Trump dominates IMF meetings for all the wrong reasons

As the world’s finance ministers, central bank governors and investment bankers dispersed from Washington DC at the weekend after the IMF-World Bank annual meetings, a sense of oppression hung over them.

  • By Toby Fildes
  • 17 Oct 2017
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Not just from the heavy weather being whipped by Hurricane Ophelia in the Atlantic — or even any effects of over-indulgence at the heavy round of parties.

Instead, many recognised a dreadful irony. As the most international and multilateralist crowd on earth gathered for the meetings, all they wanted to discuss was protectionism and the end of Pax Americana.

As has become all too obvious, the administration of President Donald Trump is retreating from the international institutions that have played a central role in preserving world order and advancing economic progress since the end of the Second World War.

Since his election last year, Trump has rebuffed World Bank requests for extra funding, removed the US from the Trans-Pacific Partnership, a multilateral trade deal, and questioned its commitment to Nafta.

As the weekend went on, it became clear that the multilateral development banks — and their future — had become the main subject of the meetings, rather than just the conveners.

Many talked of the need for a fresh approach, noting that the US was tired of having to support other countries and playing such a central international role.

Fresh approach

One voice calling for a new approach to international development, in what many said was becoming a multipolar world, was China. It sent a small army of development bank officials, politicians and civil servants to this year’s meeting.

Shi Yaobin, China’s deputy finance minister, urged nation states to “strengthen international co-operation”, noting that “no one country alone can solve all the problems we are facing now”.

Jin Liqun, chairman of the Beijing-based Asian Infrastructure Investment Bank, said it was inevitable countries like his would contribute more to global trade.

“Over the past 70 years, the world has benefited from valued US support,” he told GlobalCapital sister paper GlobalMarkets. “But as time moves on you need more help from donors, supporters and contributors to benefit the whole world. China needs to play a bigger role in international and financial areas.”

Many hope this is just a blip — that the US’s retreat from the world will prove temporary. “Is it really responsible for America to truly withdraw from multilateralism?” asked Jin. “Given the scale of the US economy, I wonder if it is possible for the US to truly remove itself from multilateral co-operation.”

We'll always have Paris?

And then there was discussion over Trump’s decision to take the US out of the Paris Agreement on climate change and what the world should do about it.

It was here that a little hope appeared. 

Delegates were greatly encouraged, some even inspired, by America’s We Are Still In movement. Co-ordinated by civil society groups, the initiative has amassed signatures from 2,300 state governors, CEOs, tribal and local government leaders and heads of universities, who are determined not to be turned aside from pursuing “ambitious climate goals”. 

Organisations backing the drive include the states of California, New York, Virginia and North Carolina, as well as the big tech giants — Facebook, Apple, Amazon, Netflix and Google.

Trump’s actions have acted as a call to arms — for the other side. Indeed, he has arguably helped to bring the topic of climate change to the kitchen table in American households and to the boardroom tables of US businesses.

And not just in the US. Large emitters, like China, India and the EU, have since reiterated their commitments to the Paris Agreement. In Europe, France has led the clarion call to work together to patch up our battered planet.

Trump’s actions are undoubtedly frightening. For the time being, the Western world can no longer rely on such a stable and predictable, internationally active US as it has been used to.

But, for better or worse, the past year has also shown that some important international work can get done without the White House behind it.

When the US Congress refused to ratify the Kyoto Treaty in 1997, the fight against climate change was put back years — even though the EU carried on with its commitments.

Trump pulling out of Paris has not led other countries to lose momentum at all.

Never too late

Of course it is not too late for the US to get back in the game. As most delegates in Washington were quick to point out, they would much rather have the Americans pulling in the same direction.

Werner Hoyer, president of the European Investment Bank, and a candidate to be Germany’s next minister of finance, seemed to sum it best up, when he told delegates he still believed in the wonderful heritage of the US. 

“America gave us win-win situations, multilateralism, enlightened rule and working to achieve harmonious goals,” he said. “It is this benevolent America we need, now more than ever.”

  • By Toby Fildes
  • 17 Oct 2017

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