Big emerging economies such as China, India and Saudi Arabia
will not aid the West in its financial crisis unless they are given more
influence in running the global economy, a senior figure from Saudi Arabia’s
ruling establishment said on Monday.
“The financial crisis and great recession were born in
the West, developed in the West yet hit hard throughout the world,” former
Saudi intelligence chief Prince Turki al-Faisal said in a speech to a business
conference in Riyadh.
He said this showed the need to give emerging economies more
representation and more authority in global bodies such as the Group of 20
nations, a forum of the world’s major industrialised countries, and the
Financial Stability Board (FSB), which discusses regulation of banks and
financial markets.
So far, however, organisations such as the FSB “have
yet to take these new realities into consideration”, while the G20 is
making little headway in coordinating economic policymaking around the world,
he said.
Big emerging economies’ lack of influence in international
bodies reduces their willingness to contribute money to fight the global crisis,
the prince warned.
The International Monetary Fund is seeking to more than
double its war chest by raising $600bn in new resources to help countries deal
with the fallout of the euro zone’s sovereign debt crisis.
“What we can be certain of is that large developing
nations will not agree to provide additional funds without a greater say in the
IMF, and this applies to all global economic governance organisations,”
Prince Turki said.
The prince, who chairs the King Faisal Center for Research
and Islamic Studies, a major think tank, no longer holds government office but
is still seen as influential, and his position outside government may give him
room to speak more frankly in public than current Saudi officials.
He is a former ambassador to the United States and Britain.
His speech criticised Western governments for
“leveraging up” their economies over the past six decades and letting
their financial sectors spiral out of control, saying the United States and the
European Union would continue to struggle with debt problems for five or 10
years.
Much of his criticism echoed comments by officials in China,
another emerging economy that is being asked to help fight the global financial
crisis.
Oman’s central bank governor said last week that his country
was prepared to increase its contribution to the IMF.
In general, however, officials in the Gulf’s rich oil
exporters have indicated they are in no rush to contribute funds to bail out
the West, and expect Europe first to do more to resolve its debt crisis.
Prince Turki noted that the Saudi central bank’s holdings of
roughly $360bn in foreign securities, most of them in the form of US
Treasuries, helped to underpin the value of the US dollar and the stability of
the global economy.
He said his country would continue to play a stabilising
role but added that because it faced its own challenges, including the need to
create jobs for a young population and cope with political strains across the
Arab world, it would need in the future to focus more of its resources
domestically and within the Middle East.
The Arab Monetary Fund, a regional body which lends to
governments, and Saudi development funds such as the Islamic Development Bank
need to be strengthened to help the Middle East develop economically, he said.
“We will continue to support our neighbours where we
are able, including financially, but now we also face new exigencies of our
own,” Turki said.
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