[stop-imf] IMF Head Resigns to Become Pres. of Germany;Krueger Takes Over

[Robert Weissman]

From: "50 Years Is Enough Network" <list@50years.org>

IMF Head Horst Kohler Resigns to Become President of
Germany; Krueger now Acting Managing Director

A press release from the IMF (which appears below, after
stories from FT.com) confirms that Horst Koehler, Managing
Director of the IMF, has decided to resign and accept the
post of President of Germany (usually referred to as
"largely ceremonial?).

This is a complete surprise.  Koehler's term was due to
end in 2005, but I think it was assumed he would be
re-appointed.  It would appear that he owes his change of
job to a political deadlock among the center-right
political parties in Germany, since he was never a
political heavyweight there.

Koehler?s resignation takes effect immediately, so the IMF
is now being headed, on an interim basis, by Deputy
Managing Director Anne Krueger.  Like World Bank President
James Wolfensohn, she is a U.S. citizen.  She is a Bush
Administration appointee (unlike Wolfensohn), a former
high-ranking official at the World Bank, and a former
fellow at Stanford University?s right-wing Hoover
Institution.  Krueger has been particularly outspoken in
her hard-line statements on Argentina, the site of the
IMF?s most spectacular recent fiasco.

As this article mentions, the selection of Koehler in 2000
was a very contentious process, and in that case, too, he
emerged as the compromise candidate. By "unwritten rules,"
the U.S. selects the head of the World Bank, and Western
Europe selects the head (Managing Director) of the IMF.
 In 2000, however, the Clinton Administration felt that
the candidate Europe finally settled on, Caio Koch-Weser,
did not have the gravitas for the job, and the Germans
were eventually persuaded to choose someone else.  While
the process was publicly disrupted, space opened up for
more open questioning of this exclusive, imperial, and
undemocratic arrangement.  Some prominent voices (Jeffrey
Sachs, I believe, was one) pushed for a former Polish
Finance Minister, and others asked why someone from the
Global South could not be considered.  An African
executive director at the IMF, impatient with the
stalemate, and maybe partially to open up the same
questions, formally nominated Stanley Fischer, the U.S.
citizen who was then Deputy Managing Director, but the
U.S. government did not take the bait and add its support
to that idea.  Ultimately it was resolved behind closed
doors by the G7 allies.

The controversy led the IMF and World Bank to appoint
parallel ?working groups? to come up with guidelines for
future selection of the respective head positions.  That
they did, recommending the formation of a committee of
?eminent persons? to review candidates, etc. Their
 recommendations contain no mention of the candidate?s
country of origin, which would seem to mean that it should
not be a consideration.  But since the IMF board of
directors did not formally adopt the recommendations, it
is not bound by what the working groups said anyway
(though it said it would rely on the recommendations for
?guidance? in the future).

Although this development comes as a complete surprise,
there has been much speculation in recent months about
what will happen at the end of the term of James
Wolfensohn as President of the World Bank Group in 2005.
 He may choose to retire at that time, but if Bush was to
be re-elected, he would probably want to install his own
person, with Colin Powell being the current rumor.

The question now is whether pressure will grow for the
process to be opened up; the surprise is that it will
happen with Europe and the IMF first.  That both
institutions are now headed by U.S. citizens, and that
Krueger was appointed by the unilateralist Bush
Administration (though she has displayed some independence
from the U.S. Treasury Department) may add to the urgency
to complete the process of choosing Koehler?s successor.

It should be clear that no process for selecting the head
of either the IMF or the World Bank is going to in itself
reform or legitimize the institutions.  It should also be
clear that regardless of the process used, the person who
emerges will still be a staunch defended of neo-liberal
pro-corporate economic programs, and will be heading an
institution dedicated to defending the current global
economic system.  For campaigners, this is mainly an
opportunity for exposing how completely undemocratic and
unaccountable the institutions are.   This is the kind of
story newspapers love, so reporters should by all means be
encouraged to look into the secretive and anti-democratic
process of how the most influential people at the
institutions that run the global economy are chosen.
 Given that the IMF is now thrust into this new level of
scrutiny, and that it happens during its 60th anniversary
year, there is probably some scrambling going on in its
External Relations and press offices.  It will be
interesting to see what happens.

Soren Ambrose - 50 Years Is Enough Network - Washington,
DC  USA

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IMF chief takes up German presidency
By Andrew Balls, Bertrand Benoit and Ed Crooks
FT.com
Published: March 4 2004

The International Monetary Fund found itself looking for a
new boss on Thursday, after Horst K=F6hler, the current
managing director, was put forward as Germany's next head
of state.

The unexpected vacancy in one of the top jobs in
international finance was brought when Germany's main
opposition parties chose Mr K=F6hler as their candidate to
succeed Johannes Rau in the largely ceremonial role of
president in May.

Mr K=F6hler said he was "deeply honoured" to be nominated.
"I accepted this nomination today and according to the
rules of the IMF, I have to resign immediately with the
acceptance of this nomination, so I resigned today."

The leading contenders to replace him at the IMF are Jean
Lemierre, head of the European Bank for Reconstruction and
Development and Rodrigo Rato, the Spanish finance
minister.

Mr Lemierre, also a former director of the French
Treasury, is seen as having done a good job as head of
London-based EBRD. Mr Rato is an experienced finance
minister who is respected within the IMF.

The new managing director will be formally selected by the
IMF board, which is dominated by the Group of Seven
countries. Traditionally, the IMF managing director is a
European while the US appoints the president of the World
Bank. There was controversy in 2000 when the US blocked
Caio Koch-Weser, the German candidate.

Gordon Brown, UK finance minister, was seen as a potential
candidate for the job in 2000 and would probably be
welcomed by IMF staff, although they also see this as
unlikely given his domestic political ambitions.

Other possible candidates include Giuliano Amato, former
Italian prime minister and finance minister, and Stanley
Fischer, former first deputy managing director of the IMF.

Mr K=F6hler has led the IMF at a time when the Fund has been
under considerable pressure from its critics. There have
been failures in Argentina but also successes in Brazil
and Turkey. The IMF has become more transparent although
there have also been questions about his management style.

His departure comes on the eve of the deadline for
Argentina's $3bn loan repayment to the Fund and the second
review of the loans programme. Anne Krueger, first deputy
managing director, will lead the IMF on an interim basis.

In Germany, the main opposition parties - the centre-right
Christian Democratic Union, its Bavarian sister wing: the
Christian Social Union, and the liberal Free Democratic
Party - announced their decision at a joint conference in
Berlin after three days of talks. The negotiations were
marked by disagreement between the three parties who enjoy
a 21-vote majority in the federal assembly that will vote
on a successor to the outgoing Social Democratic
President.

Largely unknown in Germany, Mr K=F6hler, 61, was deputy
finance minister under chancellor Helmut Kohl between 1990
and 1993. He later moved to London to head the EBRD before
moving to Washington.

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Profile of Horst K=F6hler
FT.com
Published: March 4 2004 11:34 | Last Updated: March 4 2004
11:34

Horst K=F6hler has notched up some remarkable successes
during his years as one of the world's leading finance
officials. Although not always liked, he has generally
been respected as a tough negotiator and as someone not
afraid of speaking his mind.

Born during the second world war, in what is now Poland,
Horst K=F6hler's family fled to East Germany as the Russians
advanced, and escaped to the west in 1953, when he was 10.

After training as an economist, he spent most of his
career in the Bonn government, working his way up to be
the main official dealing with international economic
negotiations.

In 1993, he went on to run the national association of
German savings banks. Finally, he was chosen in 1998 by
Helmut Kohl, the then chancellor, to run the European Bank
for Reconstruction and Development, where his 18-month
tenure involved personal tensions, but were generally seen
as successful.

He arrived at the London headquarters of the EBRD - set up
to support economic development and transition in
post-Communist Europe - just as the Russian financial
crisis struck. His first task was to put the bank's
finances in order, which he did successfully.

Mr K=F6hler also led a strategic shift in the EBRD's
priorities, turning the bank away from some of the big
infrastructure projects it had supported in the past
towards small businesses.

During his time at the finance ministry in the early
1990s, Mr Kohler built international contacts with the
Group of Seven industrialised countries and with
developing nations. He was closely involved with the
economics of German unification and support for Russia in
the immediate aftermath of the break-up of the Soviet
Union. That gave him first-hand experience of financial
crisis management as well as development.

As Germany's lead official in the tortuous negotiations
that led up to the commitment to economic and monetary
union he was instrumental in crafting the Maastricht
Treaty of 1991.

Mr K=F6hler also succeeded in winning a hostile German
public over to the idea of monetary union. In 1991 it was
an uphill struggle - 75 per cent of Germans told pollsters
they would rather hang on to the D-Mark than share a
currency with the Spanish and Italians. But Mr Kohler's
advocacy brought public opinion round.

During the early months of his tenure as director general
of the International Monetary Fund - Mr K=F6hler  took a
firm line over extending further loans to Argentina, when
its financial system collapsed.

He revamped the IMF management team and introduced
measures to make the IMF more efficient and accountable,
setting up an independent evaluation office to oversee IMF
policies, and an International Capital Markets department
to ensure that the fund was more aware of market
developments and possible dangers.

He also oversaw an IMF review aimed at focusing conditions
on IMF loans to core demands and goals - a popular step
with the developing countries among the IMF's 183 member
nations.

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Press Release No. 04/43
March 4, 2004
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

IMF Managing Director Horst K=F6hler Resigns Following
Nomination as German President

International Monetary Fund (IMF) Managing Director Horst
K=F6hler announced today he will resign from his post,
effective at the end of business today, following his
nomination for the German Presidency. Effective
immediately, the Managing Director will excuse himself
from official IMF business.

First Deputy Managing Director Anne Krueger will be Acting
Managing Director until the IMF's Executive Board names a
successor to Mr. K=F6hler.

"I am very honored to be nominated for the office of
President of the Federal Republic of Germany, and I have
accepted the nomination," Mr. K=F6hler said in a statement
to the Executive Board and staff. "The election, which in
Germany is the responsibility of the Federal Assembly,
will take place on May 23, 2004. In conformity with the
rules of the Fund, I will resign as Managing Director of
the Fund effective at the end of business today. Anne
Krueger takes over as Acting Managing Director
immediately.

"I accepted the nomination with `a laughing and a crying
eye', as we say in German. I fully expected to stay at the
IMF and continue working on our unfinished agenda," he
said. "I will leave the IMF with the deepest appreciation
of its integrity and its dedication to helping its
members. I would like to thank the Executive Board, my
management colleagues, and the staff for their
professionalism and their support over the past four
years. You can be sure that I will maintain an active
interest in the role of the Fund in helping to build a
better world."

Before joining the IMF in May 2000, Mr. K=F6hler, 61, a
German national, was President of the European Bank for
Reconstruction and Development, a post to which he was
appointed in September 1998.

Mr. K=F6hler was President of the German Savings Bank
Association from 1993 to 1998. From 1990 to 1993, he
served as Germany's Deputy Minister of Finance, and was
responsible for international financial and monetary
relations.

Mr. K=F6hler earned a doctorate in economics and political
sciences from the University of T=FCbingen, where he was a
scientific research assistant at the Institute for Applied
Economic Research from 1969 to 1976, and received the
title of Honorary Professor from the University of
T=FCbingen last year. Between 1976 and 1989, he held various
positions in Germany's Ministries of Economics and
Finance. He is married to Eva K=F6hler and has two children.