Group of 7 Begins a Slow Fade

The world’s top financial officials did not bury the Group of 7 at their meetings in Istanbul this weekend. But a few pronounced some last rites.

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, criticized the “decisions, no follow-up, boring communiqués, and then the next meeting six months later” in summing up the widespread view that the Group of 7 club of the big industrialized nations had outlived its usefulness.

“Making declarations is just not enough if you want to change the reality,” Mr. Strauss-Kahn said.

At the weekend meetings in Istanbul of the World Bank and the International Monetary Fund, the move toward a more multilateral world was in full swing.

The Group of 7, meeting on the fringes, began what may be an extended fade to black. And major members of the I.M.F., while still certain to clash over the details, broadly endorsed changes to I.M.F. rules that will water down the ironclad control that the industrialized world has held on the organization for the last half century.

“A more representative, responsive and accountable governance structure is essential to strengthening the I.M.F.’s legitimacy,” the American Treasury secretary, Timothy F. Geithner, said in a statement.

Coming only weeks after officials at a summit meeting in Pittsburgh of the top industrialized and emerging economies blessed the Group of 20 as the globe’s top decision-making body for economic governance, the Group of 7 offered what may be one of its last statements.

And it even made clear that the Group of 7’s existence now only made sense in conjunction with the Group of 20, a body that includes China, Brazil, India and other major emerging economies.

Every major policy decision facing the world, whether it be exit strategies from the extraordinary steps taken to prevent the economy’s collapse or new regulations for the financial system, will be made “with other members of the G-20,” the G-7 wrote.

Officials from G-7 countries, who did not specifically mention the forum’s fate in their statement, were quick to emphasize that the lines of communications among its members had to remain open.

“The G-7’s existence is fully justified,” said Christine Lagarde, the French finance minister, The Associated Press reported. “It’s still important for us to talk on issues of economy and finance.”

But they also hinted that formal statements, once a potent tool for managing currency markets but now more general in nature, would soon end. Other officials made clear that the frequency of the meetings — at least twice a year for finance ministers and central bank chiefs — was bound to diminish.

Less consensus emerged on how countries would restructure the I.M.F., which has 186 members, to mirror the tectonic shifts in the world economy.

Traditionally, a European has been at the helm of the I.M.F., which is based in Washington, while the World Bank has been run by an American, a practice that has been much criticized. Members are considering changes to its quotas, the complicated system that governs how much countries contributed to the I.M.F., and what share of votes they have.

“We recognize that the distribution of quota shares should reflect the relative weights of the fund’s members in the world economy, which have changed substantially in view of the strong growth in dynamic emerging market and developing countries,” I.M.F. members said in a statement issued Sunday.

I.M.F. members endorsed a general plan to transfer 5 percent of the I.M.F.’s quotas away from the industrialized world to emerging market economies, and directed senior officials to work out the details by January 2011.

That leaves ample room for friction between I.M.F. members that stand to gain in influence and those losing it, as well as within the community of advanced countries. European countries, including France and Germany, are already quietly maneuvering to preserve their own leverage, possibly at the expense of their neighbors.

Also, the I.M.F. did not address one of the most contentious issues, that of the effective United States veto at the organization. With a 17 percent voting share in a body that requires 85 percent for major decisions, the United States can block any significant move.