Global Policy Forum

The IMF Wants to Change. Honest. Just Not Yet.


By Barrie McKenna

Globe and Mail
September 11, 2007

It's nice work if you can get it.

You get to run a prestigious international organization, live lavishly in one of the world's great cities and maybe save the planet. Throw in a tax-free salary of more than $400,000 (U.S.), a bevy of aides, club memberships, loads of first-class foreign travel, and it's a dream job. And yet, in the three months since the International Monetary Fund launched a global search for a new managing director, only two people have applied - French politician and economist Dominique Strauss-Kahn and Czech central banker Josef Tosovsky. That's because, barring an act of God, the position belongs to Mr. Strauss-Kahn.

There will, of course, be interviews. And the IMF insists it will consider only the two men's "professional record and qualifications." But the fix is in, and by early next month Mr. Strauss-Kahn will be the IMF's new boss. Sadly, it's the way the heads of the IMF and its sister organization, the World Bank, have been chosen for more than 60 years. And the tradition is alive and well. The founding European members of the fund choose one of their own, and all of them have already endorsed Mr. Strauss-Kahn. Meanwhile, the U.S. picks the president of the Bank, as it did three months ago, naming Robert Zoellick to replace scandal-plagued Paul Wolfowitz. Increasingly, these two powerful jobs have become cushy resting places for career politicians on the way up, or the way out. Rodrigo de Rato, a Spaniard, quit part way through his five-year term at the IMF, ostensibly to spend more time with his family. But the Spanish media is aflutter with speculation about his imminent return to domestic politics. His predecessor, Horst Koehler, followed a similar path. And Mr. Strauss-Kahn has never concealed his ambition to be France's president. That's unfortunate. The IMF is struggling mightily to re-establish a place for itself in a world that increasingly doesn't seem to want or need its cash or advice.

Mr. Strauss-Kahn, known in France by his initials DSK, must take on a reform agenda that isn't exactly moving at warp speed. After all, if the reforms were on track, he probably wouldn't be getting the job. Many people seem to have forgotten that Mr. de Rato was to have been the last of the automatic European designates, chosen in some dark room in Brussels. The Europeans now promise that Mr. Strauss-Kahn will be the last.

Other reforms are in trouble. Some Europeans are fighting modest proposals to correct the shameless lack of voting clout at the IMF for emerging and developing economies. South Korea, one of the countries badly underrepresented relative to its economic clout, has warned that if Europeans insist on this "league of their own," Asian countries may just form their own fund. There is also infighting over how a newly created emergency-bailout fund would work. And there is some question about the commitment of member countries to effectively beef up the IMF's surveillance and enforcement tools.

Mr. Strauss-Kahn, 58, talks a good line, and his credentials are solid. He's a former finance minister and economics professor. Although a socialist, he has forged a centrist path at home, urging France to embrace globalization. And he recently completed a world tour to show the bank's clients that he's a team player. In a blog posted on his website last week, Mr. Strauss-Kahn billed himself as the "candidate of reform" and endorsed even deeper changes to the so-called "quota" system to give more power to the developing world. "I feel confident that, if appointed, I would find the necessary support to implement an ambitious reform program to ensure the enduring relevance of the IMF in a rapidly changing world economy," he pledged. Maybe so. But many of the countries who put him up for the job have made it clear they have no intention of relinquishing their historical clout to emerging economic powers. If the Europeans honestly thought DSK would thwart those wishes in Washington, it's a good bet they wouldn't hire him. And no offence to DSK, but Mr. Tosovsky, who was cheekily nominated by Russia, is just as legitimate a candidate, and a European. But he won't get the nod because he isn't Europe's choice.

Mr. Strauss-Kahn gives reform a bad name because he's a symbol of the way it's always been at the IMF, not the way it ought to be.

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