FRENCH President Nicholas Sarkozy, in his keynote speech at the World Economic Forum at Davos, Switzerland January 28, 2010, echoed a populous call for a new Bretton Woods agreement to control exchange rates and the function of the dollar, according to the Financial Times of London; he intimated that this will be an agenda item when France chairs the G8 and G20 in 2011. It really was an attack on the International financial institutions.

In this vein, the French President issued an incisive assault on the structure of market capitalism, and felt that the currency exchange rate is the cause of serious inequities in the global economy. He argued that exchange instability and the undervaluation of some currenciesfor unfair trade practices and unfair competition, including the huge disparities in the global economy; for this reason, he argued for exchange currency control which would involve a new Bretton Woods agreement.

The Financial Times of London recently noted that many significant changes that impacted the management and regulation of the economy were due to cataclysmic upheaval. For instance, it pointed out that in order to finance military expenditures in Europe, the English came up with the idea of central banking in 1694; to finance the Napolelonic Wars, the British introduced the modern income tax system; and subsequently, the Great Depression between 1929 and 1935 and then the Second World War brought us to the Bretton Woods agreement which created the International Monetary Fund (IMF) for crisis lending, and the World Bank for development aid.

The Financial Times went on to say that these international financial institutions’ weaknesses in managing a changing economy continue unabated; the Financial Times asserted “But despite a torrent of rhetoric about a new Bretton Woods, the world ends the decade with much the same system as it began. The lesson is that institutional fiddling is not a substitute for political courage.”

Criticisms of the IFIs abound. Our own President Bharrat Jagdeo spoke about the dichotomy between the IMF’s public statements and what actually happens at the ground level; and that the IFIs’ missions negotiating power is disproportionate to that of the locals. There are others. Dr. Maurice Odle spoke about the lack of democracy in the IFIs. There is a report that indicated that both the IMF and the World Bank are tools of U.S. economic foreign policy, as the U.S. is one of the largest funding sources to these organizations. The Bretton Woods Projects accused the World Bank of disregarding the poorest countries; for instance, the World Bank reduced cash disbursements to Sub-Saharan Africa by $500 million in the last fiscal year.

The University of Iowa Center for International Finance and Development also indicated a series of criticisms: The World Bank has top-heavy bureaucratic structure; the World Bank funded projects that destroyed weak eco-systems, resulting in the dislocation of many people; several human rights concerns bedeviled a number of World Bank projects; the World Bank has a counterproductive loan culture where the projects were unresponsive to community needs. And the criticisms go on and on.

For these reasons, it is a welcome signal from President Sarkozy to demand a new Bretton Woods agreement.
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