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|  | SEPTEMBER 28, 2004
By Brian Bremner Asia Needs Seats at the World Tables The underrepresentation of China, Japan, and India at the IMF and U.N. hinders attempts to resolve critical global problems Let's get this straight. Asian economies have now amassed a regional currency stockpile of $2 trillion-plus and are pretty much funding a gaping U.S. current-account deficit approaching 6% of America's gross domestic product. Japan is the world's second-biggest economy, while it's a given that both China and India will be the mega-economies of the future. Overall, Asia is outstripping growth both in the U.S. and Europe in 2004 and will keep doing so in 2005, 2006, and 2007.... Well, you get the idea. If these statistics suggest a region that's dynamic, crucial to future world growth, and relevant to the great power forums -- such as Group of Seven (G7) summits, the U.N., the International Monetary Fund, and the World Bank -- they should. But Asia's ascendent countries are greatly underrepresented in these organizations. And that's not only wrongheaded but counterproductive when it comes to sorting through the big, burning issues of the age -- everything from international currency policy to terrorism. UNREASONABLE ABSENCE. It's true that when the captains of global finance gather in Washington on Oct. 1 for the annual meeting of the IMF, World Bank, and G7 industrial nations, a delegation of Chinese financial officials will be on hand. They'll certainly have plenty to talk about. International pressure on China to loosen the yuan's peg to the U.S. dollar is intense because critics charge that the link is set far too low and gives Chinese exporters an unfair advantage. China's banking system remains awash in bad loans. And if Beijing fails to rein in the country's overheated economy smoothly and touches off a sudden crash, that would be felt keenly among China's key trading partners in Asia and even Latin America. Yet given China's growing clout in the global economy -- it now boasts $1.4 trillion in annual output and is already roughly the same size as G7 member Italy -- it defies reason that the country doesn't get a permanent seat at this august table of rich-world policymakers. (Japan is already in.) Ad hoc visits such as next week's might be helpful. But if you really want to coordinate economic policies that benefit the rest of the world and China, top Beijing officials ought to be in regular contact with their peers in the world's leading economies. OUT OF TOUCH. The same holds true at the IMF and World Bank, where the top positions have been handed out religiously to U.S. and European economists and financial bureaucrats. Small wonder that these jobs are salivated over. The pay is fab, there's plenty of international travel, and you get to knock back scotch and sodas with Alan Greenspan in sunny locales. One reason Japan and other regional players often float the notion of setting up a separate Asian monetary fund is that they have little stake in the IMF. Resentment also remains over IMF austerity programs there were applied to Asian economies during the fabled 1997 regionwide financial crisis. Putting aside the question of whether the IMF programs of fiscal austerity to correct debt-burdened Asian economies were effective or not, a lot of regional economic talent that's underrepresented at the fund could have made a critical difference in assessing the political and social backlash created by such programs. Some have argued that Indonesia could have bounced back much faster if the IMF had a better sense of developments on the ground, for example. A DAFT DISPARITY. It's also hard to understand why Japan and India shouldn't be granted permanent seats on the U.N. Security Council. Japan is a huge financial contributor to the world body, but it but doesn't have veto power over critical policy calls. Some might call that taxation without representation. True, being on the losing side of a war didn't help Japan back when the U.N. charter was written. And, yes, Beijing, which does have a seat, would hardly be thrilled about its rival getting one, too. But efforts to expand the Security Council to include other influential players on the global scene, such as Brazil, India, and Germany, deserve serious consideration. All these post-war institutions look wildly out of sync with the current global economic realities. And in a world that needs quick and integrated responses to crises, whether they're economic meltdowns, weapons proliferation, or problems in regional hot spots, this disparity is more than a bit daft as well. It's time for a rethink on the restrictive admission policies that have left big and important chunks of the globe on the outside looking in. A little more inclusiveness is long overdue. Otherwise, count on the G7 and IMF to drift ever more into global irrelevance.  Bremner is Asia regional manager for BusinessWeek, based in Tokyo Edited by Patricia O'Connell
BW MALL
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