WITH the members of the Association of Southeast Asian Nations plus China, Japan, South Korea, Australia, New Zealand and India (Asean+6) now accounting for at least 20 percent of trade quotas in the global economy, an expert from a Washington-based think tank Peterson Institute for International Economics (PIIE) believes the time is ripe for a unified Asian position in the International Monetary Fund (IMF).
PIIE senior fellow Mohsin S. Khan said until now, the region has played a limited role in the IMF despite the fact that the Asean+6 already account for 19.2 percent of votes.
“Although Asian representatives are now becoming more assertive, when the chips are down, some Asian countries have still been reticent in pushing a unified Asian agenda in the IMF,” Khan said. “Asia’s role in the IMF to date has been limited. Given the size and strength of Asia in the global economy, it is evident that the region punches below its weight.”
According to Khan, the combined quotas of the Association of Southeast Asian Nations plus China, Japan and South Korea (Asean+3) already represent 15.7 percent of total quotas and their votes comprise 15.2 percent of total votes.
If only the Asean+3 voted as a bloc, Khan said it could already exercise a veto over decisions requiring the supermajority of 85 percent.
This position, Khan said, could be a major consideration especially when choosing a managing director for the IMF.
While this does not mean that an Asian should become the managing director of the IMF, he said the region has a strong claim to the position given that its now the fastest growing region in the world and has large lending commitments to the IMF.
“The remarkable growth of the economies in the region and their integration in global trade and finance bestow upon Asian states considerable potential clout in international forums and institutions,” Khan said.
Khan explained that Asian countries have kept the IMF “at arms length” mainly because of its role in the 1997 Asian Financial Crisis, when the relationship between IMF and Asian countries turned from cool to hostile.
After the crisis, Khan said the relationship changed from annual consultations to adjustment programs with the IMF. Further, many Asians became antagonistic toward the IMF after the crisis which persisted a few years after the crisis and IMF programs ended.
“This is partly the result of a conscious choice by Asian countries to keep the IMF at arm’s length, reflecting bitter memories of the IMF’s role in the Asian financial crisis. But it is also due to the fact that, at least until recently, Asia has not pushed to have a larger say in global financial circles, but has chosen instead to develop its own regional arrangements and institutions. But playing its rightful role in the IMF need not detract from regional arrangements. The global and regional institutions can easily work together in a complementary way,” Khan said.
