[stop-imf] U.S. upbeat on IMF quota deal, Europe holds out

[Robert Weissman]

U.S. upbeat on IMF quota deal, Europe holds out
Sat Jan 28, 2006 10:07 PM IST

By Stella Dawson

DAVOS, Switzerland (Reuters) - The United States is very optimistic it
can reach a deal to give emerging Asia more say in the International
Monetary Fund, but Europe insists that Washington gives up some power,
officials said on Saturday.

After talks with Group of Seven deputies at the World Economic Forum in
Davos, U.S. Treasury Under Secretary Timothy Adams said that financial
policymakers are making progress on talks over reforming the IMF's
voting structure.

"I am very optimistic," he said. "The U.S. agrees that the IMF should
evolve."

Emerging Asia, particularly China and India which now rank among the
world's largest economies as Europe's role fades, are pressing for a
larger say in the fund's governance.

Reform is expected be high on the agenda of the IMF's spring meeting in
Washington, as it reviews its role in a globalised economy where
developing nations have more weight.

But changing the voting structure is contentious. It threatens to
diminish Europe's dominant role in the 60-year old institution, which
was designed to police the world economy and provide emergency aide when
countries faced cash crises.

One suggestion is to consolidate the Europe Union into one seat to make
room for Asian countries. Also under discussion is changing the
weightings of votes, which are linked to the amount of money that each
country contributes, known as quotas.

But European Central Bank President Jean-Claude Trichet said Europeans
wants "fairness" -- code for saying that it will insist that if Europe
gives up power through a change in quotas, then the United States give
some ground too.

"A reduction in quotas would not be fair," Trichet said.

As for a single European seat, he said that while the ECB Governing
Council does not have a position on the issue, it currently sees limited
politicial integration in Europe as an obstacle.

"At this stage, clearly the sentiment of my colleagues is that it will
not fit with the present political framework of the European Union,"
Trichet said.

But he held out hope for future change, saying: "But again, this is a
process."

Adams gave no details of what type of IMF deal was under discussion
among G7 officials, though monetary officials here expressed confidence
a plan would be ready in time for the September annual meeting in September.

IMF Managing Director Rodrigo Rato has consistently said in recent
months that emerging markets especially in Asia, which play a bigger
role in the world economy than 15 years ago, need better representation,
a view he repeated again at sessions here in Davos.