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At first sight, everything seemed the same as usual. But, taking a closer look, the ritual annual meeting was different this year from all the previous ones. Previously, the IMF was a forum in which rich countries told poor countries to get their finance in order. Now, the Group of 24 demands the Fund’s "surveillance of advanced economies and the evaluation of their vulnerabilities". Brazil and India are now the ones demanding the IMF to act in order to settle finances in the United States.

At first sight, everything seemed the same as usual. Four blocks away from the White House and over a long weekend, traffic was blocked at H Street between 18th and 20th to allow the sister Bretton Woods institutions created seventy years ago – the World Bank and the International Monetary Fund (IMF) – to receive Finance ministers from all around the world to hold their joint annual meeting. Demonstrations - non-violent and therefore not televised -, tens of cocktail parties and diplomatic receptions, hundreds of police officers and bodyguards, and huge posters displaying photographs of poor women and children, on whose poverty discussions were held, did not fail to be present. But, taking a closer look, the ritual annual meeting attended by men in dark suits – and only a few women – who decide on global finance was different this year from all the previous ones.

Previously, the IMF was a forum in which rich countries told poor countries to get their finance in order, not to spend more than they could afford, to balance their accounts… now, the Group of 24, which represents the developing countries, demands the Fund’s “surveillance of advanced economies and the evaluation of their vulnerabilities”. Brazil and India are now the ones demanding the IMF to act in order to settle finances in the United States, where financial markets are in turmoil and the crisis in the housing sector was unfolded, now threatening to expand to Europe and from there to the rest of the world.

Previously, all eyes were on the “locomotives” that would pull the train of economic growth and which were invariably the United States, Germany or Japan. If these economies grew, poor countries would find markets for their products and would thus also grow. Nowadays, according to World Bank and IMF reports, the locomotives are China and India. It does no longer matter whether the US or European economies become stagnated, poor countries will continue to have markets and good prices for their commodities in Asian emerging powers.

Previously, the World Bank was the main source of finance for developing countries. Now – actually, for the last ten years – poor countries are paying the Bank (by way of interests and amortization of previous debts) more than they get from it by way of new loans or grants. Money flows upside down and while the World Bank’s coffers remain full, it has no clients who could borrow from it since countries prefer to receive grants from China or issue bonds rather than submitting themselves to the Bank’s complex and often humiliating conditionalities. In order to loan the surplus it should not have, the World Bank has further reduced the interest rates on its credits, it is opening up windows to loan directly to provincial or municipal governments, and intends to offer consultancy services as a way to avoid staff cutbacks.

Previously, the IMF was an advocate of globalization. Now, according to the widely mentioned headline of the Wall Street Journal, it “fuels critics of globalization”, by arguing in the 2007 edition of its main publication, the World Economic Outlook, that technology and foreign investment boost income inequalities all over the world . What part of globalization is indeed responsible for inequalities has turned into the object of heated discussions. The Financial Times says it is not free trade, while bloggers and business media from the US West Coast (Silicon Valley and surrounding areas) are tearing their hair out in view of the possibility that the blame was to be put on technology and no longer accuse the IMF of “neo-liberal” but of “neo-ludist” tendencies, in allusion to the early 19th century movement that blamed machines for causing the misery of workers.

Contributing to this confusion is the fact that the Bretton Woods Institutions are in the process of changing leadership. Robert Zoellick, former US trade representative and former executive at Goldman Sachs (the same as Treasury Secretary, Hank Paulson) was appointed by George W. Bush as World Bank president less than four months ago, replacing the neo-conservative Paul Wolfowitz, leader of the war against corruption, who had to resign over charges of nepotism. At the IMF, the former French finance minister, Dominique Strauss-Kahn, known as DSK, will take office as Managing Director on November 1, taking over the post left by Rodrigo de Rato, who is “leaving a sinking ship” according to the scathing interpretation of the British newspaper The Guardian of his resignation “for personal reasons”.

In search of support for his nomination, Strauss-Kahn had promised middle and low income countries a substantial reform of the IMF voting system, introducing the use of a “double majority” decision-making structure. Both a majority in the present weighted voting system (17 per cent for the United States and 1.4 per cent for Brazil) and a majority of members would be needed in order to approve a proposal. Thus, poor countries, which are the vast majority among the IMF’s 185 members, would be granted a certain veto power provided they reached an agreement and voted together. However, a rumour began to spread during the meeting – which was not denied by DSK – that the “second majority” would be referred to Board members. The IMF has 24 Executive Directors. The United States, Germany, France, the United Kingdom and Japan have each one of them a director “of their own”, but the fifty African countries have only two. With a double majority of directors – instead of the number of countries represented by each director – the Third World cannot possible get an equal vote share.

Discontent was manifest in the corridors. In the meantime, Zoellick, who is an experienced negotiator, came off well from the comparison between his diplomatic skills and those of his belligerent predecessor, marking an innovative and polemic profile, with a controversial proposal aimed at resorting to grants (not loans) provided by private sector companies to finance aid programmes in Sub-Saharan Africa.

To end up channelling the business philanthropy to the poor through the World Bank when there are so many private foundations seems illogical and many questions remained unanswered. At a time of uncertainty, in which investors and the public demand certainties, the annual meeting of the Bretton Woods Institutions drew to a close with more doubts than when it was opened. An upside down kingdom.

This article was first published in Spanish language by Uruguayan local newspaper

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