HIROSHIMA: UN Secretary General Antonio Guterres said on Sunday that it was time to reform both the Security Council and Bretton Woods to align with the “realities of today’s world”.

Speaking at a press conference in Hiroshima, Japan, where the Group of Seven summit meeting had been held, Guterres said both institutions reflected the power relations of 1945 and needed to be updated.

“The global financial architecture became outdated, dysfunctional and unfair,” he said. “In the face of the economic shocks from the Covid-19 pandemic and the Russian invasion of Ukraine, it has failed to fulfil its core function as a global safety net.”

Under the UN Charter, Security Council primary duties for maintenance of international peace and security. It can impose sanctions or authorise the use of force to resort in some cases. It has five permanent members including China, France, Russian Federation, the United Kingdom, and the United States, and ten non-permanent members, each member has one vote.

Guterres also spoke of how he felt that at the G7 summit there was a growing consciousness among developing countries that not enough was being done to reform outdated institutions or “remove the frustrations” of the Global South.

India’s economy will grow over 6 per cent this year and next, the International Monetary Fund said in its World Economic Outlook this January.

China and India together will account for about 50 pc of world growth in 2023, IMF chief economist and director of the research department Pierre-Olivier Gourinchas said at the time.

The wealthy G7’s economic clout has also shrunk in the past 30 years, accounting for 29.9pc of global GDP in 2023 compared to 50.7pc in 1980, according to the IMF.

“We will see now what is the impact of the discussions that were held here in Hiroshima,” Guterres said. “The G7 members were able to discuss with some of the most important emerging economies in the world.”

G7 host Japan made a point of inviting figures from the so-called Global South to Hiroshima for talks. Invitees included Indian Prime Minister Narendra Modi, Brazil’s President Luiz Inacio Lula da Silva and Indonesian President Joko Widodo.

The Bretton Woods system of monetary management was established after the 1944 agreement, which fixed currency exchange rate could be created using gold as the universal standard. This system regulated international trade between 44 countries and remained in practice from 1945 to 1973. The system collapsed because the US dollar could not hold its value.

Published in Dawn, May 22nd, 2023