CHAPTER THREE - REFORMING THE BRETTON WOODS INSTITUTIONAL FRAMEWORK:
FROM ADAPTATION TO ACCOUNTABLE "REINVENTION"

2. TOWARDS A HALIFAX INITIATIVE

During last year's foreign policy review we heard repeated calls for the IFIs to change their ways, and the government's response has agreed that much still needs to be done. The compelling logic of reform has not been news to Canadian parliamentarians. In this regard, we have taken note in particular of the pertinent first recommendations of the June 1993 report of the House finance committee, which conducted a more extensive review of IFI operations, and Canada's participation within them, than we have been able to conduct in the short time available. These proposals were that: Canada "suggest to its G-7 partners that an independent review be undertaken through the G-7 to study issues facing the IFIs"; and that this review "should examine the respective mandates of the IMF and the World Bank".10

We believe that this recommendation should be revived for Halifax, but reformulated to give it sharper terms of reference and a definite time frame. It should also be emphasized that the larger long-term purpose of pursuing reforms to Bretton Woods institutional structures is to enable the IFIs, through their policies and programmes, to perform more effectively in achieving the global objectives of poverty reduction and sustainable human development that are accented in Chapter Four of this report.

Accordingly, the Committee recommends that Canada propose to Summit leaders a "Halifax Initiative for Bretton Woods Institutional Reform". A special G-7 Task Force would be created for that purpose and in order to seek the views of other countries. The Task Force would be required to report to the 1996 Summit on specific measures for achieving real progress on the following principal reform objectives:

• clarity of mandates;
• coherence while avoiding duplication;
• frugality and operational efficiency;
• transparency and accessibility to public review;
• accountability; and
• more representative and democratic governance.

We are mindful in regard to the above of the warnings of Professor Helleiner, and of the comment by Dr. John Williamson, senior fellow at the Institute for International Economics, that "the G-7 can no longer have the last word" on the IFIs or their reform. However, we are also convinced that unless and until G-7 governments - who collectively control the largest voting blocs within the Fund and the Bank - commit themselves to some serious "first words" for reform, action on a global scale is extremely unlikely to occur, no matter how many other worthy ideas pile up. The concluding chapter of this report will return to the crucial matter of broadening the process beyond this initial step in order to achieve a comprehensive result that carries global and democratic legitimacy.

Before moving to consider other important reforms to the policy frameworks of the IFIs, especially in regard to their effectiveness in reducing poverty and promoting sustainable human development, the Committee's initial six reference points for institutional reform need to be spelled out more explicitly. We are certainly not in a position to offer a definitive comprehensive "blueprint" for a "new and improved" Bretton Woods system (while accepting that the international demand for one continues to grow).11 However, picking up on some of the suggestions put to us, we believe that certain parameters of a thorough structural revision of the institutions are becoming increasingly apparent, and that in particular the following directions for action should be pursued by the special G-7 Task Force.