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Bretton Woods II conference FAQs
23 October 2008
As the world’s most powerful leaders propose a global economic reform summit – a Bretton Woods II – Eurodad publishes a guide to what is being planned, what it means, and what civil society groups are demanding
1. What was the original Bretton Woods conference?
In June 1944, 44 governments met for 22 days in Bretton Woods, New Hampshire, U.S.A. at a meeting known as the United Nations Monetary and Financial Conference. The meeting was intended to agree a new institutional architecture to improve inter-governmental economic and monetary cooperation after the war. It gave birth to the International Monetary Fund and World Bank. It was also supposed to initiate the International Trade Organisation, but this was not ratified by member governments until the 1990s, when the World Trade Organisation was established.
2. Who has called for a new conference?
Several political leaders have gone public with demands for a Bretton Woods II. Heads of Government from 11 Commonwealth countries issued the Marlborough House Statement on Reform of International Institutions, in June. This called for wider international support for an international conference to redefine the purposes and governance of the Bretton Woods Institutions. The statement was signed by leaders from Guyana, Mauritius, Maldives, Sri Lanka, Tonga, Trinidad and Tobago, Uganda, United Kingdom, Tanzania, Ghana, and Malaysia. In September, French President Nicolas Sarkozy called for a “global summit” to rebuild “regulated capitalism”. This was reiterated in mid-October in the G8 leaders Statement on the Global Economy, calling for a “leaders" meeting with key countries at an appropriate time in the near future to adopt an agenda for reforms to meet the challenges of the 21st century.” US president George W. Bush and UN Secretary General Ban Ki-Moon have more recently added their voices to these calls.
3. Where will the new BW conference take place?
While there are expected to be a series of summits, the first will take place in Washington. Parallel to this, however, on October 21, the President of the General Assembly announced the appointment of economics Nobel Laureate Professor Joseph Stiglitz as the Chair of a high-level task force to review the global financial system, including major bodies such as the World Bank and the International Monetary Fund (IMF). The composition and the precise terms of reference of the task force will be announced soon after the Interactive Panel on the Global Financial Crisis to be held in the United Nations on 30 October 2008. In addition, the Doha meeting for financing for development has also raised the possibility of a "a major international conference to review the international financial and monetary architecture and global economic governance structures".
4. When will the new BW conference take place?
George Bush announced on October 22 that the first meeting will take place on November 15. A series of summits is likely to follow, although their date has not yet been announced. Civil society organisations and some officials argue that refounding the Bretton Woods system cannot be done simply at one meeting (the first meeting took 22 days). This first meeting should simply initiate a longer inter-governmental process. Meanwhile, other groups are pushing for at least an outcome to initiate a more inclusive process from the Doha meetings on Financing for Development at the end of November.
5. Which governments will be invited to the new BW conference?
The formula will be "G-7 plus". In announcing the summit, US President George Bush said that summit would bring together members of the G-20. The G-20 is made up of the G-7 plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, and the European Union. The IMF and the World Bank also participate in G-20 meetings. The G-20 was set up to respond to the financial turmoil of 1997-99 through the development of policies that "promote international financial stability". The G-20 comprises countries considered to be systemically important, but omits over 170 governments (192 governments are members of the United Nations).
6. What issues and institutions will be up for discussion at the proposed meeting?
There is no official agenda for the meeting as yet. German Chancellor Angela Merkel and French President Nicolas Sarkozy said “Bretton Woods II” should bring about “genuine, all-encompassing reform of the international financial system”. The Council of the European Union sees the meeting as “tak[ing] early decisions on transparency, global standards of regulation, cross-border supervision and crisis management, to avoid conflicts of interest and to create an early warning system, so as to engender confidence among savers and investors in every country.” In announcing the meeting, the spokesperson for US President George Bush said that "leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes, and, in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world’s financial sector". UK Prime Minister Gordon Brown, in a mid-October speech, set out several principles. These include transparency (internationally agreed accounting standards, credit insurance market standards), integrity (credit agencies, executive pay), responsibility (board member competency and expertise), sound banking practice (protecting against speculative bubbles).
For the new international architecture Brown and others are discussing an effective global early warning system for risk prevention, globally accepted standards to supervise cross-border capital flows and the activities of global firms, plus stronger institutions for cooperative action in crises. For CSOs it will be important that equity as well as stability is discussed at the conference and that fairer rules are developed for aid, debt, trade, investment, taxation and capital flight. The governance of the international financial institutions must be radically changed, fair debt workout mechanisms introduced, and much more.
7. What is the link between the BW conference and other inter-governmental processes such as the UN Financing for Development (FfD) process or the regular G-7/G-8 processes?
There is no formal link – the proposed BWII conference is ad hoc. However the implicit link to the G-20 process is strong, with no clear link with any UN processes. In fact Ban Ki-Moon offered the UN as the meeting place for the first meeting in New York, but the US refused. UN officials within the FfD secretariat have also been pushing publicly for making links to the FfD process, and civil society have been pushing for such a meeting under the auspices of the UN. The G77 and Rio Group are supposedly in favour of such a move, while the G24 are hesitant to push a process through the UN. Regardless, there is a danger that the smaller meeting will in fact reinforce the power of the G-7 and the G-20, and further undermine the more inclusive UN FfD process which will have its summit in Doha from November 29 - December 2. UN Secretary General Ban Ki-Moon has commented: ''I strongly believe that holding the summit at the United Nations, the symbol of multilateralism, will lend universal legitimacy to this endeavour and demonstrate a collective will to face this serious global challenge". In Geneva, UNCTAD Secretary General Supachai Panitchpakdi also said that the UN and a wider variety of countries should play a significant role in talks to reshape the international financial system so that it can better cope with spreading turmoil and a looming worldwide recession.
8. What civil society statements have been issued on the Bretton Woods Institutions and the current process?
A new statement, prepared by organisations from across the world, calls for an opening of the process to discuss solutions for the world's financial system.
Statement on the proposed “Global Summit” to reform the international financial system. Sign it by 28 October.
Previous civil society calls to abolish or transform the international financial institutions include:
For more information on which civil society groups are working on the World Bank, IMF and related institutions, and what they say, see IFIwatchnet.
9. What opportunities for citizens’ action exist around the process?
Citizens groups are signing the statement calling for an open process. This is a major and rare opportunity to make proposals for a new financial architecture. It is an excellent time for citizens’ groups to make proposals about policies and about institutions that are equitable and inclusive and break decisively with the current model.
The current economic model and crisis have caused major difficulties for citizens worldwide, through unemployment, housing dispossessions, rising food and other prices, reduced remittances. These and other effects are likely to continue. The depth of the current crisis and the fact that it has started in the most liberalised economies in the North mean that it provides a rare and important opportunity for mobilisation and education towards a more stable, equitable and accountable economic model and institutional framework. Without citizens’ mobilisation little change will come.
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