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Horse-trading over IMF post intensifies

Horse-trading over IMF post intensifies

by David Marsh

Tue 24 May 2011

As Dominique Strauss-Kahn gives a new meaning to the IMF’s programs of enhanced surveillance, international horse-trading is intensifying over who should replace the Fund’s disgraced former managing director. It would seem a thoroughly good thing for a representative of one of the emerging economies to take over the job. With his bail release to a safe address in Manhattan, Strauss-Kahn’s noble yet distinctly lived-in features are due to be banished at least temporarily from our TV screens. A new image is surely required: the spectre of the two original Bretton Woods powers, the US and Britain, uniting in common sense. President Barack Obama and his perfectly-formed accomplice, British prime minister David Cameron, should stride before the TV cameras and jointly state that it’s time for a non-European to take the helm at the IMF. Something tells me that this is not going to happen, at least not straight away.

Over the weekend, Britain’s Chancellor of the Exchequer George Osborne declared he was backing the front runner, Christine Lagarde, the French finance minster. Even though Cameron recently had suggested the IMF should look beyond Europe for its next chief, Osborne said the French minister was "the outstanding candidate" and had "shown real international leadership as chair of the G20 finance ministers this year... We support her because she's the best person for the job.” It’s difficult to know whether Osborne’s statement is based on a deeply-held political position – or whether it’s a clever gesture to curry favour with other Europeans, masking Britain’s readiness to back down if a serious candidate emerges from the developing world. Australia and South Africa meanwhile have fired a warning shot across Europe’s bows, warning over the weekend that: "For too long, the IMF's legitimacy has been undermined by a convention to appoint its senior management on the basis of their nationality" – a statement that may indicate that a candidate such as former South African finance minister Trevor Manuel could be moving up in the stakes. The overriding consideration should be that paving the way for an African, Asian or Latin American to move into the top position would be a way of ensuring that rapidly developing countries take real responsibility commensurate with the growing financial power on the world stage. The haste with which European countries cast down their beach towels around the IMF pool cast little credit on the protagonists. German Chancellor Angela Merkel’s assertion that Europe needs its own candidate to ensure a happy ending for the European debt crisis simply beggars belief.

French officials have already occupied the IMF managing directorship for 36 years out of the 65 the Fund has been in existence. True, Ms Lagarde has been a stalwart finance minister and cuts a dapper figure at ministerial gatherings. By getting on in a civilised manner with Wolfgang Schäuble, her German opposite number, she has contributed to greater cohesiveness between Germany and France – especially by comparison with the way that her predecessor, one Nicolas Sarkozy, regularly chose to clash with his German counterpart Peer Steinbrück. But pushing her candidature while the ink is barely dry on Strauss-Kahn’s charge sheet has a touch of desperation to it. Is Europe really in such a parlous state that it needs a euro devotee at the IMF to ensure the currency bloc doesn’t fall apart?

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