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Europe

IMF begins selection process for new chief

Text by News Wires

Latest update : 2011-05-21

The International Monetary Fund reported Friday that it has begun the search for a successor to Dominique Strauss-Kahn, stating that it hopes to name a new chief by the end of June.

AP - France’s frank, hard-working and chic finance minister, Christine Lagarde, emerged Friday as Europe’s likely choice to lead the International Monetary Fund.

The IMF insists the departure of former chief Dominique Strauss-Kahn has not hurt its day-to-day operations, but it is clearly under pressure to find a successor fast to lead an organization that provides billions in loans to stabilize the world economy. A new chief would also draw attention away from the seamy scandal surrounding Strauss-Kahn, who quit this week to face charges in New York that he tried to rape a hotel maid.
 
The 24-member executive board, which will pick Strauss-Kahn’s successor, outlined late Friday the procedures it will use to pick the next IMF leader. Nominations will be accepted starting Monday until June 10, after which the board will choose the top three candidates to interview.
 
While the nominations will be secret, the board said it would release the names of the three top candidates as chosen by the board. That change could be an effort to address the complaints of critics that the process has been too secret in the past. The board said it hoped to select the next IMF director by June 30.
 
Eswar Prasad, an economist at Cornell University and an expert on the IMF, said the process the IMF board has adopted is similar to the procedures used the last time there was an opening when Strauss-Kahn was chosen in 2007.
 
He said the test of whether the board’s process will be “truly competitive” this time will come only if more than one viable candidate enters the race.
 
Lagarde’s chances for the top IMF job got a boost Friday when Kemal Dervis, a former finance minister for Turkey, said he did not want to be considered for the position.
 
Dervis, who had been considered perhaps the leading non-European candidate, said he was happy in his current position at the Brookings Institution, a Washington think tank. Dervis is a prominent economist who had spent 24 years at the World Bank, the IMF’s sister lending institution.
 
Treasury Secretary Timothy Geithner said in a statement Friday that the United States was consulting broadly with IMF member countries “from emerging markets as well as advanced economies” during the search process for a new IMF leader.
 
A Treasury official on Thursday said the United States had not decided whether to support Lagarde or a non-European for the job.
 
The IMF may face a choice between naming its first woman leader or its first leader from the developing world. Emerging economies see Europe’s traditional stranglehold on the position as increasingly out of touch with the world economy, but have not yet united around a candidate.
 
German Chancellor Angela Merkel said Friday that she “very much appreciates the French finance minister.” She insisted she wasn’t announcing Lagarde’s candidacy, just sharing her views.
 
Merkel has also said the next IMF chief should be a European, since the fund is deeply involved in tackling the eurozone’s sprawling debt crisis. Germany’s view is critical, since as the continent’s economic powerhouse it funds much of the bailouts to weaker eurozone nations.
 
Lagarde, 55, has a clean-cut image and has been praised for her acumen in helping steer Europe through the global financial crisis and its more recent debt woes. She speaks impeccable English and spent much of her career in the United States as a lawyer. One of the longest-serving ministers under French President Nicolas Sarkozy, Lagarde eased French labor laws and helped France weather its worst recession since World War II better than many other developed countries.
 
A champion swimmer as a teen, Lagarde is known for her colorful language and a sense of humor, and for being vocally pro-market in a capitalism-wary nation. When she took over as finance minister, she urged compatriots to stop their endless ideological yammering and “roll up your sleeves.”
 
Italian Prime Minister Silvio Berlusconi has openly endorsed Lagarde for the job, saying she would make “a great choice.” That view was backed by Swedish Finance Minister Anders Borg, who told journalists that Lagarde carries weight internationally and has a lot of experience.
 
Dominique Strauss-Kahn: portrait of a political heavyweight
Sarkozy hasn’t spoken publicly about Lagarde, possibly because that would feed domestic conspiracy theories that Strauss-Kahn’s troubles are a plot by political rivals. Strauss-Kahn, a Socialist, had been seen as the potential winner of France’s presidential election next year, while the conservative Sarkozy’s poll ratings are dismal.
 
The French foreign minister, however, expressed confidence that his continent would keep the job.
 
“Europe still has IMF leadership guaranteed,” Alain Juppe said Friday. “We have excellent candidates for the position and it would be wonderful if we agreed on a candidate that would then be accepted by the IMF board.”
 
French economist Nicolas Bouzou said Lagarde is “eminently competent” but the fact that she’s French “could pose problems.”
 
The IMF has already had four Frenchmen at its helm since its inception in the 1940s.
 
Her gender “on the contrary, could help her,” Bouzou said. The IMF has never had a woman managing director.
 
Questions have also surfaced about Lagarde’s role in getting arbitration for maverick businessman Bernard Tapie, who won ¤285 million ($449 million) as compensation for the mishandling of the 1990s sale of sportswear maker Adidas in 2008. Lagarde was finance minister at the time. No formal investigation has been announced, but prosecutors are looking into the matter.
 
John Lipsky, the IMF’s acting managing director, and other IMF officials are stressing that the work of the agency will go on without interruption during the search for a new leader.
 
In a sign of business as usual, the IMF board on Friday gave formal approval to providing Portugal $36.8 billion in IMF loans as part of a $111 billion rescue package approved earlier in the week by European finance ministers.
 
Lipsky led the board discussion on Portugal, a job that would have been handled before his resignation by Strauss-Kahn, who was released from a New York City jail late Friday after spending nearly a week behind bars on the attempted rape charges.
 
IMF officials on Friday disputed a New York Times article that described an atmosphere in which women could be subjected to sexual harassment from “alpha male economists.” Spokesman William Murray said the IMF’s conduct code, which was updated this month, makes clear that “harassment in any form is not tolerated.”
 
France hosts a meeting of the G-8 - a group of eight developed countries - next week in the seaside resort of Deauville, and all the major decision-makers will be there.
 
Together, the U.S. and Europe control more than 50 percent of the votes on the IMF’s board. A simple majority is all that is required to select the group’s leader.
 
With Dervis withdrawing from consideration, remaining candidates from outside the EU include Singapore’s finance chief, Thurman Shanmugaratnam and Indian economist Montek Singh Ahluwalia.
 
Poland said it may propose its own candidate, former Finance Minister Leszek Balcerowicz, who turned Poland’s post-communist economy into a market-driven one.
 
Gordon Brown, Britain’s former Labour prime minister, also ruled himself out Friday.
 
“No I am not pitching for the job,” he said while visiting a primary school in Soweto, South Africa. Another potential candidate, Mohamed El-Erian, the head of bond giant PIMCO, has also taken himself out of the running. In a commentary posted by the company, he said, “I will not be a part of the process; I already have a great job, here in California.”

 

Date created : 2011-05-21

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  • INTERNATIONAL MONETARY FUND

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  • JUSTICE

    Strauss-Kahn resigns from International Monetary Fund

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