Plans pushed by the US to boost China’s influence in the International Monetary Fund could be to the EU’s detriment and potentially divide Member States.
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Europe’s current share of 23% of quotas is roughly equal to its share of the world economy. The US, on the other hand, represents 30% of the world economy but only 17% of the quotas.
Because the quota system has not been revised for years, emerging economies such as China, South Korea and India are grossly under-represented. For example, although China’s economy is now double the size of Belgium and the Netherlands combined, both European countries continue to have a larger quota than China.
De Rato requires backing from 85% of the IMF for his two-stage reform programme to rebalance voting power. But the proposal is encountering resistance at various levels.
India is unhappy with the plan as it is not included in the first-phase increase and doubts that developed countries will agree to give up their quotas in the second stage.
Poor countries in Africa are also opposing the reshuffle, as they fear a loss of power in an organisation that often dictates their economic policies.
Resistance is also coming from Europe which, as a whole, would lose voting share to Asia and the United States.
The proposal is also threatening to divide the EU internally. Belgium, the Netherlands and Scandinavian countries are opposed as they would lose voting power. But Spain, Ireland and other rapidly growing countries in the bloc would benefit from the reform.