![Dominique Strauss-Kahn has resigned as head of the IMF. [AFP]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_spuDg2aWBmqlDfuMlF6YMhZbJqDK0wdHVCh-5LJl3ZHReg64Nxnr9RgY4-orNGvLd0dJQE73e89DpIR6nr9bTTivxJ1_xQx0_tXyRqlvI8AkJBwP_dFwp48w=s0-d "Dominique Strauss-Kahn has resigned as head of the IMF. [AFP]")
PHOTO
Dominique Strauss-Kahn has resigned as head of the IMF. [AFP]
Last Updated:
A former International Monetary Fund official says there are no realistic Asian contenders to replace the organisation's outgoing managing director Dominique Strauss-Kahn.
Mr Strauss-Kahn has resigned after being charged with sexually assaulting a hotel maid in New York.
Patrick de Fontenay, a former director of the IMF Institute and now adjunct professor at Australian National University, has told Connect Asia that Europe and the US have the voting power to decide the new leader.
"It's a question of tradition," he said.
"There's no rule, it's just a gentleman's agreement that a European should be head of the IMF."
He says he does not know of any realistic contenders from Asia vying for the job.
"It would have to be someone coming [in at] the last minute and without much preparation. So I think it would be very difficult for Asia to push for an Asian head of the IMF."
But an Asian managing director would not make a great deal of difference to the IMF's operations, he says.
"The managing director is mainly the head of the staff but the decisions are taken by the membership based on voting power - what's called their quota - as an institution.
"So that's where the legislative power is in effect - in the institution - while the managing director is just the head of the executive branch."
The influence of Asian countries in the IMF will increase when reforms to give them more than 20 per cent of the organisations voting shares take effect by late 2012.
Despite this change, Dr de Fontenay says Asia deserves greater recognition of its contribution to the world economy.
"There is probably a feeling that the IMF, because of the tradition [of appointing European managing directors] has become... similar to a European federal bank... and that there's not enough recognition of the importance of Asia in the world economy in terms of the way [the IMF] is managed, the way the decisions are taken and so on."
Mr Strauss-Kahn has resigned after being charged with sexually assaulting a hotel maid in New York.
Patrick de Fontenay, a former director of the IMF Institute and now adjunct professor at Australian National University, has told Connect Asia that Europe and the US have the voting power to decide the new leader.
"It's a question of tradition," he said.
"There's no rule, it's just a gentleman's agreement that a European should be head of the IMF."
He says he does not know of any realistic contenders from Asia vying for the job.
"It would have to be someone coming [in at] the last minute and without much preparation. So I think it would be very difficult for Asia to push for an Asian head of the IMF."
But an Asian managing director would not make a great deal of difference to the IMF's operations, he says.
"The managing director is mainly the head of the staff but the decisions are taken by the membership based on voting power - what's called their quota - as an institution.
"So that's where the legislative power is in effect - in the institution - while the managing director is just the head of the executive branch."
The influence of Asian countries in the IMF will increase when reforms to give them more than 20 per cent of the organisations voting shares take effect by late 2012.
Despite this change, Dr de Fontenay says Asia deserves greater recognition of its contribution to the world economy.
"There is probably a feeling that the IMF, because of the tradition [of appointing European managing directors] has become... similar to a European federal bank... and that there's not enough recognition of the importance of Asia in the world economy in terms of the way [the IMF] is managed, the way the decisions are taken and so on."
European push
The German chancellor Angela Merkel has argued that Europe should continue to maintain authority over the IMF.
"I think in the current situation, considering we are having grave problems with the euro and the fact that the IMF is strongly involved in solving these, there are many arguments for a European candidate," she said.
However, the IMF's former chief economist Simon Johnson says that is flawed logic.
"That is a completely bogus argument. When Argentina was in trouble, did anyone propose the fund should be headed by an Argentine, did anyone put forward a Russian when Russia was in serious trouble, or a Korean when Asia was in trouble? Of course not," he responded.
"In fact, from a point of view of conflict of interest, it is a matter of common sense that you should have someone from a different region representing the world's resources and trying to help countries such as Greece."
He says the European domination has caused perceptions of favouritism about which countries the fund helps, and on what terms.
"From the perspective of emerging markets, there are now two IMF's. One that helps Europe on very favourable conditions, and one that provides assistance to other places such as Pakistan, such as Egypt," he observed.
"You can pick the country, the IMF is very engaged around the world and the conditions on that engagement are nowhere near as favourable in the view of emerging markets as the conditions under which it lends to Europe."
Chinese candidate
But Simon Johnson says there are problems with candidates from some other countries such as China, which continues to hold its currency's exchange rate at artificially low levels.
"To be honest, I think that will come up in the conversation. I am not sure it is an absolutely deal breaker but it would be something taken into consideration," he said.
"At this moment perhaps it will tilt the playing field against the IMF job but the World Bank job on the other hand could easily go to a Chinese person. It would just depend on the basis of merit."
Acting IMF managing director John Lipsky has confirmed that the new leader will be chosen on merit from among all the 187 countries represented at the IMF.
The lobbying has already begun in Europe to install the popular French finance minister Christine Lagarde into the IMF chair, but with the US and Europe largely considered responsible for the financial crisis, a compromise candidate from another developed country could be the answer.
0 comments