Crisis Politics in Europe: Vulnerability to Adjustment, Policy Responses and Political Conflict

The Euro crisis has turned into one of the most serious challenges that the European Union (EU) has had to face so far. At its root the crisis is a balance-of-payments crisis; caused by divergent economic developments among member states in the pre-crisis years and the deep financial integration that accompanied this process.

Who Controls the IMF?

The International Monetary Fund (IMF, or Fund) is governed by its member countries. Its daily business is conducted by a 24-member Executive Board, its directors representing countries, or groups of countries. Importantly, at the IMF, not all countries are the same – instead, so-called weighted voting governs the Fund. The “weight” of a country is determined by its economic importance, depending on variables like GDP, trade, and reserves of foreign currency. The resulting vote share of the United States, the single largest shareholder of the Fund, exceeds 17 percent. Japan and Germany follow, with around 6 percent each, then the United Kingdom and France with each around 5 percent of the voting weight. Most decisions at the Fund have to be taken with a majority of more than 50 percent (though formal votes are rarely taken), giving these few countries a substantial say in decision-making at the Fund.

The Key Battles of the Greek Bailout Saga

Greece's dramatic bailout negotiations will soon be coming to a head one way or the other. Although the Greek government has been painstakingly throwing a veil of uncertainty and misinformation over its real financial and fiscal position, most pundits would agree that state coffers are running bare and that, absent an interim, piece-meal, or final bailout agreement, Greece will not be able to pay off the consolidated IMF loan tranches coming up at the end of June. The government's finances have been stretched to their limit by dint of an internal payment moratorium and a raid on the cash reserves of local governments and pension funds.