Call for Transparency and Merit in Picking Next IMF Head

By J. Chandler/IDN-InDepth NewsReport

TORONTO (IDN) – A global coalition of campaigners is calling for an open and merit-based process to elect the next head of the International Monetary Fund (IMF) after its Managing Director Dominique Strauss-Kahn, locked up on charges of sexually assaulting a maid in his posh hotel suite in Washington, resigned amid rising calls to step down.

The departure of Strauss-Kahn means the 187 member governments of the IMF will have to select a new managing director during a time of grave economic uncertainty. It also reopens the debate over an anachronistic and unfair selection process, say the campaigners who include the Bretton Woods Project, Oxfam, and the Third World Network.

They are calling for putting to an end the “gentlemen’s agreement” between Europe and the U.S., which ensures that the IMF managing director is always a European, and the president of the World Bank an American.

“The next IMF managing director must be chosen through an open, transparent and inclusive process, where selection is based on merit, not nationality, and with an effort to facilitate a leadership role from outside the European region,” said Bhumika Muchhala of the Third World Network.

“It is time for the European and US governments to finally end the sordid tacit deal between the two regions that has maintained a de facto Northern leadership at both the Fund and the Bank,” she added.

The campaigners also want an end to behind the scenes deals, a commitment to make sure votes are cast in public, and a requirement for the winning candidate to have the backing of a majority of member governments.

Oxfam spokesperson Sarah Wynn-Williams said: “The only way to give the new IMF head legitimacy and authority is through open voting, with the winner backed by a majority of countries, not just a majority of shares. The time has come for the IMF to accept an open and merit-based approach to choosing its leaders.”

Jesse Griffiths of the Bretton Woods Project said May 19, 2011: “The head of the IMF must be – and be seen to be – independent of powerful governments, and well versed in the problems of low- and middle-income countries, where most IMF operations take place. They should display a commitment to reducing levels of global inequality and poverty.”

The campaigners recall that in 2009, the IMF agreed to “adopt an open, merit-based and transparent process for the selection of IMF management.” In doing so, it confirmed a 2008 commitment made in Pittsburgh by the Group of 20 (G20) major industrial and emerging economies that “the heads and senior leadership of all international institutions should be appointed through an open, transparent and merit-based process.”

However, since then, two deputy managing directors of the IMF have been appointed without such a process, both going to the Group of Seven (G7) industrial country candidates: in March 2010, to Naoyuki Shinohara, a Japanese national; and in February 2011, to Nemat Shafik, a British-Egyptian national and permanent secretary in the UK Department for International Development. The first deputy Managing Director is John Lipsky, a U.S. national.

“The impression that the rich governments which have run the IMF have dragged their heels on this enormously important issue is hard to avoid. It matters who the head of the IMF is, and it matters how they are chosen. It matters for the legitimacy of an organisation that, through the stringent conditions often attached to its loans, has a powerful hand in economic policy making – and hence politics – in many countries, particularly poorer ones,” a paper published at the spring meetings of the IMF and World Bank in Washington in April 2011, said.

The paper, titled ‘Heading for the right choice?’ A professional approach to selecting the IMF boss’, is co-authored by ActionAid, Afrodad, Bond, Bretton Woods Project, Cafod, CRBM, Christian Aid, CIDSE, 11.11.11. Halifax Initiative, Eurodad, Jubilee Debt Campaign, Forum Syd, New Rules for Global Finance, The Norwegian Forum for Environment and Development, Oxfam, The Social Justice Committee of Montreal, SLUG, WDM, TWN and Weed.

The authors of the paper maintain: “It matters for the effectiveness of the Fund, which is struggling to adapt to an emerging world order where the old Western powers are gradually being eclipsed by faster growing, larger southern countries. And it matters because the MD (managing director) wields significant power both within the institution, and by using the position as a pulpit from which to influence global policy-making on the most critical issues.

The group said, the IMF will need to agree on a more detailed ‘person specification’ to outline the qualities, qualifications and experience that candidates for the top job at the IMF must have. It should include the following elements:

– Experience of working with a variety of stakeholders, including civil society groups, with a demonstrated commitment to high standards of transparency and accountability.

– Proven desire to act independently of the government of his or her home state. This is particularly important when the home state is a powerful member of the IMF. In practical terms therefore, recent or sitting ministers should be ruled out.

– Demonstrate a clear-headed focus on the ultimate purpose of the IMF: to “contribute to …the promotion and maintenance of high levels of employment and real income”. In the modern world this would mean a rigorous focus on poverty, and the growing levels of inequality and joblessness that damage lives and threaten stability. The MD should also be well versed in the particular problems of low-income and middle-income countries – historically where most IMF lending has taken place, and where technical assistance, advice and conditionality are most dominant.

– Committed to defending agreed international norms, such as those set out in international treaties and conventions such as the UN convention on human rights.

– Of impeccable character, following the highest ethical standards expected of public office holders – a criterion that assumes a particular significance in retrospect.

Going by the discussion about who should replace Strauss-Kahn, there appears to be little chance of campaigners’ criteria becoming a reality.

Among the names being mentioned were: former German federal bank (Bundesbank) president Axel Weber, former British Prime Minister and Finance Minister Gordon Brown; South African finance minister Pravin Gordhan; his colleague Trevor Manuel, and a former Turkish minister and UNDP head Kemal Dervis. Some of the other names being thrown in are: Mexico’s central bank governor Augustin Carstens, and India’s Planning Commission deputy chief Montek Ahluwalia.

There is no definite word on a Chinese nomination on May 19 though a Chinese central bank advisor, Li Daokui, was making the case for a candidate from a neutral or small country who “would accord more with the interests of the world including China, because big countries such as India and Brazil have too many national interests”. (IDN-InDepthNews/19.05.2011)

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