7 September 2007
The U.K. confirms its support of the EU nominee Dominique Strauss-Kahn for the leadership of the IMF; Luxembourg's prime minister assures a non-European leader in the future; and emerging countries such as India call out for real reform of governance in the IMF.
The selection process for the International Monetary Fund’s managing director post seems increasingly pre-determined. The U.K. explicitly confirmed its backing of Dominique Strauss-Kahn in an article published by the Financial Times on September 4 and Strauss-Kahn pitched himself as “the candidate of reform” in a Wall Street Journal commentary published on September 6. The nominations for the IMF leadership post, to succeed the outgoing managing director, Rodrigo de Rato, closed on August 31. The EU endorsed Strauss-Kahn, while Russia intervened in late August with their nomination of former Czech prime minister, Josef Tosovsky. The IMF Board will now initiate interviews with these two candidates to select which of them will take over as the Fund's new head after the IMF-World Bank Annual Meetings in October 2007.
While EU nominee Strauss-Kahn had received the support of most western European countries, the U.K. had sent mixed signals as it initially “accused Paris of railroading the French socialist’s candidacy without following formal procedures,” and then called for an “open, transparent and meritocratic process for selecting the next Managing Director” while simultaneously extending their support for Strauss-Kahn. However, in a statement this week, the U.K. Treasury expressed that Strauss-Kahn was the candidate who best matches the criteria established by the IMF Board for the managing director position. The sudden shift in the U.K.’s position is privately understood as part of a tacit agreement where France will support Britain in calling for a more legitimate and transparent process in the next round of selecting the IMF leader.
Future leadership selection was also the subject of a Financial Times article published last week on August 29, in which Jean-Claude Juncker, Luxembourg’s prime minister, stated that if developing countries accept Strauss-Kahn this time around, they will be able to influence the IMF’s next leadership selection. Critics of the selection process—who have long argued against the opaque and undemocratic tradition of Europeans claiming the right to appoint the IMF head, in exchange for the U.S.' claim over the World Bank presidency —feel that Juncker’s compensatory statement to developing countries is too little and too late. Developing countries should not have to accept the current status quo in return for promises that “the next director will certainly not be a European.” At the same time, Juncker expressed that accusations by critics that Europeans are unilaterally deciding on the IMF head by nominating Strauss-Kahn are “missing the point.” Juncker, who is also the president of the group of eurozone finance ministers, defended Strauss-Kahn’s nomination by emphasizing how he is well-known as a “reformer” who will be able to “adjust the IMF firmly to the expectations and interests of developing countries.”
Meanwhile, developing countries, particularly the emerging economies of Brazil, Russia, China, India, and South Africa, are calling for real decision-making power, as well as voice and visibility, in the IMF. An editorial published in the Times of India on September 5 asserted that the IMF’s voting rights and leadership composition do not reflect the rising economic clout of developing countries in today’s global economy. Although an increment in voting rights has been mandated in the IMF for China, South Korea, Turkey, and Mexico, the Indian editorial argues that “the change is less than substantial and, in any case, leaves the basic power structure at the Fund intact.”
Resources
Follow the IMF leadership selection process on the IMFleadership blog
- My Vision for the IMF by Dominique Strauss-Kahn, September 6, 2007 (Wall Street Journal website)
- UK backs Strauss-Kahn for IMF by Scheherazade Daneshkhu and Eoin Callan, September 4, 2007 (Financial Times website)
- Get Real, Fund-Bank, Times of India editorial, September 5, 2007 (Times of India website)
- European control of IMF "to end" By Wolfgang Proissl, August 29, 2007 (Financial Times website)
- Two nominees for IMF top job, IMF Survey Magazine, August 31, 2007 (IMF website)