Emerging markets must demand more say-so concerning multilateral decisions surrounding the eurozone crisis as well as the vacancy at the World Bank, avoiding "second-best" solutions offered by the U.S. and Europe, says Mohamed El-Erian, CEO of Pimco, which runs the world's largest bond fund.
Today, the U.S. and Europe are working Europe's debt crisis out at less-than-optimal terms for the global economy.
Europe is busy pumping liquidity into its economy via low-interest loans made to banks, but such monetary policy won't solve the continent's underlying problem of too little growth and too much debt.
Bailout funds, meanwhile, have relied on the support International Monetary Fund, a multilateral lending institution, with emerging economies footing more of the bill these days.
The U.S. is the fund's top shareholder, and is likely letting Europe rely more on external support in exchange for Europe's support to keep a U.S. citizen in charge of the World Bank, another multilateral organization.
The U.S. has nominated Dartmouth College President Jim Yong Kim, although the Colombian Jose Antonio Ocampo and the Nigerian Ngozi Okonjo-Iweala remain in contention for the post and boast more development experience.
The U.S. traditionally picks the head of the World Bank while Europe picks the head of the International Monetary Fund.
"The international community risks settling for second best on two key issues to be discussed this month at global meetings in Washington, D.C.: the lingering (if currently somewhat dormant) European debt crisis, and the selection of the World Bank’s next president," El-Erian writes in a Project Syndicate column.
First, emerging market countries should postpone bolstering the IMF with bailout money unless the eurozone agrees to tougher policy mixes and secondly, the world needs to back one candidate for the World Bank spot, most likely Nigeria's Ngozi Okonjo-Iweala, El-Erian writes.
"Finally, they can put pressure on their Western counterparts by maintaining momentum on the alternative of a 'development bank for the South,'" El-Erian adds.
"This will happen only if emerging countries play their cards well, and if Europe and the U.S. do what is in their own best longer-term interests, as well as those of the global economy."
Colombia's Ocampo insists it's time for the U.S. the hand the baton to the other countries at the World Bank.
"It makes some sense for the developing world to be united in the final reckoning," Ocampo tells the AFP newswire.
While Kim is a strong candidate due to his medical experience, the bank must be lead by someone with development experience.
"He is a very competent doctor, but if we speak strictly about development experience, the Nigerian minister and I amply surpass him," Ocampo says.
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