Power, including the power to appoint, is never given: it must be taken, and now it can be
The Europeans are, once again, circling to nominate one of their own as head of the IMF. They are doing so despite their solemn undertaking given during the sex-scandal-European-IMF-succession in 2011 to stop doing so. Promises promises.
The Trump administration—having already got its end of the bargain with European consent for the all-too-evidently unsuitable Mr. Malpass as President of the World Bank, and at best disinterested in International Organizations—is set to let the Europeans have their way at the IMF yet again.
The European short-list, comprising the usual crop of second-tier politicians, is being drawn up in great haste to pre-empt any head of steam building up in protest. The self-declared-and-so-called-great-and-good friends-of-the-IMF that recently met at the Paris conference on Bretton Woods at 75 have circulated their way around this stench. And the broader world looks on, unable either to coalesce around an alternative candidate or to outvote the US and the Europeans.
So is it all a done deal, even though this practice would rightly be condemned in no uncertain terms by the IMF itself as corruption and tribalism were it to be conducted for senior appointments by any African government.
Well, just berating the Europeans for this—as financial commentators are wont to do before moving breathlessly on to their next op-ed—is ineffectual at best and complicit at worst because water glides effortlessly off a duck’s back.
Instead, this is the time for a mutiny at the IMF by the countries of the rest of the world.
That is easier to mount than it might appear and now has better prospects than it ever has.
The strategy is not to mutiny around an alternative nominee—this has been tried before, has failed, and will fail again—but is to mutiny around a principle: “no Europeans, no Politicians, no Amateurs as IMF Managing Director”.
Thus, instead of promoting a specific alternative candidate, mutineers should, respectfully, withhold all cooperation with any nominee/appointee who does not fulfill all three criteria.
So such individuals should not be welcome in mutinying countries during the preappointment “get to know you” tours in which such nominees indulge. If such an individual is forced through, mutinying countries should boycott all official functions in the IMF carried out by the appointee, including country visits and IMF Board meetings they chair.
This step is not symbolic. Even if a European nominee is forced through, they will know that they risk becoming increasingly irrelevant in operational terms inside the institution, the bulk of whose work concerns its smaller members. So as the number of non-cooperating countries grows, even if those countries are small, second tier appointees will face incremental demise, even though they have Mr. Trump and the Europeans behind them.
And this step should be twinned with an action with real bite. Until such a foisted candidate steps down, mutinying countries should refuse to approve IMF Quota increases and reform (including withdrawing approval if already indicated) under the ongoing 15th Review, pending a replacement as Managing Director who meets the criteria.
As that review requires approval by 85 per cent of the total voting power of the IMF, this flagship process can be held hostage by quite a modest band of mutineers, especially if the participants include some or all of the non-European non-US members of the G-20.
Concern that delaying the review blocks the shift towards emerging countries in voting shares is a concern about shuffling a window-display: the person of the Managing Director wields the real power, which is why the Europeans are so keen to have someone in their pocket in that job. What delay really does—and why it has bite—is impede the enlargement of the IMF.
Given these twinned actions, all other cooperation with the IMF by mutineers should continue as normal. So Article IV and program missions would be welcome and all other obligations to the IMF would continue to be observed in full, with all other IMF staff, management, and members. This would underscore that the mutineers’ issue is not with the IMF but with the undue appointment of its Managing Director.
And prospects are particularly good for such an initiative right now because, this time, the European cabal may have overplayed its hand: it is not just insisting on a European but on a Euro Zone nominee.
So conditions are ripe for some of the thereby explicitly and newly snubbed non-Euro Zone Europeans to break European ranks and put themselves on the right side of history on this matter: Norway, Sweden, Denmark, Iceland, Czech Republic, Poland, Romania, Bulgaria, Croatia, Serbia, Bosnia and Herzegovina, Albania, Switzerland and, if they can turn the Brexit spirit to some good, the UK. The last two hold above 5 per cent of the IMF voting share; if they join, the mutiny can block the Quota review with just 10 percent more.
Such actions may cause a delay in the Managing Director transition. If so, this is ideal from the conspirators’ viewpoint because the acting Managing Director, Mr. Lipton, meets the three criteria: he is not a European, is not a politician, and is no amateur. So the mutineers can wait any such delay out with the IMF functioning in full accord with their objectives in the meantime.
Such a growing mutiny would seriously embarrass the Euro establishment, keen as it is to claim globalist credentials in contrast to Mr. Trump. And the individual concerned will know that s/he is (or may become) personally responsible for blocking the primary funding and shareholding realignment objectives of the IMF, the 15th General Review of Quotas.
What is the exit strategy for such mutineers? As they have proven incapable of coalescing around a single alternative, the mutiny would be resolved by the Euro Zone members and the US replacing their unsuitable nominee/appointee with one who meets the criteria. There is a plethora of such around the world for them to choose from, all superior to the second-tier Euro Zone politicians being considered. With a candidate meeting the three criteria installed with immediate not eventual effect, the mutiny would end and the European ability to foist one of their second-tier onto the IMF would finally be broken.
As with any boycott, its prospects depend on its duration and size. The longer it persists, the tougher it is on the Euro Zone to hold its indefensible line in support of its appointee; and as all IMF operations continue meanwhile, there is no loss to the mutineers from delay.
So will a country ring-lead such a mutiny and will enough countries by vote share and number join it to force an end to this Euro-Zone IMF appointment malpractice?
Or is the problem, despite the talk of need to bolster international governance and all the Brexit emphasis on reclaiming sovereignty, that vassal countries do not actually care that they have to bend the knee to this Euro-Zoned IMF ?
Now is the time to ask them.