Accessibility links

World: Two Key IMF Members Disagree Over New Chief

  • Andrew Tully



The deliberations of finance ministers once was a gentlemanly affair. Differences were settled in private. Decisions usually were presented as unanimous votes. Now, as RFE/RL's Andrew F. Tully reports, the U.S. and Germany are publicly feuding over who will succeed Michel Camdessus as managing director of the International Monetary Fund (IMF). And no one knows where the dispute will end -- or whether it will be messy.

Washington, 29 February 2000 (RFE/RL) -- For the first time in memory, two influential members of the International Monetary Fund are publicly brawling over who should be the agency's next managing director.

The IMF, like its sister organization, the World Bank, has operated under gentlemanly rules since it was created after World War II. It is, after all, made up of finance ministers, not football players.

For instance, there has always been an agreement that the presidency of the World Bank would be held by an American. For balance, the managing director of the IMF would be a European.

Likewise, IMF members could disagree about which candidates they preferred to be managing director of the IMF -- as long as they differed in private. Then, traditionally, the dissenting delegates would agree to vote for whichever candidate had the support of a clear majority of members. In fact, the would not be held until the winner was known to the members. This charade of unanimity was considered the dignified way to choose the leader.

In November, Michel Camdessus announced that he would retire as the IMF's managing-director. Almost at once, Germany nominated Caio Koch-Weser to succeed Camdessus. Soon it appeared that Koch-Weser, a former senior official at the World Bank, had growing support of the other member countries of the European Union (EU).

On Monday, the EU finance ministers voted unanimously in Brussels to giver Koch-Weser their formal support.

Within hours, in Washington, White House Press Secretary Joe Lockhart announced that the administration of U.S. President Bill Clinton opposes Koch-Weser for the senior IMF position. He said Clinton spoke by telephone with German Chancellor Gerhard Schroeder on Saturday:

"The president told Chancellor Schroeder that the United States is not prepared to support the German candidate [Koch-Weser]. We remain -- our objective remains to work with Europe to find a strong European candidate who is able to command broad support, including from the emerging markets countries."

Meanwhile, other IMF member states and some developing countries suggested that Camdessus be succeeded by his deputy, Stanley Fischer, an American citizen who has been serving as acting managing-director since Camdessus' resignation became effective on February 14. And Japan nominated Eisuke Sakakibara, a former monetary policy-maker with the Japanese Finance Ministry.

None of these candidates has a chance to lead the IMF without American support. The United States is the IMF's largest shareholder and has 18 percent of the votes. And Lockhart would not say whether the U.S. supports any of the formally nominated alternatives to Koch-Weser.

It is clear that Schroeder wants to show the United States that Germany was not intimidated by Clinton's telephone call on Saturday. Schroeder could have acceded to Clinton and withdrawn Koch-Weser's nomination, but he did not.

All this wrangling suggests that the once dignified, almost dainty, conduct of finance ministers may be a thing of the past, according to Richard Sweeney, a professor of economics at Georgetown University in Washington.

Sweeney told RFE/RL that the world of finance has changed radically in the past decade, in part influenced by the young technology entrepreneurs. These financial leaders, like Bill Gates of the Microsoft Corporation, control an enormous amount of the world's wealth. And they do not follow the rules of the previous generation.

At the same time, Sweeney says, the leaders of developing countries are becoming impatient with the methods of industrialized countries. And they are not reluctant to speak out as they did at the World Trade Organization meeting in Seattle three months ago. According to Sweeney, such behavior was once considered unacceptable.

But now, Sweeney says, finance ministers -- even presidents and prime ministers -- seem to believe that confrontational political methods get more results than reserved, diplomatic engagement.

"I think it's -- it's the wave of the future, that people who have these inhibitions come up short in the politics of the thing."

Sweeney says he is not sure that the IMF will abandon its tradition of privacy to achieve at least the appearance of dignity in choosing its next managing director. But he is concerned that Clinton made a point of opposing Koch-Weser to succeed Camdessus, and that Schroeder apparently has decided to fight back.

XS
SM
MD
LG