WASHINGTON, May 20, (AFP): India’s IMF director on Thursday said the institution needs to revamp how it chooses it managing director, after decades of as “consensus” that let Europeans monopolize the top position.
Hours after the resignation of International Monetary Fund chief Dominique Strauss-Kahn of France to fight sexual assault charges in New York, Arvind Virmani said the IMF board needs to openly elect the head rather than choose via back-room negotiations. “The credibility of a candidate depends on the credibility of the process,” he told AFP.
Process
“There are a lot of people who feel that the process has not been credible... that certain countries, certain nationalities were virtually pre-selected.”
Virmani stressed that it was his own view, and not that of the countries he represents on the 24-member executive board — India, Sri Lanka, Bangladesh and Bhutan. But in the past two days there have been numerous calls from emerging economies for a more open process and an IMF chief from the developing world.
“The era is over in which it may have been even remotely appropriate to reserve that important post for a European national,” Brazilian Finance Minister Guido Mantega said.
The IMF’s executive board normally selects a new managing director from nominees by consensus, though it can do it by vote. In practice, by an informal pact with the US, it has always led to a European managing director, while an American heads the World Bank.
But Virmani says that leaves other hopeful nominees facing an embarrassing, unexplained rejection.
“We are never told” why someone is rejected, he said.
“Consensus is a very flexible word. It can be used at any stage, not used, it is not transparent. One never knows how this consensus is achieved, who is achieving this consensus.” He said he knows potential candidates, already named in international media, who would not stand because the process is opaque.
“The kind of people I know who meet the criteria will just not take a chance if they know X or Y has already been selected and the whole process is just to make sure that he gets elected,” he said.
“I would not advise them to stand, because it is pointless.”
The process effectively locks out suitable candidates, he added.
Virmani proposes a three-step process in which directors submit nominations, based on already widely accepted criteria.
The names would remain secret while the nominees weigh their chances against the field. They could withdraw, still anonymously, within a certain time.
Those left would then face an election by the directors.
“Somebody will win, somebody will lose. The merit of this is, it’s open and transparent... That’s what a democratic process is in my view.”
Meanwhile, a battle raged Friday over the choice of a new leader for the IMF, with Europe trying to keep the post, emerging countries muscling in and the OECD head saying it is time for a change.
European nations have moved to keep their lock on the IMF’s top job after Strauss-Kahn said early Thursday that he would be stepping down to battle allegations of sexual assault in a statement from his New York jail cell.
Many of Europe’s leading figures have lined up behind front-runner Christine Lagarde, the respected French finance minister who, like Strauss-Kahn, has an intimate knowledge of Europe’s debilitating fiscal problems.
But rising powers like Brazil, China and India have moved quickly to prevent a fait accompli with counter-calls for a more transparent selection process.
Beijing’s state media on Friday carried calls for the next IMF chief to be Chinese, with one editorial saying the economic powerhouse has “a large number of people capable of holding the position.”
Its central bank chief Zhou Xiaochuan had earlier said only that the top management “should better reflect changes in the global economic structure and better represent emerging markets.”
Choice
The head of the Organization for Economic Cooperation and Development also said the time had come to break with the arrangement since World War II that a European heads the fund, but that a choice had to be made quickly.
Egyptian Abdel Shakour Shaalan, who represents the Arab states on the Fund’s 24-member governing board, was “initiating contacts with his colleagues today about the selection process,” IMF spokesman William Murray said Thursday.
The position is a crucial one in the world economy. The global lender of last resort, the IMF each year lends tens of billions of dollars to troubled countries to help right their economies when no others will help them.
But it also lays down strict standards of fiscal and economic reform for its clients which can upset political and social systems.
The IMF explained that the board would choose a qualified candidate from any of the institution’s 187 member states.