|
||
|
TWN Info Service on Finance and Development (Jul07/05) 16 July 2007
Just 12 days after International Monetary Fund Managing Director Rodrigo de Rato made a surprise announcement that he would resign in October, European countries have put forward a leading member of the French socialist party and former finance minister Dominique Strauss-Kahn to replace him. With
the However, with senior officials from some developing countries (and at least one developed country) voicing unhappiness with the undemocratic process, there might still be a bumpy road to Strauss-Kahn’s formal appointment. The following is a report by Peter Chowla from the London-based World Bank and IMF watchdog, the Bretton Woods Project, on the selection process. It was published in SUNS #6292 Friday 13 July 2007. With
best wishes Missed Chance to Reform Selection of IMF Chief By Peter Chowla Just 12 days after International Monetary Fund Managing Director Rodrigo de Rato made a surprise announcement that he would resign in October, European countries have put forward a leading member of the French socialist party and former finance minister Dominique Strauss-Kahn to replace him. With
the It is the second lost opportunity in as many months for reform of the anachronistic governance of the international financial institutions. However, with senior officials from some developing countries (and at least one developed country) voicing unhappiness with the undemocratic process, there might still be a bumpy road to Strauss-Kahn’s formal appointment. De Rato cited only personal reasons for his departure, but said that he remained committed to pursuing reform at the IMF under the Medium-Term Strategy, a document that the managing director had a strong hand in shaping. His departure, announced months in advance, opened up the possibility that an open, transparent and merit-based process for selecting the next managing director could be put into place. Apparently,
the heads of state and finance ministers in In
the week leading up to a breakfast meeting of European finance ministers
on 10 July, a plethora of European candidates were put forward. However,
Strauss-Kahn, also known as DSK, received the endorsement from the majority
of European Union member states, after a vigorous campaign by French
President Nicolas Sarkozy. The French president’s efforts effectively
place US
Treasury Secretary Hank Paulson had already confirmed that the appointment
was a European prerogative and that the The German Finance Minister, Peer Steinbrueck, from a centre-left party but working under centre-right Prime Minister Angela Merkel, also brushed aside calls for an open and transparent process and openly supported Strauss-Kahn when Sarkozy first announced his intention to nominate him. With
European and Not so fast The road to Strauss-Kahn’s formal selection may yet be bumpy. The
day before the European finance ministers met, the After the meeting, the UK Treasury dissented from the robust statement of support for Strauss-Kahn issued by the European Union presidency, saying that “we don’t feel bound by that discussion”. Developing
countries and NGOs were the first to demand that the selection process
be opened. The spokesperson for On the Monday before the European decision, the IMF’s Executive Board met to discuss the replacement process. By the IMF’s Articles of Agreement, the Board is the body that is given the power to appoint the Managing Director. The
Board’s agenda is heavily influenced by the dean of the board, the longest
serving board member, who currently is Iranian Abbas Mirakhor, and the
deputy dean, Shakour Shaalan from Developing country board members seem ready to challenge the tradition of European domination in any way they can, with Shaalan saying “I am going to blast the Europeans, not because of Mr. Strauss-Kahn, but because of the procedure being followed.” The Board had previously broadly endorsed the guidelines set down in a 2001 report by a joint Bank-Fund committee looking into the selection processes. It called for an open, merit-based process driven not by national nomination but by an external advisory group of eminent persons. The IMF’s Medium-Term Strategy has also called for more transparency in the selection process. The board issued a statement on 9 July confirming that the board plans to make a decision in “an open and transparent manner” and agreeing that “any executive director may submit a nomination, regardless of nationality, for the position”. Fait accompli Even
if there are machinations on the board to ensure an open process, the
outcome is already defined. At the time of de Rato’s selection in 2004,
there were officially three candidates, including one non-European,
but the outcome was known far in advance. With Paulson’s statement about
deferring to Developing country officials inside the IMF have indicated that they are again interested in putting forward a candidate, but no names have been announced. Trevor Manuel has been cited by the media as a possible candidate, as has Arminio Fraga, former Brazilian central bank governor; Mohammed El-Erian, the failed 2004 candidate and head of Harvard Investment Management; and Stanley Fisher, governor of the Bank of Israel. But
even if all developing country Executive Directors voted together and
attracted the unlikely support of The
announcement of Strauss-Khan’s nomination also indicated that after
his term ends, the post should be open to others. *
Peter Chowla, who contributed this article, is a policy and advocacy
officer with the Bretton Woods Project, an NGO monitoring the World
Bank and IMF in
|
||
