Europe in the IMF

BRUSSELS – Europe’s leaders never tire of reminding their constituencies, almost like a mantra, that the major emerging-market countries are overturning the existing global economic order. But when it comes to recognizing that reality in the world’s international financial institutions, they adopt a different tune. This is particularly true of the eurozone.

The eurozone as such has no representation in the international financial institutions. Instead, 12 eurozone countries are represented on the board of the International Monetary Fund via six different “constituencies,” or country groups. The two largest, Germany and France, have a constituency all their own. Ten other eurozone members are part of four other constituencies headed by Belgium, the Netherlands, Spain, and Italy. However, these four constituencies also contain more than 20 other countries, most of which are not even EU members.

Together with the Scandinavian and British constituencies, there are thus eight EU representatives on the IMF’s executive board. Given that the IMF’s Articles of Agreement stipulate that there can be only 20 board members, this means that 40% of all the IMF’s executive directors from the EU, with one-third coming from the eurozone.

The IMF is a prime example of the over-representation of Europeans in international fora. Counter-intuitively, however, the excessive number of Europeans actually diminishes Europe’s influence, because they usually defend national interests, which are often divergent. The net effect is that common European interests are not represented at all.