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United we stand, divided we fall
At a macro-economic level – or ‘big economy stuff’, as we prefer to call it – the lesson of the global downturn is that we are stronger together than we are apart.
February 7, 2011 3:01 by Samuel Potter
Kipp remembers years ago, there was a cartoon called Captain Planet. If we remember rightly, five characters had magic rings which meant they were entrusted with protecting the Earth, mainly from eco-type disasters. When they needed help (pretty much every episode) they all held up their rings (which symbolized earth, wind, water, fire, and heart) yelled out “Go Planet!” and a flying bloke painted blue arrived to help them. The key lesson was: working together we can achieve anything. Or something.
Why are we babbling away about this obscure, annoying and preachy sub-Teenage Mutant Ninja Turtles cartoon? Well because we needed an intro, of course, but also because it occurred to us that if there’s one thing economies should have learned from the downturn, it’s that we’re all in this together.
The UAE has recognized this, sort of, in a proposal to increase its contributions to the IMF. This week the UAE cabinet approved an increase in its share of the International Monetary Fund’s capital; according to WAM, the increase would make the share of the UAE the largest among Arab countries.
This is a positive thing; though the IMF has critics – the harsh terms of its loans have come under fire for undermining healthcare, environmental efforts, and access to food, and some of its interventions have been notably unsuccessful – the aims of the organization are well intentioned. The fund aims to work to stabilize exchange rates, and to be a resource for countries that find themselves with payment imbalances. It exists to strengthen the economies of member countries. It describes itself as “an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty”. The UAE’s decision to up its contributions is a commitment to that goal, and is deserving of praise.
Not that the move is entirely benevolent, of course. A greater investment is a powerful argument for a greater say in the IMF’s decisions. In October, the Ministers of Finance of the G20 (who control most of the IMF voting shares) agreed to reform the IMF and move around 6 percent of voting shares to major developing nations and emerging markets. The UAE will no doubt be hoping to benefit from such a restructure, though its position within the IMF will remain relative weak – the organization is dominated by the US, Europe, Japan and China (though Saudi Arabia, Canada and Russia are also countries with one of the ten largest voting shares).
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