Accessibility links

World: Europe Remains Divided On Next IMF Chief

  • Ron Synovitz

European governments are squabbling about whom to nominate as a replacement for the outgoing director of the International Monetary Fund. In an analysis, correspondent Ron Synovitz looks at the candidates -- and the politics surrounding their candidacies.

Prague, 31 January 2000 (RFE/RL) -- It has been more than two months since Michel Camdessus announced that he was leaving his post as head of the International Monetary Fund (IMF). But the member-state governments have yet to name his successor.

Tradition has held that the head of the IMF is a European, while the president of the World Bank is an American. European leaders, however, have not agreed on a common candidate. A gathering of EU finance ministers today (Monday) in Brussels may be the last chance for the German and French governments to unite behind a single candidate before Camdessus leaves office on February 14.

If the talks end without a breakthrough, the number-two person at the fund, Stanley Fischer, almost certainly will be named temporary chief until a lengthy political wrangle is resolved. Fischer had no comment when asked about that probability this weekend at the economic forum in Davos.

The final decision on the next IMF chief will be made by the fund's executive board, which has 24 members, among them representatives from the United States, France, Germany, and Britain.

So far, Germany has lobbied unsuccessfully for its choice -- Deputy Finance Minister Caio Koch-Weser. France has balked at Koch-Weser because he has little experience in macro-level international finance. And Washington made its opposition to the German candidate public earlier this month (January) at a Tokyo summit of the Group of Seven leading industrial nations.

Three of the last four IMF chiefs have been Frenchmen, including Camdessus. But France has not officially announced a candidate of its own.

There had been early indications that Paris was promoting a former French prime minister, Laurent Fabius, for the job. Fabius, however, has called reports of his possible candidacy "flattering" but "untrue."

Other European candidates have been suggested by Rome and London. Italy wants its treasury director, Mario Draghi, to head the fund.

Officials in London have suggested four possible British candidates -- Andrew Crockett, who heads the Switzerland-based Bank of International Settlements, has been mentioned often. The other British candidates are Chancellor of the Exchequer Gordon Brown, Bank of England Deputy Governor Mervyn King, and former chancellor of the exchequer Kenneth Clark.

The tradition that the IMF head is a European is just that -- tradition, not regulation. Japan now wants to change that practice.

Japan is the second largest financial contributor to the IMF, and has been demanding a larger role in determining IMF policy. It has proposed former Deputy Finance Minister Eisuke Sakakibara as a candidate.

That choice has the backing of Russia and countries hit by Asia's financial crisis. But Sakakibara is an outspoken critic of the IMF's handling of the Asian economic crisis, and even he admits he has little chance.

Behind the political squabbles over the next chief is the issue of whether sweeping reforms of IMF loan policies will be implemented in the coming years.

Under Camdessus, Russia became the IMF's biggest single borrower. Camdessus has said his early resignation -- two years before the end of his term -- was not related to allegations that IMF loans to Russia have been illegally laundered through foreign banks. He said he is resigning for personal reasons.

"My resignation has nothing to do with these allegations. These allegations, if anything, have [been] demonstrated to be totally unsubstantiated. So I don't see why I would have that in consideration at the time I've taken this decision, after almost 13 years of service, and for the constitutional and personal reasons. Are there political reasons behind my resignation? Not at all!"

Nevertheless, Camdessus's announcement last November has been followed by calls for the IMF to change the way it operates. Washington, in particular, has criticized the fund for its loans to Russia and its handling of the Asian crisis.

At the G-7 summit in Tokyo, U.S. Treasury Secretary Lawrence Summers proposed a slimmed-down IMF that would refocus its resources on emergency funding and move away from long-term development loans.

That proposal illuminates why Koch-Weser is not considered by Washington as a suitable candidate to head the IMF. Koch-Weser's primary experience in international finance is in long-term development loans, which he worked on as a health projects officer during much of his 26 years at the World Bank.

(Andrew Tully in Washington contributed to this report).