Who runs the IFIs?



taking a decision. This the case in both the World Bank and IMF on matters of capital
expansion, which must be taken by 85% majority, and can thus be blocked by the United
States alone or by the UK, France and Germany acting in concert. In such case, the
major shareholder, or a very small group of like-minded ones, exert by themselves a veto
power of considerable policy and political weight.

In normal circumstances, simple majority decisions are made by the Executive Boards of
these institutions2, where shareholders-appointed (i.e. member country-appointed)
Directors sit. They make decisions on lending, on policies or on organizational matters.
And these, one may argue, must reflect common denominators of country interests and
goals (institutional, country or region-specific). These “winning” coalitions of
shareholders, that vary from case to case, may have at their basis shared objectives (such
as preventing a financial crisis in a country or a region, or helping a specific country
develop economically and financially), or common national economic concerns in mind
(preserving the value of national assets, enhancing national commercial relations or
furthering the interests of nationals as suppliers of goods and services). Furthermore,
motivating coalition and majority building inside IFIs can also come from common or
parallel political interests. These can be regional (in cold war times, they were global) or
country specific, such as the protection, or simply the helping, of friendly nations (be
they neighbors, partners in regional arrangements, former colonies, strategic allies,
political friends).

Political positions inside these institutions are in many ways inevitable, given their
nature, ownership structure and functions. Despite claims of “functionalism” and
“content-based” decision making, which are standard regarding international financial
organizations, a good part of their decisions are inevitably political, in the sense that they
respond to the national interests of one or a group of shareholders, who can mass enough
support from the others to carry them through or to block them. There are famous
“historical” such cases, like the decision of the World Bank not to finance the Aswan
Dam in Egypt in 1955 or the decision of the IMF to extend a huge loan to Mexico in
1995 (supported by a credit facility of the United States and a Bank of International
Settlement loan on account of the Group of 10), that are normally rubricked as political
decisions. The former took place under pressure from the United States and the United
Kingdom wishing to “punish” in some ways President Nasser for his dealings with the
Soviet Union. The second was taken, largely on behalf of the United States (and the nine
other members of the G-10)3, set on helping a critically important country in the Western
Hemisphere.

Yet, to answer to the questions of what are, if any, the recurrent coalitions that emerge in
the governing boards of these institutions and of how frequently they hold sway, is more
difficult that it may appear on the surface. The practice of the Executive Boards of the

2 All these institutions are formally headed by Boards of Governors, which meet once a year, and thus
must leave to Executive Boards, always in session, the day to day running of the institutions. The key
decisions are demanded to the Boards of Governors, but are first effectively arrived at in the Executive
Boards.

3 As shown above, the G-10 countries have a majority in the shares of both institutions.



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