Thank you, Mr. Chairman. Good morning.
I'd like to thank the committee for inviting the North-South Institute to offer its views on the issues raised by the government's annual report on the Bretton Woods organizations, the IMF and the World Bank.
Let me start by saying why multilateral organizations such as the International Monetary Fund and the World Bank are so important.
We live in a world facing a number of complex problems, some of which present emergencies and others are crises in the making. These include the HIV/AIDS pandemic and other health emergencies afflicting the world's poorest people and countries; the spectre of devastation from climate change; local conflicts and the threat of regional wars, or worse; huge and escalating balances of payments, among the United States, Asian countries, and Europe, that threaten the financial stability of the international economy; and enormous and growing disparities between the rich and poor, which are a consequence of inequitable globalization.
It is not possible to resolve any of these problems through bilateral aid, diplomacy, or military intervention. They are too large and complex even for the United States, the world's richest and most powerful country. Problems of such global magnitude demand multilateral solutions. In other words, today's most pressing problems demand that multilateral organizations, such as the United Nations and the Bretton Woods institutions, play key roles in their resolution. They do so by mobilizing resources from those around the world endowed with the greatest ability to help and by allocating resources to those facing the most pressing needs.
There is, of course, a catch. In order to be effective and efficient, the multilateral organizations have to be constantly monitored, evaluated, and made accountable for their activities, policies, and results. For that to happen, member countries must exercise constant vigilance and due diligence through their representatives at the organizations and through the officials who support them in capitals.
But accountability of multilateral organizations only starts with our officials, for example, with the Department of Finance's report on the Bretton Woods organizations. It certainly does not end there. Indeed it is essential that these reports be used as a platform for wider discussions, not only on the effectiveness of the institutions but on their very purpose and legitimacy.
Parliamentarians and civil society in member countries must be engaged in these discussions to ask not just whether the multilaterals are doing things right, but more fundamentally, whether they are doing the right thing. Typically, officials do not ask such questions.
Let me give you two examples. The report points to the fact that many fewer countries are now borrowing from the International Monetary Fund, undermining the financial viability of that organization. Most of the fund's remaining borrowers are the poorest countries, which need long-term development assistance, not the kind of short-term, balance-of-payment support for which the IMF was created. Yet the IMF does not consider itself to be a development agency. This has led to significant tensions between the World Bank and the IMF and coordination problems between those institutions—problems that we do not hear very much about in the report.
The reports alludes to the search by officials for financial solutions to the IMF's deficits, but the officials are not posing the more fundamental questions: Should the IMF continue to exist at all? If so, should its mission and mandate be drastically altered?
My second example relates to the turmoil currently engulfing Paul Wolfowitz's presidency at the World Bank. The issue I want to raise is that of the selection process for the World Bank president and for his counterpart in the IMF, the managing director.
Although the report states that Canada favours an open, transparent, and merit-based selection process, when push comes to shove, traditions die hard. In this case, traditionally the United States hand-picks the World Bank president and other countries rubber stamp the American candidate. Paul Wolfowitz, nominated two years ago by President George W. Bush, was a very controversial choice and hardly the best man for the job.
If Mr. Wolfowitz steps down, as many believe he should—and I agree with their assessment—the next president must be chosen through an open, transparent, and merit-based process. But it will take a considerable amount of pressure to make this happen, and that pressure must come from parliamentarians and civil society in member countries. Officials in Washington, Ottawa, and other capitals are unlikely to make this change happen without such external pressure.
Finally, I'd like to add that Canada has an opportunity to make a different sort of contribution at the IMF and World Bank from what it is able to do in UN agencies and other multilateral organizations. The boards at the IMF and World Bank comprise 24 executive directors, most of whom represent a grouping or a constituency of a number of countries. Canada's executive director represents Ireland and most of the Commonwealth Caribbean states as well as Canada itself. Similarly, our finance minister represents his counterparts among our Irish and Caribbean constituency members when he speaks at the policy-making committees at the spring and fall meetings of the fund and bank.
In other words, Canada has a north-south constituency consisting of both developed and developing countries. This enables Canada, if it so chooses, to play a more inclusive role by articulating and endorsing the positions of our developing country constituents. Other chairs at these organizations typically cannot do this. Nor can Canada speak for other countries at the United Nations, where it represents only itself.
Let me conclude. We welcome this opportunity to engage in a discussion on the international financial institutions, but the issues are many and complex. To do them justice, the standing committee should ensure more regular opportunities to have such discussions and provide sufficient time to allow greater depth in the discussion. Perhaps a standing subcommittee on international financial institutions should be re-established, or even more broadly, a committee that oversees all multilateral institutions dealing with economic and social cooperation. Multilateral institutions, in my view, are too important to be left wholly in the custody of our officials, as competent and conscientious as they may be. If these organizations are to do the right thing, as well as do things right, parliamentarians and civil society need to play a more active role in shaping their policies, activities, and impacts.
Thank you.
