Early this week, a news headline from Bloomberg and The Wall Street Journal caught my attention regarding lobbying the BRIC countries (Brazil, Russia, India, China) to ‘quietly’ assist the EU, specifically Greece.
In seeking for the quiet assistance, in a telephone interview, The Institute of International Finance Inc. (IIF) Deputy Managing Director Hung Tran said that “If you have the extra 20 billion which we are seeking from other countries, that of course would increase the amount of debt retirement that Greece can have.” He also added that “We have been in preliminary discussions with some countries and the reaction we received is an open mind and request for more information and discussion.” the IIF represents 440 of the world’s largest banks, insurance companies and investment firms.
Basically, this allows BRIC countries to pool their resources into a new account via the IMF, which in turn would be loaned to the Greek government. The goal is to allow lower Greece’s burden by as much as $25 billion and lower the country’s debt-to-GDP ration to about 91% by 2020, assuming the world is headed on a better economic climate.
It is quite lamentable that the IMF and World Bank cannot continue to support a faltering economy such as Greece’s. As the EU financial juggernaut becomes exhausted, so as the countries that it persuaded to join this exclusive ‘club’ of supposedly advanced economies.
Just last May, when the IMF chief Dominique Strauss-Kahn was on the headlines, concerns about who should head the IMF cropped up. Despite the fact that the global economy is now concentrated in the East (BRIC), we still failed to see a BRIC leader in the IMF. Indeed, the West has a short memory, having forgotten Strauss-Kahn’s statement just a few months ago that India and China’s economy are the ones that really lifted the global economy out of the recession.
Fast forward to this day, how hypocritical is it to witness that the West is asking for assistance, albeit quietly? Why be quiet about a matter that will save the Euro zone? If the economies of Portugal and Spain crashes as well, do you really need to ask for assistance, discretely? Financial ministers from BRIC countries will be meeting with the IMF today; for now, let us standby and wait for further developments.