Global Policy Forum

The 50 Years Is Enough Network, a coalition of over 200 U.S. organizations dedicated to the fundamental transformation of the International Monetary Fund (IMF) and the World Bank, issued the following statement today in response to the IMF board's expected naming of Rodrigo Rato as the institution's new Managing Director.

Two months ago, when Horst Koehler resigned as head of the IMF, the institution was presented with an opportunity to demonstrate that it was serious about becoming transparent, accountable, and open. With the culmination of that process today, the IMF has failed on all counts.

Just as in the case of every previous Managing Director, Rodrigo Rato is from Western Europe, and was chosen through an opaque series of back-room negotiations among that region's IMF shareholder governments. Only a handful of European officials were so bold as to defend the custom of reserving the position for someone from their region, but none took any tangible steps to change it. Dozens of respected observers called for an opening of the process. Koehler himself in the last few days has called for a restructuring of the IMF. A large proportion of IMF staff endorsed a statement calling for an open process. Guideline for the selection process formulated by a joint IMF/World Bank committee after objections were raised to the manner in which Koehler was nominated were largely ignored on the grounds that the board never officially adopted them.

Indeed, we can only address today's board meeting in generalities, since neither the public nor the media will be allowed to learn what was said or what positions individual board members took - not because of the sensitivity of the topic, but because that is the rule for all IMF board meetings, where all policy decisions are made and loans approved.

It is ironic that, according to the Financial Times, reports from within the board suggest that the most significant concern about Rato's candidacy was his contention that the IMF is more a "political" than a technocratic institution. This obvious fact has long been denied by the IMF in its quest to appear neutral and scientifically objective. Surely the manner of Rato's selection is the best proof of his observation: hardly a nod to any process designed to find the best candidate, just the whim of the region with one-third of the votes at the board.

Some at the IMF will point to the nomination of Mohammed El-Erian, from Egypt, and his official interview with the board as a sign of increased openness. The usefulness of the precedent set, however, was put in perspective by an IMF executive director quoted by the Financial Times: "It was not a total success in that the decision as to who is going to get the job has already been made."

Europe's collective domination of the votes at the IMF was augmented by the support of the United States government, the largest single shareholder. Once Europe settled on Rato as its candidate, the U.S. signalled its approval - hardly a surprise, since it will want similar cooperation when it comes time to exercise its customary prerogative to unilaterally name the President of the World Bank next year.

The reprise of the closed selection process for Managing Director confirms our view of the IMF: it is a multilateral institution in which control is tightly held by a small number of governments, none of which are IMF clients. The programs mandated by the IMF benefit business and investor interests in that same small groups of countries, but have done inestimable harm to literally billions of people in the rest of the world over the last 25 years. No Managing Director chosen by the IMF board would be likely to change the direction of the institution. What is striking is how careful the reigning powers are to make sure that their control remains absolute. Today's appointment of Rodrigo Rato is sad confirmation that the IMF has no intention of becoming more open, accountable, or transparent - least of all to the people who suffer under its policies.

As the IMF marks its 60th anniversary, it is clear that real change will not happen through internal processes, but will require political pressure from people around the world. The 50 Years Is Enough Network, together with its partners and allies around the world, will redouble its efforts to ensure that such pressure is applied.