RIYADH (Reuters) - 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 $600 billion (385 billion pounds) 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 told Reuters 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 $360 billion in foreign securities, most of them in the form of U.S. Treasuries, helped to underpin the value of the U.S. 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.
Editing by Susan Fenton