Oops, they did it again: EU leaders push for European head of IMF

Time and again European Union leaders have made overbearing political commitments to conduct an “open, transparent and merit-based process”  to select the IMF Managing Director (MD). However, at the moment of truth now that former MD Dominique Strauss-Khan has resigned, they are taking back every word they said and holding on to their outdated privilege to head the institution that will – whether we like it or not – determine the fate of the world economies.

The selection process of the new IMF head has managed to achieve what three long years of deep financial and economic crisis in Europe never managed to do: to reach agreement among Member States of the European Union. This week “a European consensus is being elaborated. We must have a European [IMF managing director],” said French Minister Francois Baroin. Even “the Chinese are favorable to the appointment of Christine Lagarde [current French Finance Minister],” he added.

Both amnesia and backtracking are common features amongst European decision-makers regarding IMF governance. Let’s remind them what they promised to deliver:

In November 2008, ahead of the International Conference on Financing for Development in Doha, European leaders expressed their “support (for) an open and transparent selection process of the IMF Managing Director and the WB President and the simultaneous opening of these positions to candidates from all board members.”

In May 2009, in a speech on “European foreign economic policy”, the European Commissioner Joaquin Almunia said that the situation at the IMF was “becoming more and more untenable.” And he added: “It is now time to face up to the reality and to find a solution which would be acceptable to member states before a solution to the problem is forced upon us.”

In June 2010, European leaders agreed in the Council Conclusions that IMF quotas should be reviewed as part of a wider package of IMF governance issues, covering all elements agreed in Pittsburgh,” including the selection of leaders of all international institutions through an open, transparent and merit-based process.

In April 2011, on the occasion of the Spring meetings of the IMF, György Matolcsy – Chairman of the EU Council of Economic and Finance Ministers – reiterated that “the criteria and the procedure for the selection process of the IMF Managing Director should be part of a broader (…), and that the election should follow an open, transparent and merit-based process, irrespective of nationality and gender.”

Faced with the moment of truth, European leaders are – once again – desperately clinging to the top position at the IMF.

In Europe we must ask ourselves how our leaders, who have failed to put their own house in order, will manage to provide leadership at the institution which is ever more shaping the future of global economic and financial governance.

3 thoughts on “Oops, they did it again: EU leaders push for European head of IMF

  1. Some Europeans have argued that we must have a European MD because we have a European crisis. This is a nonsense. When we had the Asian crisis, did they want an Asian MD? And one can readily imagine their response if anyone had dared to suggest a Latin American MD during the Latin American crisis, or an African head on the basis of Africa’s debt crisis: “if they can’t run their own economies, why should we let them run the IMF?”. So why on Earth should the fact that the Europeans have now messed up their own economies (ably assisted by the US) give THEM the right to run the IMF?

    Clearly different standards are being applied: when African and Latin American economies face problems, this is interpreted as disqualifying candidates, regardless of their individual merits, simply because they originate from these regions, and as demonstrating the need for a European MD. When European economies face problems, this is interpreted as an unfortunate accident, and as indicating the need for…. a European MD. This view is self-serving and hypocritical in the extreme.

    Like

  2. I fully agree that there needs to be a transparent selection process for the next managing director of the IMF. Country quotas and personal qualifications should figure among the criteria, yes, but it is far more important to face the far more controversial question of the MD’s policy leaning. At a time of resurgent austerity politics there is a need to open the discussion on how to make the IMF an institution that puts employment, decent work, and the regulation of global financial flows back as its overarching rationale (as conceived in 1944) and allows for fiscal budgets to allow for expenditures that ensure the MDGs for poverty eradication, education, health and social justice can be met, and that would accommodate the global social floor initiative. This is the debate that is needed – and the choice of a new MD is a good time to advance this discussion, since many of the BRICS have indeed installed progressive socio-economic policies which they could be sharing with South and North.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s