The Canadian Parliament's committee on foreign affairs wants an historic accord on sweeping reform of the world's big government-funded international financial institutions to emerge from next month's G-7 Halifax Summit.
In a report this week, it urged the government to put this at the top of the agenda and start the process of reshaping institutions that were mostly created 50 years ago to deal with postwar reconstruction. Since then, Canadian taxpayers have put billions of dollars - through federal government contributions - into the IFIs, as the international financial institutions are called.
Deep changes are needed to make them more effective, less wasteful, less bureaucratic. A case can also be made for abolishing some entirely.
It's improbable, however, that the G-7 leaders will go this far. The power politics surrounding institutions such as the World Bank, International Monetary Fund (IMF), regional development banks and the like are pretty complex. It will be extraordinarily difficult to kill any off or even to make far-reaching changes.
Radical initiatives at Halifax are unlikely, says Professor John Kirton, the University of Toronto specialist in summitry who has been following the lead-up to Halifax closely. ''Nothing that heroic is in train.''
However, he does expect some significant, if not dramatic, agreements to strengthen the international financial system and speed up a reform process that's already partly under way. Certainly the timing is opportune. There is increasing fear about ever-turbulent currency markets.
''Mexico was a wakeup call,'' says Bill Graham, the Toronto Liberal MP who chaired the parliamentary committee that made 20 recommendations to the government in a unanimous all-party report. They include redefining the mandates of the Bretton Woods institutions. (This was the New Hampshire site of the postwar conference setting up the IMF, World Bank, and codes of conduct for the world's central banks.)
Graham says a key priority is more ''transparency'' - more openness in decision-making by IFIs that can have a major effect on national economies. Some IFIs are notoriously secretive - ''more than the CIA,'' he says.
There's also a need for frugality. Take the lavish spending on the London headquarters of the European Bank for Reconstruction & Development (EBRD), the newest IFI. This fiasco led to the president's resignation. Restraints are now in place. All IFIs must be made more publicly accountable and subject to outside scrutiny. The committee recommends a system of independent audits, and wants more timely, more adequate information given to parliaments.
Another priority is to redefine their mandates, reduce overlap, eliminate bureaucratic competition. The IMF now does some of the things the World Bank was set up to do and vice versa. The fight over turf can be ferocious.
Some changes are being made. In China, for example, the World Bank and Asian Development Bank have agreed to specialize in different sectors to avoid duplication. But some think regional development banks should become branches of the World Bank, especially as the private sector plays a larger role in development finance.
Finding ways to improve the stability of international capital and currency markets is set as another top summit objective - and will be the hardest to achieve. What's needed is better surveillance of countries' economies and an early warning system to prevent shocks such as the peso crisis.
The committee also wants a review of anti-currency speculation proposals, including the controversial worldwide 0.5% Tobin tax levy. Already branded as ''unworkable'' by Finance Minister Paul Martin, the committee fortunately didn't endorse the concept. ''All we're saying is that a variety of options should be looked at,'' said Graham, a bit lamely, admitting it's easier to analyse the problems rather than propose solutions.
For the same reasons, the Halifax Summit isn't likely to go down as a ''Bretton Woods Two'' - to use Kirton's phrase. Still, Prime Minister Jean Chretien and his officials have a great opportunity, as the hosts, to show leadership in putting forward sensible working proposals, setting a timetable for action, and accelerating the pace of change.
DNOTE (Ed. note) Neville Nankivell is The Financial Post's editor-at-large, based in Ottawa.
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