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TWN Info Service on Finance and Development (Sep07/01)

7 September 2007


EUROPE, RUSSIA VIE FOR IMF TOP JOB

Europe and Russia have squared off over who will head the International Monetary Fund (IMF) as developing countries urge reforms so that they can compete in future.  Two candidates registered for the post of managing director before nominations closed, the IMF’s executive board said in a statement late Friday.

Dominique Strauss-Kahn, a former French finance minister nominated by the European Union, is running against Josef Tosovsky, a former Czech central bank head and prime minister nominated by Russia.

Developing countries forwarded no candidates, however, amid complaints that smaller shareholders and their nominees remained shut out by an unwritten rule that Europe picks the IMF chief and the United States chooses the top boss at the World Bank.

Below is a report on the IMF leadership contest by IPS. It was published in the SUNS #6317 Tuesday 4 September.

With best wishes
Martin Khor
TWN

Europe, Russia Vie For IMF Top Job

By Abid Aslam (IPS)

Europe and Russia have squared off over who will head the International Monetary Fund (IMF) as developing countries urge reforms so that they can compete in future.

Two candidates registered for the post of managing director before nominations closed, the IMF’s executive board said in a statement late Friday.

Dominique Strauss-Kahn, a former French finance minister nominated by the European Union, is running against Josef Tosovsky, a former Czech central bank head and prime minister nominated by Russia.

“The Executive Board will consider the candidates on the basis of their professional record and qualifications,” the Fund’s executive directors said in their statement. Strauss-Kahn and Tosovsky will be interviewed in Washington over the coming month, they added.

The IMF said in July that the nomination process would be open to all of its 185 government shareholders.

Developing countries forwarded no candidates, however, amid complaints that smaller shareholders and their nominees remained shut out by an unwritten rule that Europe picks the IMF chief and the United States chooses the top boss at the World Bank.

Alpha Omar Konare, the African Union chairman, last week faulted the existing process for “not reflecting the balance of powers in the world today.”

Earlier, the Group of 24 (G24) borrowing countries at the IMF and World Bank renewed its longstanding call to open up the selection process.

“A strong commitment to an open, transparent and multilateral selection process will greatly enhance the legitimacy and effectiveness of the next Managing Director and of the institution at a time when the IMF is confronted with fundamental challenges to its relevance and viability,” the G24 said in a statement.

In the view of borrowers and other minor shareholders, the existing arrangement assures that any candidate not chosen by Europe, or the United States in the case of the World Bank, would be offered up as a sacrificial lamb.

Many IMF staff and senior officials support that position but the institutions’ largest shareholders have put off reform.

Borrower countries could name the IMF’s head but not until after Strauss-Kahn vacates the post, a senior European official said as nominations drew to a close.

“Within the Euro-group and among the EU’s finance ministers, everybody agrees that Strauss-Kahn will probably be the last European to lead the IMF in the foreseeable future,” said Jean-Claude Juncker, Luxembourg’s prime minister and chairman of the Euro-group finance ministers.

Some European countries reportedly had been prepared to open the field to borrowing countries but decided to hold off because Washington was allowed to handpick Robert Zoellick, who in July took over as World Bank president from his embattled predecessor and compatriot, Paul Wolfowitz.

For its part, Russia put forward Tosovsky’s name partly to confront the traditional order. “Not everyone agrees with this. It’s unfair to leading countries in the world,” Russian Foreign Minister Alexei Kudrin was quoted as saying in news reports.

Tosovsky is almost universally considered as unlikely to win. Even so, some have said that his candidacy could serve to highlight the need for change, especially if developing countries throw most or all of their combined weight behind the Czech.

These countries hold nearly one-third of votes on the IMF’s executive board, compared to one-third for Europe and about 17% for the United States.

Strauss-Kahn also is proving a controversial candidate. The influential British newspaper Financial Times, in an editorial, last week assailed the Frenchman as “a man who is neither qualified nor legitimate.”

The IMF began looking for a new chief after incumbent Rodrigo de Rato, a former Spanish finance minister, said in June that he would quit in October, nearly two years before his term was due to end.

He cited personal reasons for his decision. His replacement will become the tenth managing director at the IMF, which is charged with maintaining global financial stability.

 


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