[stop-imf] Guardian: Hunt for Camdessus Replacement Continues

[Robert Weissman]

The Guardian (London), February 14, 2000 
   HEADLINE: Bank notes; 
   One of the most important jobs in international finance is up for
grabs but the selection process
   beggars belief 

   BYLINE: Mark Milner and Mark Atkinson 

   Today is the last in Michel Camdessus' long tenure as head of the
International Monetary Fund.
   Though Mr Camdessus gave plenty of notice of his intention to
depart, he is still leaving before his
   successor has been announced. As usual the appointment procedure
has become involved in the
   kind of unseemly backstairs power politicking which is an almost
inevitable accompaniment to a
   change of leadership at any big international institution. 

   At present the frontrunner is a German, Caio Koch Weiser. He has
the backing of the German
   government but so far has yet to clinch the post. Quite why he
emerged as the leading candidate is
   unclear. So, too, is the nature of the obstacle preventing him
easing himself into Mr Camdessus'
   chair. There are, however, vague rumblings that his background as a
development economist fits
   uncomfortably with the vision of US treasury secretary Larry Summer
of a purely financial role for the
   IMF. 

   The selection process illustrates the lack of transparency and
accountability that exercised many of
   the protesters who took to the streets in Seattle at the World
Trade Organisation summit at end of
   last year. 

   The top job at the IMF is 'paired' with that at the World Bank.
Tradition has it that the World Bank
   goes to an American and the IMF to a European. As Mr Camdessus - a
Frenchman - had held the
   post for so long, a view developed that this time another European
country should have a turn. Quite
   how well that played in Paris is another matter. French support for
Mr Koch Weiser has been notable
   by its absence. 

   But it is not just the IMF where the leadership selection is a
matter for power broking and political
   horse trading. Take the European Bank for Reconstruction and
Development. 

   London won the battle to provide the new bank with a home - even
though it is one of the European
   capitals furthest from the bank's area of operations in central and
eastern Europe. Though London's
   standing as a banking centre played a part in the decision, there
is little doubt that it was an early
   consolation prize for the subsequent decision to site the European
Monetary Institute, forerunner of
   the European Central Bank, in Frankfurt. France's share of the
spoils was the appointment of
   Jacques Attali as the bank's first president. When he departed
early and under a cloud, the French
   government insisted that he should be replaced by another
Frenchman, Jacques de Larosierre. But
   even though the bank's governors knew months in advance that he
would be going they were still
   unable to get his replacement, Horst Kohler, in place until seven
months later. 

   The governorship of the European Central Bank was another case in
point. At the EMI, an institution
   whose main role was to mastermind the preparations for the single
currency, the presidency went,
   uncontroversially, to a Belgian, Alexander Lamfalussy. But when the
institution turned into the bank
   which set the euro-zone's interest rates, the fur soon started to
fly. 

   The German government, which knew it could not have the bank in
Germany and a German in the
   president's office, opted for the next best thing - Wim Duisenberg,
a former head of the Dutch central
   bank, which is probably the closest in approach to the Bundesbank.
The French government,
   however, was less than happy and fought to get their man, the
governor of the Banque de France
   -Jean-Claude Trichet - into the top ECB job. 

   An unholy row ensued, which rattled the currency markets and put a
question mark over the ECB's
   independence. It was only settled by an uncomfortable compromise
under which Mr Duisenberg
   agreed to step down before the end of his eight-year term to make
way for Mr Trichet. Quite when he
   will step down, however, is still unclear. 

   All that paled into insignificance when it came to replacing Renato
Ruggiero as director general of the
   World Trade Organisation. Resentful at the way they were bossed
around by the US treasury and the
   IMF during the Asian financial crisis, the East Asian countries and
Japan nominated the deputy
   prime minister of Thailand, Dr Supachai Panitchpakdi, in an attempt
to break the western
   stranglehold on top jobs in international financial diplomacy. 

   The Americans, however, wanted their own nominee, Mike Moore,
one-time prime minister of New
   Zealand, to take over from the Italian. The ensuing stand-off
lasted three months. Despite calls from
   Dr Supachai's supporters for the issue to be put to a formal vote
of WTO members, it was eventually
   settled by a back -room deal which split the job between the two
men, with each serving three -year
   terms. The Americans insisted Mr Moore went first. 

   Time wasted squabbling over the WTO leadership meant that
preparations for the Seattle trade talks
   suffered, contributing towards their collapse. 

   Now the most powerful job in international finance, that of IMF
managing director, is up for grabs and
   none of the lessons of previous disputes appears to have been
learnt. 

   Rather than have a formal selection procedure, in which candidates
of every nationality are invited to
   apply in an open and transparent way, in the interests of securing
the best possible person for the
   job, the position is to be filled by more unseemly wrangling
between European governments. The
   most important criterion for the job, it seems, is nationality. 

   The developing countries are not impressed and those with seats on
the IMF board, normally
   deferential creatures, have begun to question the democratic
legitimacy of the process. The IMF
   places great emphasis on transparency and accountability and
requires borrowing governments to
   reform their governance systems as a condition of receiving loans.
Yet the process is highly secretive
   and undemocratic. 

   The double standards being applied by the IMF have not gone
unnoticed by the protesters who
   caused so much havoc on the streets of Seattle. Sources in the
community of non-governmental
   organisations say they are already planning their demonstrations
for the IMF's spring meeting in
   Washington in April. But will there be an IMF managing director to
listen? 

   Mark Milner is the Guardian's deputy financial editor and Mark
Atkinson is economics correspondent