Late on Friday the IMF board formally set out the process for selection of the next managing director. It includes the key phrase that is being fought over: “open, merit-based, and transparent manner” in describing the process they will use.
We now know the key dates for the process. Nominations open on Monday and close on the 10th of June, giving about 3 weeks for names to be put forward. The board will then shortlist 3 candidates and make a final decision by the end of June.
Of course the board is mostly irrelevant in this process as these decisions are made far above the heads of most board members. The Executive Directors, especially those appointed by rich countries, take marching orders from their capitals. This decision will be made at finance minister and head of government level.
Despite promises to the contrary, European countries are not respecting the idea of a merit based process. By definition that would require comparing all the candidates, but many have already picked their choice on the basis of what part of the world she comes from. On Thursday Italian prime minister Silvio Berlusconi backed Christine Lagarde. On Friday German Chancellor Angela Merkel again insisted the IMF head must be European and gave provisional backing to Lagarde. Austrian Finance Minister Maria Fekter backed her on Friday as well.
Europeans have argued that because euro zone countries are the biggest borrowers from the IMF, in volume terms, they need to retain Fund leadership. A post from Richard Gowan at Global Dashboard exposes the the absurdity of this argument. “Imagine that you ran out of money, and all your friends were nearly bankrupt. Would you then go to the nearest outlet of HSBC or Citibank and demand to be made the branch manager, as you understand the need for an overdraft really, really well? No, you would not.” And lets not forget that the plurality of the IMF’s agreements (on number, not volume, terms) are actually in Africa.
Dave Merrill over at fistfullofeuros has some wishful thinking: “but since quota weights were realigned last year, it’s possible that the new boss may come from outside Europe.” Unfortunately the pitifully small realignment agreed last year won’t take affect until 2012, and even then it wouldn’t prevent the Europeans, with American connivance, from stitching up the process.
Given that the IMF and its European owners seem impervious to joining the 21st century, many people on left and right are now asking whether we should just abolish this relic of an institution. Most of the right-wing commentators, like ED Kain at Forbes, display a startling lack of knowledge when they claim that the IMF is subsidised by US taxpayers, but their question is worth pondering. Especially if the next MD ends up being a reactionary european…