NYTimes: Longtime I.M.F. Director Resigns in Midterm (fwd)

[Robert Weissman <rob@essential.org>]

This is a week old story from the New York Times on Camdessus's
resignation. For those who didn't see it, it is instructive for its frank
statement that the IMF "is in effect dictating national economic policy
from Russia to Indonesia and Africa."

Robert Weissman
Essential Information			|   Internet:	rob@essential.org


The New York Times
November 10, 1999
Longtime I.M.F. Director Resigns in Midterm
By DAVID E. SANGER
WASHINGTON -- Michel Camdessus resigned Tuesday in the middle of his third
term as chief of the International Monetary Fund, setting off a
behind-the-scenes struggle involving the Clinton administration and big
European nations over who will direct the agency that is in effect
dictating
national economic policy from Russia to Indonesia and Africa.
Camdessus, who has steered the I.M.F. for nearly 13 years through a
succession of economic crises, said Tuesday that "entirely personal
reasons"
had prompted his resignation two years before the end of his term.
Colleagues
said constant travel and a succession of international crises had exhausted
him.
But in a half-hour conversation in his office here Tuesday afternoon, the
67-year-old former central banker in France appeared vigorous, telling
tales
of political intrigue, responding to attacks from conservatives in the U.S.
Congress who had accused him of wasting billions in bailing out Russia, and
arguing that his much-attacked prescriptions saved Asia from a far worse
economic fate.
And in discussing the fund's growing political impact throughout the world,
he acknowledged for the first time that its actions in Indonesia served as
a
catalyst in forcing out the man who led the nation, the world's fourth-most
populous.
"We created the conditions that obliged President Suharto to leave his
job,"
Camdessus said. "That was not our intention," he said, but quickly added
that
soon after Suharto's resignation he traveled to Moscow to warn Russian
President Boris Yeltsin that the same forces could end his control of
Russia
unless he acted to contain them.
Because the I.M.F. has become such a tremendous political force on the
world
scene, the struggle over who will occupy Camdessus' spacious office,
situated
almost exactly halfway between the White House and the Federal Reserve,
will
likely be a fierce one. Traditionally the fund has been run by a European,
and for 30 of its 51 years the top job has gone to a Frenchman. And
Washington has usually had only a bit role in selecting the head of the
fund
because it has sole discretion to choose the head of the I.M.F.'s much
larger
sister institution, the World Bank.
The bank focuses on alleviating poverty and promoting development, while
the
fund's mission is economic stabilization, particularly in time of crisis.
All that may change. Europe appears divided on the question of who should
succeed Camdessus when he steps down in February, and the administration
has
signaled that it intends to play a much bigger role in the selection.
"This is a very important decision for the fund at a very important time,"
a
senior Treasury official said Tuesday evening. "The stakes are higher now
because the fund's profile is so much higher."
The official said that the United States was looking for a candidate "who
will have strong credibility in the markets," and that the United States
was
not necessarily ready to back a European candidate.
Among the top candidates for the job are Caio Koch-Weser, the state
secretary
of finance in Germany and former managing director of the World Bank, and
Andrew Crockett of Britain, who heads the Bank of International Settlements
in Switzerland. Other possible successors include the current head of the
Bank of France, Jean-Claude Trichet, who is scheduled to be the next head
of
the European Central Bank; Mervyn King, deputy governor of the Bank of
England; Nigel Wicks, a top official in Britain's treasury department; and
Horst Koehler, head of the European Bank for Reconstruction and
Development.
In his nearly 13 years at the fund, Camdessus earned praise -- particularly
from American officials -- as a savvy political operator who could cajole,
wheedle and threaten foreign leaders who were reluctant to enact economic
reform. "Damn right he can be tough," former Treasury Secretary Lloyd
Bentsen
once said of him, though he added "sometimes you have to lean on him real
hard to get things done."
But when Washington called for help, he was almost always there --
particularly in 1995, when an early-morning call from Treasury Secretary
Robert Rubin with the news that Congress would not back a bailout of
Mexico,
led him to take extraordinary unilateral action.
He committed $18 billion without the usual round of negotiations with the
board that directs the fund. He later told them, "Gentlemen, I don't ask
your
permission because you would have to speak with your ministers or
governors.
And you have no time for that." The bailout worked.
His critics, and they were legion, have had many complaints. They have
viewed
Camdessus as arrogant -- "I am French," he once said in an interview during
the Asian financial crisis, "and what Frenchmen is not accused of that?" --
and far too quick to urge the devaluation of currencies and fiscal
austerity.
In fact, that is what the I.M.F. did when the Asian crisis started in
Thailand and Indonesia, but within months it backed away, restoring
subsidies
for fuel and rice to contain growing street protests.
In Congress, conservatives have complained that the fund wasted billions,
particularly with a $17 billion bailout of Russia last year that collapsed
in
months -- and which has spurred ongoing investigations into where the
fund's
money went. Camdessus repeated Tuesday that "the charges are completely
unsubstantiated," and said that "we must not loose sight of the fact that
Russia is now a democracy and a market economy, even if it is blurred by
corruption and cronyism and mistakes in Chechnya."



What undercut some of Camdessus' credibility on Capitol Hill, where funding
for the I.M.F. is perpetually under attack, was his tendency to act as a
public cheerleader for countries in trouble. Speaking of the capital flight
from Russia in the spring of 1998, for example, he said: "Contrary to what
markets and commentators are imagining, this is not a crisis. This is not a
major development." It became one quickly, spurring one of the fund's
biggest
and least successful stabilization efforts.
On Tuesday Camdessus said he was resigned to the fact that Europeans and
Asians view him as a lackey for the United States -- "they call me a damn
U.S. neoliberal in Europe," he said -- while in Congress he is viewed as
not
doing enough to advance the U.S. agenda.
"The fact is that the American influence in the I.M.F. is strong, very
strong, and for good reason," he said. "America has a systemic vision of
the
world. The problem is that America does not always put its money where its
mouth is. When my countrymen in Europe complain about that, I say that if
you
had the guts to stand united, you would have more power than the U.S."
And then he ushered a visitor past his collection of sculpture, including
one
of an Indian goddess who "dances on ignorance and is the force of creative
destruction," to a favorite painting. It shows a blur of hands reaching
into
the pockets of a pinstriped suit. The painting is titled: "Sorry, no
funds."