a globalized world.

British Prime Minister Gordon Brown has championed the push for reform and he will chair a Commonwealth heads of state meeting next week to discuss how the international institutions should be changed to give developing countries a greater voice.

Campaigners such as the World Development Movement argue the Washington-based institutions have increased poverty in some countries, rather than alleviating it, by increasing their debt and imposing unsuitable economic policies.

The 53-nation Commonwealth groups mostly former British colonies including rich nations, Canada and Britain, emerging economic powerhouse India, poor African countries such as Sierra Leone and tiny island states like the Maldives.

RESPONSIBLE GLOBALISATION

Sharma said successful globalization in an ever shrinking world depended on ensuring marginalized and fragile states, mired in poverty without energy and food security, were given a "supporting architecture".

Soaring food prices have sparked riots in poor countries and emerging economies have been loathe to sign global agreements to limit carbon emissions arguing economic growth should be the priority to raise living standards.

"Basically instead of talking to countries about what their obligations should be, shouldn't we be asking what their capacities are?" he said.

"The outcome of what these institutions are doing has to be linked to what is their understanding of responsibility in globalization, which is to say giving support and protection where it would not otherwise be available."

Sharma said poor states might need investment for projects with a high carbon footprint, or equipment, knowhow and expertise. They might need insurance against natural disasters -- and there should be a facility to meet these demands.