♠ Posted by Emmanuel in Bretton Woods Twins,IMF
at 5/19/2011 11:02:00 AM
Before getting to the topic at hand, let me point out Desmond Lachman of the AEI and his scathing indictment of Dominique Strauss-Kahn's performance as IMF managing-director--but without offering an alternative. From my vantage focusing on global governance, this much is clear: the "mistake" of Dominique Strauss-Kahn was favouritism toward Europe by granting Greece, Ireland, and now Portugal access to IMF funds meant for balance of payments troubles for what were, in essence, fiscal woes. Is this prudent lending? You first have to consider if the IMF should have lent to these countries at all. Latvia, Ukraine, Hungary, Iceland, Pakistan, etc. definitely had BOP woes so I have no issue with their borrowing. Lending to the abovementioned EU states genuinely rankles me, however.That said, recent events have forced us to reassess the future of leadership at the IMF and the World Bank a bit further down the line when Robert Zoellick's term ends. In my previous post on the white man's IMF burden, I pooh-poohed the argument that European dominance at the IMF should be continued given current circumstances in peripheral EU economies. And now the cavalry has arrived to back me up, by which I mean the major developing economies. Hence the current post title lacking originality.
Let us consider the 500-pound gorilla of China weighing in on the issue. Just today, John Ikenberry--a name that should be familiar to nearly all IR scholars--launched his new book Liberal Leviathan at LSE IDEAS. It is a distillation of his longstanding conviction that the United States' relative decline is cushioned by the bedrock of liberal institutions it has established, including the IMF contemporaneously enough. Fortunately, I had the chance to ask him about IMF succession. To him, the Chinese leadership's statements on the matter demonstrate a continuing unwillingness to be more proactive in international institutions and "free ride" on others' work. Ikenberry further suggests that the careful wording is meant to possibly encourage an IMF chief from an LDC but save China from embarrassment if s/he is not. Anyway, here's what PRC Foreign Ministry spokeswoman Jiang Yu had to offer:"We've taken note of this situation, and it would not be appropriate to further comment," ministry spokeswoman Jiang Yu told a regular news briefing when asked about the arrest of Strauss on sexual assault charges.To this observer, the "fairness" bit generally references the rising economic clout of LDCs and specifically their increased contributions to the IMF. After all, China now has the third most quota allocations in the IFI. At a broader Global South level, however, there is no sign of them uniting behind a single candidate to replace DSK. Given that it's early days, let's not make too much of this (yet):
"You also raised the issue of the selection of the Fund's senior leadership. We believe that this should be based on the principles of fairness, transparency and merit."
Emerging nations have yet to unite behind a candidate to take over as the head of the International Monetary Fund, even as they reiterate their long-held stance that the position should not be reserved for a European. Brazil and South Africa have expressed a desire for an end to the tradition of the IMF’s managing director’s job going to Europe, just as they oppose the convention that the head of the World Bank is always an American.South Africa and India certainly have viable names, but they are not tooting their horns too loudly at the moment:
Chile and China also have said that the position should be filled “on merit”, without publicly putting forward any candidates themselves. The likely resignation from the IMF of Dominique Strauss-Kahn, now in jail in New York pending the hearings of charges of sexual assault against him, has brought the sensitivities surrounding the job to the fore.
For many emerging countries the sinecures at the top of the World Bank and the IMF symbolise the old order established after the second world war, which they argue is no longer representative of the global economy.
In South Africa, Pravin Gordhan, finance minister, said Europeans “must be alive to changes in the world”. Mr Gordhan floated the name of Trevor Manuel, who was a long-serving finance minister in South Africa and who is now head of the national planning commission, calling him “highly respected in the world”.To me this is a no-brainer: all change at Bretton Woods institutions to LDC heads is long overdue given that Europeans have always headed the IMF while Americans the World Bank. Are the demonstrated leadership qualities of Dominique Strauss-Kahn and, er, Paul Wolfowitz really that great? Nuff said.
India has been more cautious on possible changes in the leadership of the IMF, making little public comment on the management of any succession. Montek Singh Ahluwalia, the influential deputy chairman of the planning commission, has sought to damp speculation that he could be a possible candidate for the position of IMF chief. “I am not putting my name forward for any of these things,” Mr Ahluwalia, a former senior official at the World Bank and IMF, said. “I am quite happy with what I am doing and I am not looking for a change.”
UPDATE 1: TIME has a pretty good take on the succession topic, too.
UPDATE 2: Obviously, I have no problem with Dani Rodrik championing Kemal Dervis for this post, though he must be kidding if the French and Germans would consider him as "European" in justification.
