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India seeks UN role in IMF, WTO

India asserts that removal of quota is an absolute necessity for the legitimacy of international financial institutions.

india Updated: Oct 03, 2006 15:05 IST

India has demanded a lead role for the United Nations in giving direction to comprehensive reform of the international financial, monetary and trading systems to end their domination by a few rich countries.

"The democratic deficit in the international financial architecture can only be addressed through a fundamental reform of the quota structure," Nirupam Sen, Permanent Representative of India, told the UN General Assembly on Monday.

Describing it as an absolute necessity for the credibility and legitimacy of international financial institutions, he said the UN should encourage further, effective and time-bound steps for the second stage of IMF quota reform without delay.

Voicing concern at the suspension of the Doha Round of trade negotiations, Sen said many developing countries' problems are not because of inadequate liberalisation or corruption but because developed countries set the agenda and went back on their promises, thereby ensuring that the history of trade negotiations would be a history of broken promises.

Demonstration of political will by developed countries will be required if negotiations are to be saved. A clear political direction to the World Trade Organisation that was not possible in the 2005 World Summit in spite of broad political support remains necessary.

The primacy of development on the global agenda can only be achieved if the UN takes a lead in setting the international economic agenda. The problem is the reform of the UN system, the reinstatement of the UN-driven and development oriented approach, Sen said.

What is needed is the UN overseeing the international economic agenda and promoting the reform of international economic institutions through a revitalized General Assembly, a strengthened Economic and Social Council and a reformed Security Council, he said.

In the IMF, the rich countries, in fact a single rich country has virtually a veto, Sen said in an obvious reference to the United States, noting that the most powerful country appoints the head of the World Bank and, with Western Europe, shares the top two posts of the IMF.

Unless developing countries managed to change things lock, stock and barrel, the organisation may pass out of their hands and they would end up as irrelevant spectators without any rights.