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Missed Opportunities at the Tokyo IMF–World Bank Meetings

Tags: Finance , China , Earthquake-Tsunami , Economic Growth

Ina, Hisayoshi

November 01, 2012

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ginzakijinaka.jpgYour typical shopper in downtown Tokyo may not know much about the annual meetings of the International Monetary Fund and the World Bank. But many no doubt noticed that something big and international was going on, for from October 9 to October 14, approximately 20,000 finance officials from around the world converged on Japan's capital, causing traffic jams on streets around the city.

Unlike a gathering of national leaders, such as a Group of Eight summit, though, the IMF/World Bank Annual Meetings did not result in abnormally heavy security.

The Boards of Governors of the IMF and World Bank customarily hold annual meetings each year in Washington, DC, for two consecutive years and in another member country every third year. This naturally creates a bit of excitement for the city selected, and Tokyo was no exception. But this year's meeting also provided an opportunity to spotlight the changing relationship between Japan and the IMF–World Bank over the 60 years that Japan has been a member.

From Beneficiary to Donor

The last IMF–World Bank meeting in Tokyo was 48 years ago, in 1964. That was also the year Tokyo hosted the Summer Olympics, a major milestone for postwar Japan. The 1964 Games not only showcased the remarkable progress Japan had made in the 19 years since the end of World War II but also provided an impetus for the completion of a series of ambitious infrastructure projects that allowed Japan to sustain that growth and development. What many Japanese have forgotten is that Japan did not manage this by its own efforts alone.

The two biggest infrastructure projects launched in advance of the 1964 Games were the Shinkansen "bullet train" and the national expressway system—both of which remain at the core of Japan's modern transportation system. These projects were financed in large part by loans from the World Bank. In this sense, the success of the Olympics was also an IMF–World Bank success story. The meeting in October rescued this long-neglected story from oblivion, as it was shared with the Japanese people and the world.

Beyond that, however, the media were hard-pressed to sum up the significance of a six-day conference consisting of dozens of seminars and workshops, as well as plenary meetings. For one NHK newscaster, the event provided a rare opportunity to blog about IMF Managing Director Christine Lagarde's pricey footwear. For others, disappointment in no-shows and wallflowers was the dominant theme.

Low Profile and No Profile

Viewing the meetings from a political perspective, some Japanese observers took note of the remarkably low profile maintained by US Treasure Secretary Timothy Geithner, who recently reiterated his intention to leave the government at the end of President Barack Obama's current term.

In the October 12 online edition of the Nihon Keizai Shimbun, Nikkei Washington correspondent Toshiki Yazawa conveyed some disappointment at Geithner's failure to make more of the opportunity. Noting that some consider Geithner a basically pro-Japanese official who has been relatively tolerant—notwithstanding his official position—of the Bank of Japan's currency intervention, Yazawa suggested that his departure could add to Japan's exchange-rate woes.

But if the Japanese were expecting any parting favors, or even a sentimental farewell, they were disappointed. With the US presidential election approaching, Geithner seemed keen to avoid any controversy by limiting his Tokyo appearances to a hotel interview, at which he did little more than express his confidence in Japan's ability to overcome its current challenges.

In terms of conspicuous absences, the prize certainly went to China, which opted to register its displeasure with Japan over the Senkaku Islands dispute by keeping its top-level officials at home. People's Bank of China Governor Zhou Xiaochuan and Minister of Finance Xie Xuren both cancelled their plans to attend to the IMF–World Bank meetings in Tokyo.

China's snub drew a tactful rebuke from Managing Director Lagarde. Responding to a question at a Tokyo press conference on October 11, she stressed the importance of both nations to the global economy and the role of the IMF as "a forum for dialogue" and urged the two to resolve their differences "harmoniously and expeditiously."

"They will be missing a great meeting," Lagarde said of the Chinese, "because really Tokyo is at its best. The colors are beautiful; the trees have the most beautiful colors you could think of. . . . I think they lose out by not attending the meetings."

The boycott by China made a particularly unfavorable impression in the northeastern city of Sendai, where international officials and finance ministers gathered on October 9 and 10 to share thoughts about disaster risk management in the wake of the tsunami that devastated the region in March 2011. In an October 12 editorial, the Kahoku Shimpo, a major regional newspaper, slammed Beijing's decision to opt out of an important global meeting on account of a bilateral disagreement, calling it "an abdication of China's responsibility as a superpower" and a "bad judgment call from which the nation stands to gain nothing."

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