Most of the governments are striving hard to keep their economies running in a normal way, forcing them to pump hundreds of billions of dollars to keep smooth trade, business, banks, industries and so on going. The bailing out of the financial system in this scale has never been witnessed in the past, but even after all measures have been put in place, the recession has not shown any sign it will stop its assault on the lives of the people and the very existence of the biggest banks and corporate houses any time soon.
The effect of this terrible global recession has already crossed the boundaries of many nations, and it seems the global community would be directly affected by this global financial crisis. It is reported that in the US alone, more than five million people have become jobless in the past six months, and an increasing number of families have been rendered homeless in this period. Bankruptcy, insolvency and the closure of bigger banks, corporate houses, industries, business and companies have become a common phenomenon in the developed world, thereby directly affecting the economies of developing nations. It is because those countries are interdependent on each other and no single country is fully self-dependent. The continuing crisis in the capital markets worldwide, triggered by the continued falling price of shares, is another matter of concern for investors and the governments.
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Who is to blame then? Of course, the faulty financial system and fat cat executives who were awarded millions in perks and bonus for showing false profits are blameworthy. Less regulation, or no regulation, and the capitalist system of economy have also been blamed for this terrible failure. Many governments, therefore, failed to take concrete and timely action against the anomalies of the sectors in order to avoid any possible disturbances to the ‘healthy expansion’ of the sectors concerned.
In an effort to rectify past mistakes and keep the world’s finances capable of facing the current challenges, world leaders also vowed to restructure and reshape the new Bretton Woods conference with the goal of reshaping the global financial institutions, particularly the International Monetary Fund (IMF) and the World Bank group. When this institution was created in 1945, the world politics, balance of power, technology and global market were quite different to those of today. That is to say, there are developing countries, such as Indonesia for example, which are becoming economic powers outweighing the traditional economic powers of Europe . The oil-rich Gulf countries, which have been able to save billions of dollar revenue, have also gained a significant ability to influence the global economy. Therefore, the UK’s Prime Minister Gordon Brown has urged the global community to revisit the Bretton Woods conference, considering the economic and political changes the world has seen during the last sixty years. This proposal was further discussed in the G8 summit meetings and other significant gatherings of world leaders to combat the economic recession looming across the globe.
It was also reported that Brown also visited the Gulf countries to request they invest a part of their huge oil revenue into these institutions, a request warmly received by the Gulf countries. Besides this, there is a greater pressure to change investment policy and the operational structure of the bank, ensuring the active participation of emerging economies and curtailing the influence of a few developed countries. For example, the post of World Bank president falls in America pie, while the chief of the IMF goes to Europe. It is because these institutions were created by their political decisions and investments that enabled full influence in its operation; unfair in the present context.
In addition, the policies of western governments, the promoters of the institutions, always dictate the operation of daily affairs and the overall running of the institution, giving them the upper and unfair hand over the cost on the rest of the globe. For example, there are severe and consistent allegations against the bank for its failure to properly understand the issues of developing countries, particularly addressing the issues of poverty and understanding the local and political contexts of such countries, and for fulfilling the interests of a few developed countries at the cost of poor countries, thereby ignoring the legitimate aspirations of billions of people. Thus, we could conclude, the time has well-and-truly come to address the global disease of poverty through these institutions with equitable geographical representation, and introduce radical changes in their policies, modus operandi and institutional framework, with a view to an eradication of the multi-faceted consequences emerging from poverty.
