“Accelerate at the same time in terms of ecological transition and that of the fight against poverty”: this is the objective stated by Emmanuel Macron in an article published this Friday in the daily Le Monde. A doctrine, detailed in seven points, whose sine qua non condition would be the reform of the “Bretton Woods system”. “We must therefore review the governance of Bretton Woods,” the head of the table put on the table. It is impossible, according to him, to “finance the ecological transition on a global scale” without overhauling the World Bank and the International Monetary Fund (IMF), two institutions resulting from the Bretton Woods agreements signed in 1944.
“Eighty years after its creation, this financial architecture is undersized compared to the size of the global economy and population,” notes the tenant of the Élysée. A financial architecture that is “also largely fragmented”, failing to have “opened the door to emerging and developing countries in the governance of these institutions”. Hence the need to renovate the facade of this building erected at the end of the Second World War. “If everyone is not on an equal footing at the negotiating table”, “we will not be able to agree on objectives and financing” for the global ecological transition.
With this battle plan, the head of state is reaching out to the countries of the South to lead them in the ecological dance. Because Emmanuel Macron calls “reciprocally” to “review the governance of Bretton Wood” and “ask emerging countries to take their share of responsibility in financing global public goods”. In short, take a step towards them while waiting for them to take one for the planet in return. Because the great emerging powers are constantly demanding a reform of the major global financial institutions, resulting from the economic agreements signed in 1944.
At the time, forty-four allied countries gathered at Bretton Woods in New Hampshire in the United States to draw up the outlines of the post-war international financial architecture, and then signed the agreements giving birth to the “system of Bretton Woods. This is the historical period (1944-1971) during which the world monetary system was organized around the American dollar, then the only currency to be convertible into gold. The International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) were also created. The first institution must “make it possible to provide liquidity to countries in difficulty to avoid further devaluations, while the IBRD (today one of the components of the World Bank) must promote economic development,” explains the vie-publique site.
Except that eighty years later, the face of the globe has changed. With the emergence of economic giants like India and China, the bipolar world of the Cold War became multipolar. To the point that the great emerging powers and developing countries are pointing the finger at these founding texts of a global financial architecture, leaving them on the sidelines. “The absence of effective reforms of traditional financial institutions has limited the volume and terms of loans granted by existing banks,” Lula criticized last April. As the voice of the Brics (Brazil, Russia, India, China, South Africa and from January 1, Saudi Arabia, the United Arab Emirates, Iran, Egypt, Ethiopia and perhaps Argentina), the President of Brazil reiterates his group’s desire to “work for effective reform of the United Nations, the IMF and the World Bank”.
“We need a new Bretton Woods,” said António Guterres during the Summit for a New Global Financial Compact organized by Emmanuel Macron last June. “The architecture of the international financial system was built in the aftermath of the Second World War. Three-quarters of the states did not yet exist. Eighty years later, the system is outdated, dysfunctional and deeply unfair. The system perpetuates inequalities,” the Secretary General of the United Nations further clarified. A desire then clearly stated in the Paris Pact for People and the Planet resulting from the Summit: “To prevent fragmentation of the international community, we will transform the governance of the international financial architecture in order to make it more efficient, more equitable and better adapted to the contemporary world,” explains the text. If the quota system which determines the governance of the IMF should surely go under the knife, the new forms of the IMF and the World Bank still need to be determined. And to obtain the green light from the United States.