America and the Global Economy

The Case for U.S. Leadership

Lew in Washington, May 2015. Carlos Barria / REUTERS

When U.S. President Barack Obama joined other global leaders at the G-20 summit in Turkey in November 2015, the United States was in the final stages of a multiyear effort to secure the approval of a set of important reforms to the International Monetary Fund. The reforms, negotiated in 2010 with strong U.S. leadership, were designed to double the organization’s core financial resources to combat financial crises and to modernize its governance by increasing the voting shares of emerging-market economies while maintaining a decisive U.S. voice. But their implementation had been on hold for several years, awaiting approval from Congress. Christine Lagarde, the IMF’s managing director, spoke for many when she opened the meeting in Turkey by saying she prayed that the United States would approve the reforms by the end of the year. Obama responded with a mix of levity and seriousness. “You don’t have to pray, Christine,” he said. “It will get done.”

Indeed, a few weeks later, Congress passed the necessary legislation, and by February 2016, the reforms had gone into effect. Their implementation not only marked a financial and institutional watershed in the IMF’s long history. It also illustrated a distinctive feature of how the United States has exercised economic leadership by expanding the number of nations with an ever-greater stake in the success of a rules-based global system that benefits all.

Yet it is worth asking: Why was it so hard to win congressional support that it led some to believe that divine intervention was required? After all, the IMF has embodied U.S. leadership since its conception in 1944. Along with the World Bank and the General Agreement on Tariffs and Trade (and its successor, the World Trade Organization), the IMF has provided the underlying infrastructure of a global economic system that has enabled economies to rise from the ashes of war, created the jobs and rising incomes that have produced a global middle class, and lifted hundreds of millions of people

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