News & insights

Source: Olters, Jan-Peter (2025). ‘Les institutions de Bretton Woods à l’épreuve des tensions géopolitiques’, Conseil des relations internationales de Montréal (CORIM),14 October 2025.

Geopolitical strains are expected to dominate the Annual Meetings of the International Monetary Fund and the World Bank, scheduled from 13 to 18 October. Related tensions were already highlighted at last September’s UN General Debate. The United States is demonstrating increasing disengagement from multilateralism, calling the legitimacy of institutions into question, and rejecting collective responses to climate. By contrast, China is presenting itself as a proactive supporter of multilateralism, demonstrating its commitment to sustainable development, South-South cooperation, and a new Global Governance Initiative. The result is a fragmented world in which competing visions of development financing are in conflict.

These divergences have placed the Bretton Woods institutions, established in 1944, at the heart of a contested world order. The intensification of geopolitical tensions, coupled with a lack of consensus on global public goods, has resulted in cuts to bilateral aid budgets and a shift in focus towards national security. Consequently, the global commitment to, and earmarked funding for, the Sustainable Development Goals (SDGs), hitherto anchor to the international development architecture, has decreased.

As part of Trump’s ‘America First’ agenda, Washington is reconsidering its approach to disengagement, aiming at balancing narrow national(ist) objectives with the risks associated with an emerging rivalry in development. The 2025 report of the National Advisory Council, alongside US trade and investment policy documents, reveals three priorities for multilateral development banks (MDBs), viz., maintaining macroeconomic discipline, increasing transparency (including monitoring debt at loan level), and encouraging private financing rather than increasing public commitments. MDBs should prioritise instruments that mobilise private capital and limit concessional windows, targeting them strategically towards low-income or fragile countries. This would result in more selective, leverage-focused commitments, shifting the emphasis away from global public goods.

Potential fractures

Three major issues have emerged as sticking points for the Annual Meetings.

• MDB mandates. The US is seeking to restrict the ‘mission creep’ to climate, social, and fragility issues. Meanwhile, China is promoting a model centred on ‘social rights’ (health, education, and infrastructure) as an alternative to the West’s more political priorities. European and Canadian shareholders advocate an approach that integrates climate resilience, equity, and social protection. They are convinced that economic stability and inclusive development go hand in hand. The negotiations will reveal whether the MDBs can reconcile these priorities or fracture along irreconcilable lines.
• Financing and transparency. Washington links development financing to geostrategic competition. The US government is demanding that MDBs tighten lending conditions, implement debt disclosure at loan level, and enforce strict monitoring, particularly in countries susceptible to Chinese influence. Beijing, which remains under-represented in the Bretton Woods system, views this as a direct challenge to its Belt and Road Initiative, which prioritises speed, responsiveness, and infrastructure delivery over transparency. However, these positions are not necessarily incompatible, provided that transparency safeguards can coexist with flexible infrastructure financing. Otherwise, competition for development financing could dominate for years, resulting in governments dependent on Chinese financing having reduced access to Western MDBs, while facing increased risks of debt distress.
• Geopolitical alignment. Europe and Canada advocate transparency, but link macroeconomic stability to social and environmental goals. This strategy is based on consolidating voting blocs and political coordination, as well as expanding co-financing with regional banks. They are attempting to align climate and social priorities with US transparency requirements in order to avoid direct confrontation while preserving MDB legitimacy also in the eyes of the Global South.

Geopolitical competition

American disengagement and Chinese openness reinforce each other. By providing rapid and adaptable financing, China is positioning itself as the preferred lender for nations in the Global South. This approach strengthens China’s position as a development partner. It provides an appealing alternative for those who are frustrated by the perceived slowness of MDBs and the limited availability of concessional funding.

Europe and Canada are attempting to bridge the divide. Their strategy is to strengthen coalitions in order to maintain influence over MDB mandates, all the while avoiding direct confrontation with Washington. By consolidating their voting power and promoting co-financing, they are demonstrating how macroeconomic stability and social investment can reinforce one another.

Evolving dynamics within the Boards of Executive Directors will reflect these competing strategies: they may resist US proposals to reallocate concessional resources and tighten conditionality. Meanwhile, Washington will present its priorities with the argument of strengthening accountability in an attempt to counter the broad-based perception of the pursuit of narrow national objectives.

The Global South is asserting itself. During the UN General Debate, for instance, Kenya emphasised that development financing should be based on partnerships rather than paternalism. Emerging economies are demanding access to financing and effective representation in bodies that govern the global financial system. They want not only to receive resources, but also to contribute to the definition of rules and institutions and become political actors rather than remain mere observers.

What to expect?

The Annual Meetings will be a pivotal moment at which development finance, governance, and geopolitics converge. They will either establish a new blueprint for a changing world order or confirm the fragmentation of multilateralism into rival blocs. Competing agendas exert a centrifugal force: the US prioritises macroeconomic discipline, private-sector catalysis, and transparency, while China, Europe, and other stakeholders focus on infrastructure, social rights, and inclusive development. The outcome will determine not only how MDBs operate, but also the geopolitics of development.

A key issue in the technical negotiations is whether multilateral financing can continue to embody international solidarity. If support for public aid continues to erode, reflecting increasing compassion fatigue, MDBs could survive as technical lenders. They would, however, lose the legitimacy that gives multilateralism a dimension beyond mere transactions. The Annual Meetings provide an opportunity to establish a basic consensus that can stabilise this legitimacy and prevent its geopolitical exploitation.

• Debt transparency. To establish stability, sustainability, and trust, and in line with MDB external debt management mandates and instruments, stakeholders should adopt MDB-wide loan disclosure and monitoring principles. In light of the negative debt trends observed in countries across the income spectrum, capacity building is essential to prevent borrowers who rely on Chinese or private financing from being disadvantaged.
• Joint investment in global public goods. Increasing global migration pressures reflect policy failures in areas such as health, education, the environment, climate, and security, all of which are considered to be global public goods. MDBs must reaffirm their commitment to achieving the SDGs. Rather than representing a ‘mission creep’, these investments are prerequisites for macroeconomic stability, private sector development, and job creation.
• Effective representation of the Global South. Extending voice and voting rights would recognise that MDB support is a joint investment in global public goods. It would also ensure that the priorities of the Global South are considered in governance reforms, debt restructuring frameworks, and concessional allocations. Furthermore, it would strengthen commitment to, and the sense of ownership towards, shared development goals.

The interaction between the World Bank and the IMF still plays a crucial role. The current polycrisis is leaving many countries at severe risk of debt distress and fiscal instability. Effective policy responses therefore require collaboration among multilateral institutions to deliver comprehensive, sustainable solutions through shared responsibility. Continued MDB relevance presupposes a continued focus on the founding principles of balanced trade, high employment, and equitable development. However, they must also recognise the preconditions necessary to achieve these goals.

The Annual Meetings will reveal whether the institutions can rise to this challenge, or whether they will succumb to fragmentation and strategic rivalry. The outcome will have an impact on the entire multilateral system, affecting everything from trade and climate debates to the selection of the next UN Secretary-General. For the incumbent, António Guterres, the choice was clear: either institutions succeed in emerging from the ‘age of reckless disruption and relentless human suffering’ or bear the consequences of deepened fragmentation.