Mutiny at the IMF

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.

Continue reading “Mutiny at the IMF”

After the European stitch up of the IMF top job, the case for major reform is clearer than ever

First published on the World Development Movement blog on 30 June 2011

As Christine Lagarde is briefed on her new job as the managing director of the IMF (the World Bank’s sister organisation, set up post-war to promote economic stability) we are left to reflect on the rigged selection process and sad inevitability of her appointment. The legitimacy of the Fund, already in pieces, was dealt a further blow by this debacle.

Lagarde was crowned long before the formal selection process had even begun. European leaders brazenly ignored their previous commitments to an open, merit-based and transparent process. Using the Eurozone crisis as an excuse both for the speed of the process (cut from ten weeks to six), and the need for a European head, they praised and promoted Lagarde’s candidacy, openly undermining the selection process. This necessity for local knowledge and understanding clearly wasn’t the case when Africa, Asia and Latin America were in crisis.

Full article available here

Open statement: International NGOs call for IMF selection process to start over

 Open statement on the IMF selection process
24 June 2011

In the wake of the Dominique Strauss-Kahn scandal, the IMF board set out a procedure for selecting a new head of the IMF, attempting to meet commitments for an open, transparent, and merit-based selection process. Even before the board’s action, a broad swathe of civil society organisations from around the globe had already articulated clear standards and procedures for how an IMF managing director should be selected.

The board’s procedure fell short of both their own previous agreements and the calls from civil society groups. This weaker process was then subverted by European real-politik which saw the continent’s governments clinging to an outmoded system of global economic governance which accords them undue privileges.

The imminent selection of Christine Lagarde to lead the IMF has laid bare the hypocrisy of a selection process which was neither truly fair and open, nor merit-based, especially given the existing imbalance in voting shares at the IMF. The rushed de facto appointment of Lagarde by European powers contradicts commitments by the G20, the IMF board and European finance ministers over the past years. Under Lagarde, the IMF is likely to further lose legitimacy, and be relegated to being the junior partner in the European Central Bank’s destructive bailouts of private creditors and punishment of ordinary eurozone citizens.

This does not have to be. There is still a chance to rescue this process and possibly the IMF’s legitimacy. The IMF board needs to start over, revamp the process and take a more professional approach that leads to a field of candidates committed to reforming the IMF and its approach to both rich countries and developing ones. In the meantime, it is imperative that the US publicly declare that it no longer expects tradition to hold, and that the filling of the posts of IMF first deputy managing director and president of the World Bank should be decided on merit and without regard to nationality. It is time the governance of our international financial institutions moves into the 21st century.

Sincerely,

  1.  Oxfam International
  2. ActionAid International
  3. Bretton Woods Project
  4. New Rules for Global Finance
  5.  11.11.11- Coalition of the Flemish North-South Movement
  6. African Forum on Alternatives (Senegal)
  7. AMODE (Mozambique)
  8. Association for Women’s Rights in Development (AWID)
  9. BOND (UK)
  10. CAFOD (UK)
  11. CEE Bankwatch Network
  12. Centre for Health Policy and Innovation
  13. Centre For Social Concern (Malawi)
  14. Christian Aid (UK)
  15. Civicus
  16. Compass (UK)
  17. CRBM (Italy)
  18. European Network on Debt and Development (Eurodad)
  19. Fundar, Centro de Análisis e Investigación (Mexico)
  20. Just Foreign Policy (US)
  21. International NGO Forum on Indonesian Development
  22. Jubilee Australia
  23. Jubilee Debt Campaign (UK)
  24. Jubilee USA Network
  25. Public Interest Research Group (India)
  26. Sisters of St Joseph of Springfield
  27. SLUG (Norway)
  28. The Norwegian Forum for Environment and Development
  29. Third World Network
  30. World Economy, Ecology & Development Assoc. (Germany)

In the news: Lagarde limbers up, Brazil backs Carstens (maybe)

Today Lagarde meets with the IMF board following meetings with IMF officials and US Treasury Secretary Timothy Geithner yesterday. Although still a long-shot, Carstens may be buoyed somewhat by the news that Brazil may back him after all. Paulo Nogueira-Batista, Brazil’s executive director at the Fund was quoted as saying “Brazil may well decide to support Carstens”. More symbolic than anything (their chair commands 2.79% of the vote) it at least shows a willingness to express their grievances at the process with deeds as well as words and saves Carstens the embarrassment of not having the support of leaders from his own region. Nogueira-Batista continues, “this institution has a long way to go in undoing problematic governance structures … this [campaign] process has helped somewhat by highlighting the weaknesses”.

Domenico Lombardi, a former IMF board member pointed to the dilemma faced by many nations in voting for anyone else but Lagarde, saying that “in the end this person is going to be the managing director of the institution. There is really no sense in voting for somebody else when it’s clear who will win”.

Still looming is the French courts’ decision on whether to pursue legal action against Lagarde for accusations of abuse of office over a settlement between businessman Bernard Tapie and the French government. Recent reports suggest that an official under her ministry’s authority is too under investigation.

The IMF board will meet on June 28 to discuss the candidates, announcing the victor by June 30.

Carstens states his case for the top job

Carstens’ presentation to the IMF board reads like a power play in challenging the legitimacy of the Fund and their commitment to a transparent and merit-based selection process.

Lagarde will no doubt benefit from Carstens’ statement being made public before she meets with the board on Thursday. Still, Carstens sure to have the Lagarde camp working overtime produce a convincing declaration of her suitability for the post.

It started in May with an eight page curriculum vitae of sorts in which he spelled out why he should get the job, starting:

To facilitate the transparent and merit-based selection process, I hereby offer an overview of my professional background; economic policymaking record; managerial and diplomatic skills, with particular attention to multilateral cooperation; understanding of the Fund and the policy challenges facing the Fund´s diverse membership; and, in closing, my strategic vision for the institution.

Long-time readers of the blog will no doubt be interested to see how it compares to the candidate assessments offered by some of his critics…

Throughout there are digs at the European stitch up such as: “we need a Managing Director who can best serve all of the member countries, not merely those experiencing challenges at one particular point in time.”

Continue reading “Carstens states his case for the top job”