The IMF announced today it would welcome candidates from any
country in the search for a new managing director, just as a
former French finance minister emerged as the frontrunner for
The statement follows widespread unease that the selection of a
European for the top job under an unwritten convention would
further sap the Funds credibility, at a time when its
influence is in marked decline.
Within Europe, there is mounting concern that the EU is
focusing on retaining its traditional hold on IMF leadership
rather than addressing the disarray of the blocs own
economic policymaking agenda.
Caio Koch-Weser, vice-chairman of Deutsche Bank and himself
a one-time candidate for the IMF post, believes the EU should
prioritize internal coordination over attempts to dominate the
A single high representative for the EU on
international economic affairs such as global imbalances and
currency policies is more important than a European managing
director for the IMF, Koch-Weser told a recent meeting of
the Euro50 Group in
A senior IMF official has also referred to inconsistencies
in the European stance on substantive issues, noting
confusion in a recent meeting of European
representatives to discuss their response to the Funds
recent exchange rate surveillance initiative (see
IMF currency plan under fire).
The German government put out a statement afterward,
but nobody seemed sure if this was on behalf of the EU or
Eurozone, the European members of the G8 or G20, the European
constituencies at the IMF, or simply as the German
government, the official said.
Koch-Weser advocated restructuring the four European voting
constituencies in the Fund, all of which are currently a mix of
EU and non-EU members. He suggested replacing this with three
constituencies: Eurozone countries; the non-Eurozone EU and
European Economic Area (EEA) countries; and the non-EU and
non-EEA countries, mostly in Eastern European and the
Emerging Markets understands that the Australian
and South African governments have been lobbying through the
G20 group of countries for non-European candidates to be
considered as a replacement for outgoing Fund chief Rodrigo de
Rato. Brazil has also publicly voiced this demand.
The former French finance minister, Dominique Strauss-Kahn,
on Monday won broad EU backing to become the next head of the
IMF, trouncing a rival Polish candidate.
Mr. Bush has appointed his candidate to the World
Bank, so the European governments will be reluctant to give up
their own nomination for the IMF at this time, former
French economy minister Edmond Alphandery told Emerging
Markets, adding that a European managing director
therefore remained the most likely outcome.
Whoever takes over, the IMF must reconsider its role:
there is no point being an organization to tackle financial
crises if there are no financial crises, Alphandery
Meanwhile, analysts are bemoaning the decline of the
Washington multilateral. It concerns me that we are
heading into the turn in the credit cycle without the global
economic leadership role traditionally provided by the
IMF, David Lubin, head of emerging market economics at
Citi, recently told an investor forum in London.
The petrodollar paradox means that there is now a big
global bid for assets, cutting global risk premiums. But
actually, this means the risks themselves are increasing, as
erstwhile creditors are pooling their own reserves and managing
their own liquidity. The IMF could be disintermediated,
For the IMFs own statement on the selection process,