As world leaders gather in Washington later this week to discuss coordinated solutions to the global financial crisis, the question of restructuring the international financial architecture, which has remained more or less what was decided at the Bretton Woods conference of 1944, has come up. Avinash Persaud has a sensible piece entitled “A Few Sensible Thoughts (and a Couple of Flippant ones) on the G20 Summit,” where he argues for the meeting to reach agreement on regulating systemic risks rather than micro-managing banks. But if the meeting goes beyond that and seeks to restructure international financial institutions (hence the term “Bretton Woods II”), what are the implications for Africa? Or more appropriately, what should be the position of African leaders on the summit? A recent article by Aaditya Matoo and Arvind Subramanian on India’s position spells out several ideas that could also apply in the African context. One particular point they make especially caught my attention. Just because the developed countries (still) have most of the money, it doesn’t mean that poor countries can’t play an important role in the negotiations. This was the same situation between the United States and Britain at Bretton Woods I, and yet Britain managed to shape the system to suit its interests thanks to its intellectual power. The situation was captured by the following rhyme: “In Washington, Lord HalifaxOnce whispered to Lord Keynes,It’s true they have all the money-bagsBut we have all the brains.”
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