Monday January 17 2000 – Financial Times
Frontrunner for IMF job faces opposition
Koch-Weser is the favourite, though only Berlin wants him, reports Ed = Crooks.=20 But a long struggle for succession could be worse
The race to succeed Michel Camdessus as managing director of the=20 International Monetary Fund is a curious contest. Promising contenders = are being=20 kept out of it, and the current favourite, according to almost everyone = but his=20 backers, is unfit.
Caio Koch-Weser, a German finance ministry official who has spent 25 = years=20 with the World Bank, is the frontrunner, but he faces powerful = opposition.=20 Feelings about him in all the G7 capitals except Berlin range from = grudging=20 acceptance to hostility.
The issue will be discussed at the Group of Seven industrialised = nations=20 finance ministers' meeting in Tokyo next weekend, but will not be = resolved=20 there.
The danger is that the IMF could see a long and damaging struggle for = succession, as the World Trade Organisation experienced last year.
Governments and analysts argue that the IMF's failure to prevent the=20 financial crises in Asia and Russia shows it urgently needs reform, = which cannot=20 be achieved without strong leadership.
The German government has stepped up a gear in its support for Mr = Koch-Weser.=20 Chancellor Gerhard Schr=F6der is writing to all 24 of the IMF's = executive=20 directors. Today in Berlin 40 foreign ambassadors will be briefed by Mr=20 Schr=F6der's chief foreign policy adviser.
But on Friday night Larry Summers, US Treasury secretary, dropped = heavy hints=20 that he would not support the German campaign. The new head of the IMF = must have=20 "stature, expertise, ability to command global support and commitment to = a=20 process of ongoing reform", he said.
Mr Summers has said he wants an IMF that is much more focused on = crisis=20 prevention and resolution, and much less involved in long-term lending = for=20 development - a role that does not suit Mr Koch-Weser's experience. = Washington=20 also doubts that Mr Koch-Weser possesses the necessary intellect and = negotiating=20 skills to handle complex negotiations with governments in financial = crisis.
The IMF post has traditionally been a European fiefdom, and if Europe = were to=20 agree on a candidate, the US would find it hard to resist. Europe, = however, is=20 deeply divided.
The French are now backing Laurent Fabius, former prime minister, as = an=20 alternative. He is unlikely to win much backing: his premiership was=20 overshadowed by a scandal over contaminated blood, and few other = countries want=20 another French MD, especially not one seen as an old-style = socialist.
It is a measure of how strongly the French feel about Mr Koch-Weser, = though,=20 that they would even prefer to see a Briton appointed.
Andrew Crockett, head of the Bank for International Settlements in = Basle, has=20 a high reputation in London. His problem is that the UK government is = refusing=20 to back him, partly because it does not want another row with a fellow = EU=20 member.
Italy has a similar problem with the director of its Treasury, Mario = Draghi.=20 The Italians are seen as having their share of top jobs since Romano = Prodi=20 became European Commission president.
Non-European alternatives look even less convincing. Jacob Frenkel, = former=20 Bank of Israel governor, is admired in the US but would be a = controversial=20 choice.
It looks as though Stanley Fischer, the first deputy MD, may end up = running=20 the IMF for some time after Mr Camdessus departs next month. He might = even get=20 the job.
But having made such a public show of support, it would be hugely=20 embarrassing for Mr Schr=F6der to see Caio Koch-Weser fail.
If deals are cut, he could still be successful. The UK might be = offered a=20 compromise on EU withholding tax. Jean-Claude Trichet, Bank of France = governor=20 and another IMF possible), could take over at the European Central Bank = earlier=20 than expected.
But the IMF seems now to be faced with two unappealing alternatives: = a=20 painful, protracted battle for succession, or accepting by default a = candidate=20 whom almost nobody really wants
Camdessus urges developed nations to cut arms sales to Africa
LIBREVILLE, Jan 17 (AFP) - IMF Director General Michel Camedessus on = Monday=20 urged developed nations to slash their arms exports to Africa, saying = "the other=20 name for development is peace."
Speaking ahead of a two-day summit on poverty reduction in Africa, = Camdessus=20 said: "A third of African countries are at war and 90 percent of the = weapons=20 used are sold by G-8 nations," referring to the group of eight most=20 industrialised countries.
Camdessus told a press conference ahead of the summit, to be held = Tuesday and=20 Wednesday under the aegis of the International Monetary Fund, that the = IMF was=20 pressing African regimes to cut back their military spending.
"The other name for development is peace," he said, calling on rich = countries=20 to cut exports "not only of heavy weaponry but also of the light arms = which are=20 carried by children in the front line of the conflicts."
"When a country we support goes to war, we go into discussions with = it: Do=20 you want war or development? It's a pretty tough dialogue," he said.
Some 20 African heads of state and government are expected to attend = the=20 gathering along with top staff of the IMF, the World Bank and the = African=20 Development Bank.
A preliminary ministerial meeting was being held Monday.
Ministers and experts from across the continent have already prepared = a=20 document containing proposals for alleviating poverty.
Camdessus estimated that Africa should be able to reach sustained = annual=20 growth rates of six to seven percent, rather than the current four to = five=20 percent, with an objective of eliminating 50 percent of extreme poverty = by=20 2015.
The IMF director general is confidently promoting a new facility for = poverty=20 reduction and growth, through which the Fund is to abandon its "all=20 macro-economic" approach.
"The fundamental aspect of these programmes is recognition of the = circular=20 relationships among the effort to reduce inflation, (to establish) good=20 macro-economic balance, and the reduction of poverty and inequalities," = he=20 said.
"We have found that the more you obtain reductions in poverty and=20 inequalities, the more you give validity to your monetary and = macro-economic=20 programmes, which become stronger and further reduce poverty and = inequalities,"=20 he added.
Asked how long the IMF had taken to draw this conclusion, Camdessus = said that=20 such principles had only recently been recognised by economists.
"Economic progress takes time," he said. "Our institutions are = serious=20 institutions which don't wish to sell = illusions."