IMF Leadership: OK for Now, but Fixing the Process Shouldn’t Wait

Christine Lagarde is now firmly in place at the IMF, and her competence, political savvy, and good humor bode well for the institution and the global economy.  Indeed, with the crisis in the eurozone upon us, the results of CGD’s spring survey on how a managing director should be chosen at the IMF may feel behind the moment if not the times—but anyone with five minutes to spare should take a look at David Wheeler’s analysis of the results.

The survey, conducted between May 19 and June 23, received 790 responses from participants from 81 nations, reflecting the diversity of the international finance and development community.  Yet, as Wheeler shows, the diverse survey respondents displayed remarkable unity of views and values, especially on making the process more open, transparent, and merit-based.  So why once more did that not happen?I think it’s the mechanics, “stupid.”  That is, how to get beyond easy truisms (the process should be more open) to the practical steps that would lock in that openness.Table 2 in Wheeler’s analysis shows responses to the two ideas about process included in the survey (an eminent panel and double majority voting called “selection by two-class vote”). While majorities of 80 percent and more reject the status quo and favor an “open process,” the percentage endorsing one or the other of the two proposed processes looks on average more like just 40 or 50 percent, suggesting a lack of any clarity about good options on the mechanics, on how to open up the process.I like double majority or special majority voting because it prevents tyranny of the powerful majority (the big and mostly rich members that have the majority of votes).  But it has its downside too, as I discuss here.  A glance at the results on the eminent panel approach suggests it is also not widely endorsed.In the end, it is power that will always matter. But mechanics, like checks and balances and the separation of powers in the U.S. federal system or special majorities in Europe, can nudge along openness and democracy.  The IMF Board shouldn’t wait until the next round to consider the practical options on—yes—the mechanics.