11 - Power versus Weight in IMF Governance: The Possible Beneficial Implications of a United European Bloc Vote

Summary

Abstract:

We discuss the nature of bloc voting and show that there is a fundamental distinction between voting weight and voting power. We analyse voting power, assuming that the G-7 countries form a bloc and find that it would disenfranchise all other countries while greatly enhancing the power of the United States, already more powerful than supposed. We consider some of the implications of a proposed reform of the voting system of the IMF in which EU countries cease to be separately represented and are replaced by a single combined European representative. The voting weight of the EU bloc is reduced accordingly. We analyse two cases—the Eurozone of 12 countries and the European Union of 25. We show that the reform could be very beneficial for the governance of the IMF, enhancing the voting power of individual member countries as a consequence of two large countervailing voting blocs. Specifically, we analyse a range of EU voting weights and find the following for ordinary decisions requiring a simple majority: (1) All countries other than those of the EU and the United States unambiguously gain power (measured absolutely or relatively); (2) The sum of powers of the EU bloc and the United States is minimized when they have voting parity; (3) The power of every other non-EU member is maximized when the EU and the United States have parity; (4) Each EU member could gain power—despite losing its seat and the reduction in EU voting weight—depending on the EU voting system that is adopted;