In an unprecedented move, late on Tuesday in Washington, the IMF executive directors that represent Brazil, Russia, India, China and South Africa issued a joint statement on the IMF selection process. The statement of course demands a “truly transparent, merit-based and competitive process for the selection of the Managing Director of the IMF and other senior positions in the Bretton Woods institutions.” What is more important is that it shows unity and the demand that the next IMF head be a reformer. This will be a blow to the hopes of Mexico’s Augustin Carstens but also a sharp rebuke to the Europeans and a warning to the US.
imfboss has invited candidate assessments from civil society voices in the home countries of the candidates to head the IMF. Throughout the process we will be posting these here for your benefit.
By Patrick Bond, University of KwaZulu-Natal Centre for Civil Society, South Africa
The world’s most predatory financial institution had until last Thursday a managing director nicknamed “The Seducer,” who talked left, evoking John Maynard Keynes, and walked right, imposing austerity on the Third World, including now Ireland, Greece and Portugal.
Useful though that was to world financial elites, Dominique Strauss-Kahn’s notorious misogyny allowed the powers behind the International Monetary Fund (IMF) to ditch him with little hesitation once rape charges by a vulnerable hotel cleaner last Saturday began to stick. Raising the prospect of a consensual-sex defense worthy of Jacob Zuma, superstar lawyer Benjamin Brafman stupidly remarked, “The forensic evidence, we believe, are not consistent with forcible encounter.”
South Africa’s Trevor Manuel is apparently being seriously considered as Strauss-Kahn’s replacement, in competition with conservative French finance minister Christine Lagarde, British political failure Gordon Brown and other emerging-markets personalities. (A “Europeans Only” sign always graced the IMF director’s door, but surely that can change?)
Strange times produce strange bedfellows. In a direct challenge to the European gang’s attempt to shoehorn in yet another French MD, South Africa and Australia have issued a joint statement saying 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.”
This is precisely the point that European governments – seemingly stuck in a nineteenth century timewarp – seem pigheadedly determined to ignore. Forcing in another European undermines the legitimacy of the IMF, making it look absurdly out of touch in a global economy powered by China, India and other emerging markets. It will also do them no favours in Europe – will an insider who owes their position to the backing of the Euro club really speak truth to power and help them take the hard choices ahead? I doubt it and so do leading analysts at the Peterson Institute. In a thoughtful article, Veron and Subramanian argue:
“if and when Greece comes back for its second tranche of borrowing, the MD will have … to convince Europe, in what promises to be a heated discussion, that Greece has a solvency problem and requires debt restructuring; or, if the IMF concludes that Greece merits international support and all other options are worse, to convince the rest of the world to extend further financial commitments. Either way, there is less need for a European and more for an objective outsider.”
Amar Bhattacharya of the G24 group of developing countries at the Fund puts it well: “There are very, very strong able candidates from the developing world and there has never been a more important time for change for the institution given the challenges it faces and the need for true multilateralism.” It seems obvious to me that Europe’s best interest lies in a truly open, merit-based process: but are there any leading European politicians far-sighted enough to see that?