WASHINGTON — What a difference a year makes. Spring was in the air in Washington — both physically and in the economic metaphors — at the meetings of the International Monetary Fund and World Bank late last month. The fog of crisis that pervaded a year ago has largely been blown away. IMF predictions that global growth will be 4.2 percent next year put cheerful makeup on the economic picture.
Nevertheless, the bags round the eyes of Dominique Strauss-Kahn, or DSK as everyone calls him, the IMF managing director, have gotten deeper. Discussions on and off the record with participants at the meetings and key backroom players suggest that deep fissures and flaws still exist. Politics — and the pettiness and greed that go with it — is the problem at virtually every level, from the big institutions themselves down through the member countries.
One of the main achievements was that the World Bank had won its first capital increase since 1988, a significant boost of $86.2 billion, of which $5.1 billion will be paid in, subject to legislative approval by the member countries. The overall capital increase includes a general and a selective tranche that will allow a significant reshuffling of the shareholdings in the bank to give China a clear third place with 4.42 percent of the voting shares (up from 2.78 percent) ahead of Germany and behind only Japan (6.84 percent) and the United States (with a veto-wielding 15.85 percent).