Multilateral Institutions and the Reform Agenda

The reform question in brief

The institutions built in the closing years of the Second World War and the decade that followed — the United Nations, the Bretton Woods twins of the International Monetary Fund and the World Bank, and later the multilateral trade system — remain the load-bearing structure of international cooperation. They were designed by and for a world that no longer exists. The distribution of population, output and military capability has shifted decisively since 1945, yet the formal architecture that allocates voice and vote within these bodies has barely moved. The United Nations Security Council still seats the same five permanent members with the same veto it granted them eighty years ago. The result is a widening gap between where economic and demographic weight now sits and where formal authority is lodged — and that legitimacy gap, in our assessment, is the system's central vulnerability and the force behind the reform agenda.

Reform is not a single project but several, moving at different speeds. It is fastest at the financial institutions, where technical adjustments can be made without amending charters: the IMF's 16th General Review of Quotas, concluded in December 2023, agreed a roughly 50 per cent increase in total quotas, and the World Bank has broadened its mandate toward global public goods. It is slowest at the political core, where the Security Council's composition is governed by a Charter amendment procedure that hands the incumbents a veto over their own dilution. And it is in open difficulty at the trade system, where the WTO's Appellate Body has been unable to function since December 2019 because its members' terms expired without replacements being appointed, leaving dispute settlement — long the crown of the rules-based order — with a broken top tier.

Beneath these headline contests sits a quieter structural problem: financing. The universal institutions run on comparatively small budgets drawn from a narrow base of assessed contributors, supplemented by a growing tail of voluntary, earmarked money that gives large funders leverage over programming and erodes the independence that gives multilateral bodies their value. The UN regular budget of roughly US$3.5–3.7 billion a year and peacekeeping of about US$5.5–6 billion are modest relative to the tasks assigned, and arrears and unpredictability compound the constraint.

This report maps the structure and scale of the multilateral core, examines the drivers of change, applies a comparative lens to the representation question, and sets out three scenarios to 2032. Our central judgement is that incremental and uneven reform is the most probable path: real but partial movement on financing and on the voice of under-represented members, little or nothing on the Security Council, and a trade system held together by interim workarounds rather than restored consensus. What separates the scenarios is less any shift in the objective distribution of power than the political choices of incumbent and rising states about whether to invest in shared institutions.

Principal judgements

• The architecture has not tracked the distribution of power. The composition of the Security Council and the veto have not changed since 1945, while the share of world output, population and trade held by states outside the original core has risen sharply. This mismatch between formal authority and real weight is the recurring theme of every reform negotiation and the deepest source of the system's contested legitimacy.

• Financial-institution reform moves faster than political reform, but stops short of realignment. The IMF's 16th Review delivered a headline quota increase of about 50 per cent yet held relative shares — and the United States' effective veto over decisions requiring an 85 per cent majority — broadly constant, deferring the substantive question of who gains voice to a later review. Technical progress is real; distributive progress is not.

• The trade system's enforcement tier is broken. The WTO Appellate Body has operated below its three-member quorum since December 2019, so appeals can be filed "into the void" and left unresolved. A subset of members has built an interim appeal-arbitration arrangement, but it is partial, and the underlying dispute over the body's remit is unresolved.

• Financing is a structural, not a cyclical, weakness. A narrow base of assessed contributors funds the core budgets, while voluntary and earmarked contributions — now a large share of what many agencies actually spend — tie money to donor priorities, constrain flexibility and expose institutions to the domestic politics of a handful of capitals.

• The representation gap is now quantifiable and central. On our estimates, emerging and developing economies account for around 60 per cent of world output in purchasing-power terms but hold roughly 42 per cent of IMF quotas; comparable gaps recur across the system. Closing even part of this wedge is the single change that would do most to restore perceived legitimacy.

• Parallel forums are proliferating without displacing the universal bodies. An enlarged G20 (which admitted the African Union in 2023), an expanded BRICS grouping and newer development banks widen the menu of coordination venues. They add capacity and give rising states institutions they help design, but they also raise coordination costs and offer exit options that weaken pressure to reform the universal core.

• Incremental, uneven reform is the most probable trajectory. Across our scenarios, the central case is partial movement on financing and voice, stalemate on the Security Council, and a rules system sustained by interim arrangements. Faster or slower outcomes turn on political alignment among major states, not on the availability of workable technical fixes, most of which already exist.

1. Context and why it matters

Multilateral institutions are the standing machinery through which states manage problems that cross borders: security and the use of force, macroeconomic and financial stability, trade rules, public health, and the growing agenda of global public goods from climate to pandemic preparedness. Their authority rests on two foundations that are in tension. The first is universality and legitimacy — the claim to speak for the whole membership, which depends on members seeing the distribution of voice as broadly fair. The second is effectiveness — the capacity to decide and act, which historically depended on privileging the most powerful states so they would remain inside the system rather than ignore it. The post-1945 settlement resolved that tension in favour of effectiveness, most visibly through the Security Council veto. Eighty years on, the compromise that once bought the great powers' participation increasingly reads to much of the membership as entrenched privilege.

Three shifts explain why the reform question has become pressing rather than perennial. The first is the redistribution of economic weight. Measured in purchasing-power terms, the share of world output held by economies outside the original Western-and-allied core has risen from a minority to a majority over four decades, and with it their claim to a proportionate say. The second is the sequence of shocks since 2008 — the global financial crisis, the pandemic, renewed great-power rivalry, and the return of major inter-state conflict — each of which tested the institutions and, in several cases, found them unable to act because the states best able to block action were also parties to the dispute. The third is the emergence of credible outside options: rising powers now have the resources to build their own banks, forums and payment arrangements, so the implicit threat behind reform demands — participate on fairer terms or watch us build elsewhere — has become materially more plausible.

Why this matters beyond the diplomatic arena is direct. The problems the institutions exist to manage — financial contagion, pandemics, conflict, breakdowns in trade, climate — are precisely those a single state cannot wall itself off from. A multilateral system seen as illegitimate loses the compliance and burden-sharing that make collective action cheaper than unilateralism; a system that cannot act loses relevance to the problems it was built for. Both failure modes raise the cost of every future crisis. The reform agenda, in this sense, is not administrative housekeeping but a question about whether the cheapest available mechanism for managing shared risks remains usable.

2. The institutional landscape: structure and scale

The multilateral core is not one organisation but a federation of bodies with different memberships, mandates, financing models and decision rules. The table below sizes the principal institutions along the dimensions that matter for reform: how many members they have, the rough scale of their budget or capital base, and the specific pressure point where change is being contested. Budget figures are drawn from published records where available and should be read as order-of-magnitude indicators; several are biennial figures expressed here on an annual basis, and commitment volumes vary year to year, so the rows are not comparable as a simple ranking and must not be summed.

Two structural features stand out. The first is how small the universal political and normative institutions are, in budget terms, relative to their mandates. The UN regular budget is comparable to that of a mid-sized city government; the WTO secretariat is smaller than many single corporate departments. These are coordinating and rule-administering bodies, not spending agencies, so modest budgets are appropriate — but the narrowness of the funding base leaves them exposed. A large share of the assessed regular budget is borne by a handful of states, with the two largest contributors alone covering well over a third; when a major contributor delays payment, the institution feels it immediately.

The membership has nearly quadrupled since 1945, overwhelmingly through decolonisation, while the inner circle that holds the veto has stayed fixed at five. The second feature is the split between institutions where reform can be achieved administratively and those where it requires charter amendment. The IMF and World Bank can adjust quotas, shares and mandates through their own weighted-majority procedures — difficult, but achievable without unanimity. The Security Council's composition, by contrast, is fixed in the UN Charter, and any amendment requires ratification by two-thirds of members including all five permanent members, each of which can veto its own dilution. This procedural asymmetry, more than any difference in political will, explains why financial-institution reform advances while Security Council reform does not.

Within the financial institutions, the reform that has occurred is real but bounded. The 16th General Review of Quotas raised total quotas by roughly 50 per cent, strengthening the Fund's permanent resource base and reducing its reliance on temporary borrowed resources. Crucially, however, it distributed the increase broadly in proportion to existing shares, so the relative voice of members — including the United States' holding above the 15 per cent threshold that confers an effective veto over the most important decisions, which require an 85 per cent majority — was left substantially unchanged. The harder task of realigning shares toward under-represented dynamic economies was acknowledged and deferred. Reform of the plumbing advanced; reform of the distribution did not.

3. Drivers of the reform agenda

Several forces are pressing on the system at once, and they do not all point the same way. The first and most fundamental is the representation gap: the divergence between economic and demographic weight on one side and formal voice on the other. This is the connective theme across the IMF quota debate, the campaign for permanent African representation on the Security Council, and the push to rebalance standing forums. It is not primarily about money — the sums that would change hands in a quota realignment are modest against global capital flows — but about status, agenda-setting power and the perceived fairness of the rules.

The chart makes the wedge visible: on our estimates emerging and developing economies produce around 60 per cent of world output in purchasing-power terms but hold roughly 42 per cent of IMF quotas, with the mirror image at the advanced-economy end. Bloc definitions differ across sources and the exact figures move with methodology, so these are rounded estimates rather than precise measurements — but the direction and rough magnitude are not in dispute, and it is this gap, more than any single grievance, that gives the reform agenda its coherence and persistence.

The second driver is the crisis of the enforcement and decision functions. On trade, the paralysis of the WTO Appellate Body since December 2019 removed the binding second tier of dispute settlement; members can now appeal panel rulings "into the void", leaving them unadopted and unenforced. A group of members has responded with an interim appeal-arbitration arrangement that reproduces appellate review among its participants, but it is not universal, and the underlying disagreement — over whether the Appellate Body overreached its mandate — remains unresolved. On security, the veto has repeatedly prevented the Security Council from acting on the gravest matters, prompting a 2022 General Assembly measure requiring the Assembly to convene whenever a veto is cast, a transparency step rather than a constraint on the veto itself.

The third driver is financing and its politics. Across the UN system, the balance has shifted from predictable assessed contributions toward voluntary, often tightly earmarked funding. Earmarking lets donors direct money to favoured priorities and gives them leverage over programming, but it fragments budgets, undermines multi-year planning and makes agencies vulnerable to shifts in a few donors' domestic politics. Efforts to broaden and stabilise the base — sustainable-financing initiatives at the WHO, replenishment reform at the concessional windows — seek to restore the predictability that gives multilateral bodies their independence.

The fourth driver is the pull of alternatives and the summit-level attempt to renew the system from within. Rising powers have built parallel institutions — new development banks, an expanded BRICS grouping, regional financial arrangements — that provide both practical capacity and negotiating leverage. In response, the incumbent system has sought to demonstrate renewal: the enlargement of the G20 to admit the African Union in 2023, and the UN's 2024 Summit of the Future, which adopted a broad political declaration reaffirming reform commitments across peace, development and digital governance. Whether such declarations translate into binding change is the central open question.

4. Regional and comparative lens

The reform question looks different from different capitals, and the regional distribution of interest shapes what is negotiable. Africa presents the sharpest case of under-representation: a continent of over fifty states and around a fifth of humanity has no permanent seat on the Security Council. The African Union's common position, articulated two decades ago, seeks at least two permanent seats with the same prerogatives as existing members and additional non-permanent seats. That this claim commands near-universal rhetorical support yet has produced no structural change is the clearest illustration of the gap between declared consensus and the incumbents' willingness to cede standing.

Asia's position is more differentiated. Its largest economies combine rising weight with divergent interests: some press for permanent Security Council seats and larger IMF quotas commensurate with their output, while others resist their neighbours' elevation, a rivalry that has repeatedly stalled the Council's intergovernmental negotiations. The result is that the very dynamism that strengthens Asia's claim to greater voice also fragments the region's ability to press a single demand. Latin America occupies an intermediate position, with long-standing candidacies for permanent representation but limited leverage to force the question. Europe faces the opposite dilemma: it is, if anything, over-represented in the inner circles relative to its share of world output and population, which makes proposals for consolidated representation sensitive for the states that would give up individual standing.

The comparative lens also clarifies the role of the parallel institutions. The expansion of the BRICS grouping from 2024 and the growth of new development banks are frequently read as a challenge to the incumbent order. The more accurate reading, in our assessment, is that they are complements and pressure devices rather than replacements: their combined lending capacity remains small against the established multilaterals, their internal cohesion is limited by the divergent interests of their members, and their existence has so far served less to supplant the universal institutions than to give rising states both practical alternatives and added leverage over the institutions they wish to reform. The risk is not a clean substitution of one order for another but a gradual fragmentation in which overlapping, partially competing forums raise the cost of coordination and dilute the universality on which the core system's legitimacy depends.

5. Risks and open questions

Several risks could push the trajectory toward the pessimistic end of the range, and honest analysis must weigh them. The first is a further erosion of the enforcement functions: if the WTO's interim appeal arrangement frays, or if the Security Council's paralysis on major conflicts deepens, members may increasingly route around the institutions altogether, hollowing them out through disuse rather than formal withdrawal. Institutions can become irrelevant long before they are abolished.

The second risk is financial. A sustained withholding of contributions by a major assessed funder — driven by domestic politics rather than institutional performance — would force abrupt retrenchment on bodies with little reserve cushion, and the growing reliance on earmarked voluntary money makes core functions hostage to shifts in a few donors' priorities. The third is that reform stalls at the level of declarations: summits produce texts, texts reaffirm commitments, and commitments are not implemented. The 2010 IMF governance reform, agreed promptly but not in force until 2016 because of delayed ratification, is a cautionary precedent for the distance between agreement and effect.

A fourth risk is fragmentation hardening into rival blocs, with parallel institutions evolving from complements into competitors and states forced toward exclusive choices between overlapping systems for finance, trade and standards — raising transaction costs and weakening the universal coverage that makes global rules valuable. Against these sit genuine upside possibilities: a negotiated restoration of binding dispute settlement, a credible realignment of IMF shares, or a workable expansion of Security Council non-permanent membership even absent agreement on permanent seats. The distribution of outcomes is wide, and it is driven far more by the political choices of a small number of states than by any change in the underlying facts.

Three scenarios to 2032

We frame the outlook through three named scenarios. These are not forecasts but internally consistent narratives, each with a qualitative judgement about how far the reform agenda advances. The probabilities attached are illustrative and reflect our assessment, not a measured distribution.

Scenario A — Incremental Adjustment (our central case; roughly a 50–55 per cent judgemental weight). The financial institutions continue their pattern of technical progress without full distributive realignment: a further modest rebalancing of IMF shares, continued broadening of the World Bank's mandate, and gradual capital-adequacy gains at the development banks. The trade system stabilises around the interim appeal arrangement and partial reform of dispute settlement, restoring some predictability without full consensus. The Security Council remains uncomposed, with at most procedural adjustments and modest movement on non-permanent seats. Financing is patched rather than repaired. The representation gap narrows at the margin but persists, and the system muddles through — diminished in authority but functional.

Scenario B — Negotiated Renewal (roughly 15–20 per cent). A concerted push by major and rising states converts reform intent into binding change: a credible realignment of IMF quotas toward under-represented economies, a restored and reformed WTO dispute-settlement system with agreed limits on its remit, a broadened and stabilised financing base, and — most demandingly — a package expanding the Security Council's membership, even if the veto itself survives. This scenario depends less on new ideas, most of which are well developed, than on a rare alignment among incumbent and rising powers to prioritise shared institutions over near-term advantage. The representation gap narrows substantially, and the system's legitimacy is materially restored.

Scenario C — Drift and Fragmentation (roughly 25–30 per cent). Reform stalls at the level of communiqués; a major funder retrenches; enforcement functions weaken through disuse; and parallel institutions harden into competing blocs. States increasingly route trade, finance and standard-setting through exclusive arrangements, raising coordination costs and eroding universality. No single dramatic collapse occurs; instead the universal institutions lose relevance through compounding missed opportunities, and the next major cross-border crisis is met by a more fractured and expensive response.

Across all three scenarios, one judgement holds. The obstacle to reform is not intellectual — most of the technical fixes, from quota formulas to appeal-arbitration models, are well developed and broadly understood. It is distributive and political: whether the states that hold formal advantage under the 1945 settlement judge that trading a portion of it for renewed legitimacy is worth more than retaining it. That is a choice, not a forecast, which is why the range of plausible outcomes is wide.

What this means for the actors involved

Governments and policymakers (incumbent powers). The strategic question is whether the marginal value of retained formal advantage now exceeds its cost in legitimacy and compliance. Where charter amendment is not feasible — the Security Council above all — the achievable agenda is procedural and financial: expanded non-permanent representation, restraint in the use of the veto on the gravest matters, and stable, less-earmarked funding. On the financial institutions, backing a genuine share realignment at the next review is comparatively low-cost and would yield a disproportionate legitimacy return.

Governments and policymakers (rising and under-represented states). The evidence suggests that leverage is greatest when reform demands are specific, coalitional and paired with credible alternatives, rather than expressed as general grievance. Investing in parallel institutions strengthens the negotiating hand for reform of the universal system, but only if those institutions are built to complement rather than duplicate — and if the aim remains a fairer seat at the existing table rather than a fragmented set of smaller ones. A single, technically detailed reform package will achieve more than a broader but vaguer alignment.

International organisations and their secretariats. The institutional imperative is to protect independence by broadening and stabilising the financing base — raising the assessed share, reducing reliance on tightly earmarked voluntary funds, and demonstrating the performance that justifies predictable core funding. On enforcement, consolidating interim arrangements (the trade appeal mechanism above all) into durable, more widely subscribed structures is the realistic path to restoring function while the larger disputes remain unresolved.

Business, investors and financial institutions. A fragmenting rules system raises operating costs and risk: divergent standards, less predictable dispute resolution, and the possibility of having to choose between overlapping financial and trade blocs. The prudent posture is to price the scenario distribution rather than assume continuity — monitoring the durability of trade dispute settlement and the coherence of the financial-institution architecture as leading indicators, and building resilience against a more fragmented outcome without betting on it.

Donors, funders and civil society. The highest-return contribution is to the predictability and independence of the core system: supporting sustainable, less-earmarked financing, and holding the reform process accountable for converting summit declarations into implemented change. The gap between agreed commitments and their entry into force — not the absence of agreement — is where reform most often fails.

Method and sources

This report is a synthesis and interpretation of publicly available information rather than the product of primary data collection. Our approach triangulates across four kinds of source: (1) official documents and records of the institutions themselves — UN budget and membership records, IMF and World Bank governance and quota disclosures, WTO dispute-settlement records, and G20 and summit communiqués; (2) the constitutional and procedural texts that govern reform, principally the UN Charter's amendment provisions and the weighted-majority rules of the financial institutions; (3) the analytical and scholarly literature on international-institutional reform; and (4) our own structured judgement, applied in the scenario analysis and interpretive claims.

Readers should treat the quantitative claims according to the confidence levels attached to them. A number are measured and well-established: UN membership counts, published regular and peacekeeping budget figures, the composition and voting thresholds of the Security Council and the IMF, and the date the WTO Appellate Body fell below quorum are all reported facts. Others are estimates presented as ranges: the budget and commitment figures in the institutional table combine annual and annualised biennial figures, and are order-of-magnitude indicators that must not be summed. The representation-gap comparison — around 60 per cent of world output against roughly 42 per cent of IMF quotas — rests on bloc definitions that vary across sources and on purchasing-power estimates that differ by methodology; we present it as a rounded illustration of a well-established direction and magnitude, not a precise measurement. The scenario probabilities are explicitly judgemental and do not constitute a measured distribution. Where we express a view, its basis and uncertainty are stated, consistent with the Institute's standard of methodological transparency.

Primary sources

The institutions' own records and the constitutional texts below were consulted directly; output-share comparisons rest on the official statistical series noted.

• United Nations (1945, with amendments). Charter of the United Nations, and General Assembly records of the programme budget and peacekeeping assessments. United Nations, New York.
• International Monetary Fund (2023). Sixteenth General Review of Quotas: Board of Governors resolution and staff report. IMF, Washington, DC.
• World Trade Organization (2024). Dispute settlement: the Appellate Body impasse and the Multi-Party Interim Appeal Arbitration Arrangement (MPIA). WTO, Geneva.
• United Nations (2024). Pact for the Future and the Global Digital Compact (Summit of the Future outcome documents). United Nations, New York.
• Group of Twenty (2023). G20 New Delhi Leaders' Declaration. G20.
• African Union (2005). The Ezulwini Consensus: the common African position on the proposed reform of the United Nations. African Union, Addis Ababa.
• World Bank Group (2023). Evolution Roadmap: a new vision and mission. World Bank, Washington, DC.
• International Monetary Fund (2024). World Economic Outlook database, used for output shares in purchasing-power terms. IMF, Washington, DC.