The crisis surrounding Ukraine shows that global governance is in a mess, but events there are merely a symptom of something larger.

The Crisis In Ukraine Is A Symptom 

Of Something Much Worse

by JIM O'NEILL

Without foreign financial assistance and economic support, 

Ukraine’s downward spiral could accelerate

My visit to Washington for the spring meetings of the International Monetary Fund and World Bank set me wondering whether western democracies are much guiltier than we are prepared to admit.

These meetings took place against the surreal background of the US Congress having failed to pass a bill allowing the IMF to reform in the way that was agreed back in 2010 – a strange decision, as the planned changes to the fund were led by the then-US Treasury Secretary, Tim Geithner.

Those proposals were to increase the IMF’s lending capability as well as to boost the voting share and seats of the major so-called “emerging economic powers” at the expense of others, including Europe.

Without the additional firepower, it makes it more difficult for the fund to intervene in economic crises, including the one engulfing Ukraine.

It is more than ironic that many of the Congressional figures who are calling for aggressive actions towards Russia over the Ukraine crisis are the same ones blocking the reforms of the IMF.

Without foreign financial assistance and economic support, Ukraine’s downward spiral could accelerate, yet there seems to be little recognition of this link.

The stalled 2010 agreement is based around the status quo of the world that existed at the end of 2008 . In those five intervening years, the world economic balance has continued to shift.

China has seen its nominal GDP double since 2008, so any agreements based on the relative size and balance of trade prevailing then are already very much out of date.

It is bigger than the combined GDP of France, Germany and Italy, three European countries which also have an intransigent stance about more substantial global reform.

Even though Brazil and Russia have especially disappointed in the past couple of years, both are within the top 10 economies by size. Collectively, the Bric countries are now nearly as large as the US and already quite a bit larger than the eurozone.

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