the future coverage. of the. seven thirty am in moscow these iraqi headline violence erupts in the serbian capital belgrade as police clashed with the far right protesters outraged at the arrest the ride home a lot of for war crimes more than one hundred arrests were made as crowds of rock throwing demonstrators were dispersed by riot police with rubber but tongs those critical of the move to detain the former bosnian serb general say the government is treating wattages forty year membership. with fighting for their rights and dad's activists highlighting concerns over freedom of expression arrested for

getting down at the jefferson memorial in washington demonstrators sought to draw attention to legislation that they say contradicts the u.s. constitution of rights to freedom of assembly and speech. peacemakers g. eight leaders say it's time for khadafy to go as russia agrees to mediate a cease fire in libya to end the bloodshed moscow will send an envoy to the country to broker an end to the ongoing civil war. and we report on the georgian independence day rallies demanding the resignation of president saakashvili that ended in several deaths after demonstrations were really put down by government forces a growing number of governments are calling for an investigation into the handling of the protests including the u.k. u.s. and russia. and up next debate brewing over who will replace dominique strauss kahn at the helm of the international monetary fund cross-talk coming your way.

please. liz. can. follow in welcome to cross talk i'm peter lavelle issues of relevance and even legitimacy as the jostling continues as to who will succeed the now disgraced dominic strauss kahn at the international monetary fund many still question the usefulness of this global financial institution is the i.m.f. a political tool of the west or an unfortunate necessity. can. start. to cross-talk the

role of the i.m.f. today i'm joined by peter chola in london he is a program manager at the bretton woods project also in london we have daniel they nami he is a journalist and author and in cambridge we cross to jeffrey frankel he's a professor of capital formation and growth at the harvard kennedy school ok gentlemen this was cross talk that means you can jump in anytime one and i very much encourage it but first let's look at some of the issues surrounding this global financial institution. in the wake of the scandalous departure of its former had extra the international monetary fund has been faced with the tough task of self-examination as the money lending parthenon seeks to find a new managing director that was regarding its effectiveness and commitment to internationalism have continued unabated and i expect that the next president of the world bank will be an american in the next manager of the i.m.f. will be european broadly construed and that's the same pattern we've had since positions were established a pattern so ingrained in the fabric of the supranational giants and so resented by

emerging economies that representatives of brazil russia india china and south africa issued a joint statement calling the process of selection an obsolete britain convention and saying that adequate representation of emerging markets and developing members and the funds management is critical to its legitimacy and effectiveness there are other reasons that should prompt the i.m.f. to revisit its record and possibly revamp some of its policies just ask latin america which suffered a massive debt crisis in the one nine hundred eighty s. or asia which near them economic meltdown in the one nine hundred ninety s. all while the i.m.f. pushed those governments to adopt structural adjustment programs that consisted of to calling in economic reforms we've really been looking at this through our problems that our lives and most of our countries have not been subject i have met programs whether these are reasons enough to dismantle the institution and do away with the economic germany of the bretton woods system is still

a matter for debate presently the i.m.f. is the only global financial institution with billions of dollars at his disposal that proved quite handy during the recent financial crisis we are one shark away from a full grown crisis the financial crisis taught us that prevention is better than cure. we cannot afford to forget that lesson regional lending institutions can provide an alternative to the dominance of organisations like the i.m.f. but such spin offs can hardly wield the same political and economic power in the time of crisis nonetheless the world is changing very quickly and it remains to be seen if the i.m.f. from its current form will be able to keep up with the temple of our ever globalizing world charney for cross-talk r.t. . and ok and i think the daniel first and you could because you would have a proper vocative article a few days ago so i'm going to read one of the provocative sentences and i think it's the first sentence the i.m.f. has i.m.f.

as function more like a medieval court than a modern organisation danny what do you mean by that. well when i said i enjoyed the article i thought i'd look at it from first principles somebody really believes in democracy how would i look and understand the i.m.f. . and there are some ways in which it's very clearly undemocratic and some ways in which it's not so clear so on the clearest side i mean if i believe western european heads for fifty plus years and the next head is likely to be european as well i mean that's clearly under perfect the fact that america which has less than five percent of the world's population has a veto if because it's clearly undemocratic but also in other ways so for example one reason politicians really like the i.m.f. is that it often enables them to. abdicate responsibility for austerity so in other words if they screw up and there are problems with their economy or

even if there are problems which are not of their own making rather than take the blame for it they bring in the i.m.f. and they can say well if the i.m.f. is imposing austerity it's not really my fault i would really like to do it so it's a way of bypassing the democratic debate and the democratic process ok jeffrey in cambridge would you agree with that and i mean i mean just from a purely democratic point of view i did use got a pretty good point. well i would probably come out on the bottom line the same the same place which is i think it's time for a candidate from emerging markets but i disagree completely about the reason if you if governance of the i.m.f. were to be completely democratic it would be run like the united nations and it would be much less effective i think that emerging markets have earned. the right to have one of their own as a magic director of the i.m.f. and it's for a bunch of reasons and none of them are democracy ok here in london where do you come down on that is the is the is the i.m.f.

practicing the principles that it claims to be out of to uphold. well i did on your direct question though the answer is deafening are because they are because of agreement talk about what it was set up to do and that was to create high incomes to promote trade and to reduce unemployment and deal with social problems and it's certainly not what it's done is actually done the opposite but i have to say i do think democracy is important in our institutions and i think there are ways to create democratic institutions in particular accountable institutions which is an important element of democracy without having a u.n. style one nation one vote that i think you can certainly try that approach but if you look at most of the democracies in the world you look at the u.s. or even the way the european union is set up they'll operate on ways to have democratic accountability under multiple metrics of doing that so in the u.s. you have a congress and the senate in europe you have a european council which has multiple metrics of voting so you don't necessarily only have to have one country one vote like you might have at the u.n. you can have other ways of balancing that using. multiple majorities or double

majorities as a way to vote for things that the i.m.f. and that's one of the first things we've asked for in this new selection process for a new managing director because if you go strictly on the voting rights that are currently in place at the i.m.f. europeans have are are heavily overrepresented and will be able to install their candidate without any real debate about it and instead we need to have a system which gives a double majority of which need to devote to both economically weighted countries but also to a one country one vote system so that you can balance the competing interests and have much more accountability for the way the i.m.f. operates so i looked up the figures i mean if i'm not a mistake in brazil has less of a list of awaiting voting rights than belgium does i mean how can that be realistic ok a lot of people even say the doldrum isn't even a country anymore it's breaking up and brazil is up there is it it's charging out there economically i mean what kind of institutional loans are to stamp so. first

off it's governance of the i.m.f. like the united nations it's the members of the. government so you don't blame it on the institution and its members it has been recognized for a long long time that developing countries are emerging markets do not have adequate weight at the i.m.f. and the world bank and others spend a lot of words and communiques and rhetoric paid to that there have been a few steps in the right direction one is a creation of the g twenty the governance is moving in the right direction and the shares of the emerging markets are larger than they were before we still have anomalies like you said but the progress is in the right direction the important point let's keep our eye on the ball rather than talking a lot about a lot of principles for the very first time the merging market countries do have shot at the managing director of the i.m.f. and they won't get it if they don't unify behind a single candidate it's going to be european and it's going to be christine legarde who's perfectly respectable but if they don't unify behind a single candidate it's just not going to happen for elementary political reasons

that aren't democracy or west versus east or anything else ok peter if i can go to you i think the internet it's just being good. he poured in point here is not actually about which countries have which votes and what have they represent because i think if we look at the reality of the situation is many of the candidates that are mentioned as coming from emerging markets are equally problematic in terms of how they would run the fund as you would think of most of europeans pretty quick christine legarde so if you're talking about a candidate who's educated at the university of chicago with a ph d. in in orthodox not reckon on a switch as we've seen from the last five years based on theories which are completely flawed then we don't want that kind of person running an i.m.f. which needs to update its thinking and update its policies into the twenty first century and if you look at all the work that's been done across many countries looking at the development process you can see that there are many development trajectories and many development tracks which can use multiple policies and you talk about things like capital controls financial repression industrial policy all

right gentlemen i'm going to jump in here daniel i'd like to. so you earlier we heard but only you know is it not democratic and this has been debated on this program but what about its entire approach i mean the i.m.f. originated is something very different than what it's trying to do now i mean is he keeping up with the times and how the global economy is changing. i don't think it's keeping up the times at all no i mean he started in near our fixed exchange rates and clearly we no longer have fixed exchange rates but i think the more fundamental problem is that it tends to put stability over economic growth so low of course it pays lip service to economic growth. whenever there are problems the kind of immediate response is to try to stabilize things which might sound sensible but what happens in the ality often is that fundamental economic problems are on the solve and they just come in people coming back and back and back so you see that happen time and time again as i think all international institutions not just

the i.m.f. should really be focusing on strong dynamic long term growth that really should be their main aim jeffrey would you want to pick up on that do you agree or disagree with what we just heard here. well i mean to begin with of course choosing a managing director of the i.m.f. is going to is very different depending on whether you think the institution is everything it does is all wrong and you want to tear it down or completely change its aims. if question is different therefore the answer is going to be different and i believe that we've had a period of remarkable growth over the last fifty sixty years i think we've had countries that were very poor become rich and i think this is unprecedented in history and i think part of the reason for it is a global system of governance including free trade and other institutions and i think the i.m.f. has been part of that doesn't mean that the enough is done everything right but i think it is one that helps and i think if you talked to the eastern european

countries and others who have been forced to read jeff really jump in here one can feel it is time now i'm going to a break here after a short break we'll continue our discussion on the state party. did i kill innocent kid allies across the face of course and that's never answered . the song from the skull still with me i think of it every day. i feel the flashbacks from the memories. so much so long time i'm

just here trying to tell. i was. i was ashamed that i didn't. i was ashamed that i hadn't been a hero why i got my arm i got my legs off. but in the mind. i am what i want to be our nominee was a boy. about what i was going on once or i think. that i was a good soldier. but now most older on the other side and i think i'm just a good. will for. bringing you the latest in science and technology from the realms of. the future.

welcome back to rostock i'm peter would i'll remind you we're talking about the i.m.f. and emerging countries. we've only which is a break jeffrey made an interesting comment is that we've seen an unprecedented amount of economic growth over the last six years i guess we all agree my industry great recession began you will if i can go back to you again what a great examples out there with the i.m.f. help countries become rich. well i don't agree with the premise of the question i don't really think it's the i.m.f. and it's got just become rich i think it's misleading to look at the past sixty years as a whole i think if you look at the world economy since the early one nine hundred

seventy s. it's likely the west you can see that economic growth rates have tended to slow down and also when they have grown they've grown quite often because of extending a huge amount of credit rather than trying to work out how to have real dynamic organic growth i think that is a fundamental problem and what we've had in recent years is a tendency to try to back away from growth so i mislead is not the politicians will say of course i'm in favor of growth but we might damage the environment of course i'm in favor of growth but we want to make people happy of course i'm in favor of growth but what about inequality so what happens is that the dynamics of growth weakens and he's undermined i think that's what's really come to the fore in the last few years and that's something i really worry about peter if i know you're also in london he can't live what is there an example out there where the i.m.f. can wave the flag and say we did a good job here with this country or this situation. i think there's very few

particular in the last thirty years or thirty five years and that's the problem because where the i.m.f. has been the most heavily involved have been the countries that have been the slackest of the weakest performers over the course of the last couple of decades and the ones that have been the strong performers china india brazil are generally the ones who have not followed rigorously the i.m.f. said vyse of the world bank's advice the ones who experimented with their own kinds of economic policy in their own kinds of reforms and melded to form of some kinds of capitalism with some kind of state control or state regulation and that's really i think that's the lesson that's the lesson that's been drawn by the commission on growth a number other institutions that have looked at how developing countries have grown now i want to bring that back to what that means for the i.m.f. leadership right now because we're choosing a leader for the i.m.f. or i should say heads of state of europe are trying to choose their leader on their own and as they're doing that they're not thinking about what we want the i.m.f. to do for the next five or ten years and what we really want the i.m.f. to do and what i think it's added value as an international institution is is that

it can be there to serve as a neutral arbiter an independent voice on economic policies particularly in rich countries don't have to spent much too long focusing on developing countries and telling them how to run their fiscal and monetary policies and should be spending more time thinking about what's going wrong in the u.s. or in germany or in china and what's creating global imbalances and the i.m.f. singularly failed to do that in the last ten years it should have been out there saying look what's happening on this financial deregulation agenda is really dangerous you shouldn't be doing it and we need to stop these kind of policies otherwise it's going to blow up in our faces in the i'm a failed to do that because it's been in hock to rich countries and it's been in hock a special interest on wall street and instead we need to have an i.m.f. with an independent head who doesn't have any ties to be kind of special interest and you can be out there doing what's called an i.m.f. speak surveillance but can do really rigorously on the most systemically important countries as they call them meaning the u.s. . germany and japan and china and that's where the i.m.f.

needs to be focusing its attention and to do that you need somebody who's not from europe the u.s. tied or germany or japan to lead the institution all right jeffrey cambridge that's pretty a really amazing indictment there from peter in london do you want to react to some of those comments. well again i actually think we agree on the bottom line that. there are no eight excellent candidates for emerging markets and so that's and there who are. geoffrey and why is it it's the just like really it's not it's not the who's going to be i think we've gotten past that i mean it's the it is it's the ideology that's coming out of the i.m.f. because what we're peters said is that these countries are going very sick have been very successful but that's where the argument so head to head. let me add to the comment the united states over the last decade followed an irresponsible policies of the budget deficits during the bush administration and the regulation and all the rest of it did the i.m.f. say all that's fine because they were an ad hoc no the i.m.f.

article forward consultations the annual reports criticized us for that nobody paid any attention nobody cares about himself or the middle here but that's a matter of power politics has got nothing to do with who's managing director of the i.m.f. they said the right things but nobody cares there are certain power realities in the world and you can't blame them on the i.m.f. by the way so it's issue of growth so that's not true i don't want to learn here and they are going to this group deficits go ahead peter. the i.m.f. said very little about the american financial deregulation agenda there was an independent evaluation conducted earlier this year by the i.m.f. so an independent evaluation office which called the i.m.f. staff is susceptible to groupthink because they've been you know just wild by the american financial system and their deregulation agenda so i think i mean yes you're half right on on the fiscal side but on the financial deregulation side completely missed the ball jeffrey you want to do so if i can come in there the i.m.f. and i mean. that was draft that can i don't wish to read you jeffrey so let jeffrey

speak and then we'll go back out to daniel go ahead jeffrey. the i.m.f. cannot dictate to the u.s. you go look back and look at what they are and have said about housing prices five six years ago if it doesn't matter that's not going to have any effect. there are having an effect in europe now with our course which is a brand new thing or new for the last thirty years but let's talk about the last thirty years among the developing countries it is a miracle in history that asians and some other developing countries have gone from poverty to wealth in the last thirty years and i think that's part of a world trade system like i said free trade multilateral institutions of which the i.m.f. is a part it's completely a loser it's almost comical to say let's look at some country that the i.m.f. was heavily involved in ok not the u.s. because they're not heavily involved some country where they are exercising influence and look for a miracle of growth that the i.m.f. is like a doctor you know of course you see doctors around sick patients you can't make a correlation and say all these doctors there are you see patients therefore they

cause sickness of course they come in a crisis you can't judge them by saying they're there is seen in the vicinity of of crises ok daniel you want to jump in there. and well you know if i can come in there. first of all i'd completely welcome the rapid growth of china and india and brazil and other countries are moving favorite economic growth i would say the i.m.f. is not all responsible for that growth and that i agree with the other people in london that they'd be much more pragmatic but i disagree with peter in london is that i think this whole idea that we have. a free economy free market free trade is complete nonsense i mean whether or not you think that's desirable that does not describe the reality of the world economy for a very long time those things don't exist is very heavily regulated trade is very heavy state spending we do not live in a free market economy so to talk as good as if we do is nonsense even if you believe that we should only shouldn't i think this is the wrong way to look at the

question peter do you want to reply that it's already so it's about the downside of course it's really it's not either we move a lot farther in that direction but it's much freer more often than i was fifty years ago peter go ahead. sure but i think i think the porton point that i was trying to make is that it's not about whether it's free you are not free it's about degrees of of management and how countries can take their own domestic situations which are each unique and manage those and yes you know for example if you look at all the developments access stories you look at career you look at taiwan you look at china and japan they've all used a trading system to get where they want but they certainly are not by any means free market countries in any sense of the word and i think that's the important lesson is that the advice the i.m.f. was giving and the economic policies that i.m.f. economists top learned themselves at the university of chicago and other orthodox economics schools and then we're putting into that into economic policy advice to

developing countries are the wrong kind of policies and advice from most countries in the world and that you need to have very very very differential situations for each country and they're not going to and as we all now know economic theory is described by new liberal or the docs economic schools he's just floored it doesn't work with the way our real world economic systems work markets still but aren't perfect even though no no i agree with that kind of economic theory no no no i believe in a higher call milton friedman you might know but no one is pursuing that chicago university does not have the great influence but you give it credit for the people who really influential i really happening is that you've got a greening of the outlook of leaders of international institutions and politicians where they've taken up i dislike environmental ism to argue that we shouldn't grow at least we should be very very careful very cautious about growth so the real growth that we have over the last two years which are really welcome risks being

undermined by that and now look is being imposed by the i.m.f. by the world bank allow them to multilateral institutions it's not the chicago green school we should be worried about i. mean i don't recognize that that is true at the game. and i think right now let's take one of the one of the most important issues that guy in math is dealing with right now and that's around free movement of capital around the world and so you know ten years ago the i.m.f. or rich members of the i.m.f. let's be fair so rich countries that owned the i.m.f. were trying to push the i.m.f. to amend its articles of agreement to mandate free movement of capital around the world and that was rejected at the time and largely because the asian financial crisis hit and everybody said oh maybe we should take a break and not think about that right now and now but it's back again and again now the i.m.f. is having to think about what do we do about capital flows and do we manage them more carefully or do we let them flow more freely and i think what we're seeing right now is there is a huge debate at the i.m.f. it's going to be a very important topic for the next managing director to take up and to mediate

between the frankly the the orthodox economic thinking in europe and the us which is pushing the line that we must have free movement of capital and the more practical and you know you know problem oriented thinking that's coming out of brazil and others who are looking i want to give i want to say we're almost out of time gentlemen i want to give geoffrey the last word go ahead. well i think the capital flows issue i don't disagree with where it's coming from but that's not that's yesterday's war the i.m.f. now has moved more in a direction which i agree is is that under certain conditions like brazil's controls on inflows are the ones chile most famously had they taken some controls well targeted can be can be useful but that's really beside the point i want to conclude on the point that there is a chance if the emerging market countries could get together behind a single candidate already jeffrey literally. ran out of time completely out of time many thanks to my good city in cambridge and london and thanks for viewers for

watching us here n.r.t. see you next time remember prostitutes. can. still. be. mom.