This post also appeared on the Huffington Post.
A Bretton Woods project statement issued on April 6 was prescient indeed:
The MD must be, and must be seen to be wholly independent of any national or regional interest. 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.
Who’s that? The candidate now supported by France and the UK: Christine Lagarde is, of course, a sitting minister of a powerful member country.
Well at least she is a woman – widely discussed now as a good idea for the male-dominated IMF (compared to the World Bank and in culture as well as numbers) -- and is said to be independent-minded. But would she be able to eschew “representing” France or the powerful France/Germany/UK triad in the tense discussions that seem to pit Greece (and other peripheral countries of the euro zone) against the banks in Germany? Would she not seem to be biased even if she wasn’t – beholden to Sarkozy and Merkel generating immoral hazard for the IMF (or the euro or Greece. . . )? Won’t she represent, whether she wants to or not, the stench of colonialism wafting around the IMF?
The Bretton Woods project statement also emphasizes the logic of locking in a process including:
- a short and open list of candidates made public
- no need for a candidate to have his/her own country’s support (Arminio Fraga headed the Brazilian Central Bank under the party now out of power; that is also Gordon Brown’s problem of course)
- an open voting process based on formal voting (as proposed by the Indian ED Arvind Virmani – go here
- the need for any candidate to have a majority of country members not just a majority of weighted votes (the "double majority" idea).
(Our IMF leader survey includes creation of an eminent persons group to propose a short list of candidates (adding to country members’ nominees) that could include nominees their own country might not nominate, and also refers to double majority voting. I hope survey takers who favor “open, transparent and merit-based” agree strongly with those proposals too.) These changes are less likely to happen between now and end of June (by when IMF Board promises it will have selected a new leader) but pumping for them now could help improve the process in the next round.
By the way, any of these changes in process would be a step in the direction of legitimacy for the new leader. None would take away the ability of the United States and of Europe to block candidates. For all practical purposes the large and powerful economies have effective vetoes (Europe if its triad of France/Germany/UK collaborates). With double majority voting other country groups in a coalition would also have veto power. . . and with an open list there would be more time for the public scrutiny that helps provide a new leader legitimacy.