IMF must seize chance for reform, after failure by World Bank

The news that the head of the International Monetary Fund is to step down in October has given European countries a second opportunity this year to scrap the 60-year leadership selection fix at the international financial institutions.

Since they were set up in 1944, a ‘gentleman’s agreement’ has operated that sees the World Bank’s president chosen by the United States, and the IMF chief chosen by Europe.

Following the announcement in June by Rodrigo De Rato, the Managing Director of the IMF, that he would be retiring early from the post, Jubilee Debt Campaign has joined with civil society organisations from the UK, Europe and across the world in calling for an open and merit-based process of leadership selection for his replacement (see the Financial Times letter).

The debate follows the failure of the Board of the World Bank, made up of representatives of the countries which fund the bank, including the UK, to shake up its own leadership selection process after the resignation of Paul Wolfowitz earlier this year. Despite protestations from the UK and other European countries that they supported a fair and transparent process, former US Deputy Secretary of State and chief US Trade Negotiator Robert Zoellick was handpicked by President Bush, and elected unopposed in June. One analyst describes Zoellick as bringing with him “a track record of arm-twisting, blackmail, pay-offs and abuse of power in the WTO to promote US interests at the expense of the developing world”.

New UK Chancellor Alistair Darling has responded to civil society pressure over the IMF leadership by publicly backing a new process, but other European countries, led by France, seem content to continue the stitch-up ‘one last time’. It is expected that French socialist Dominique Strauss-Kahn, who received support at a recent informal breakfast of EU leaders, will be the European candidate of choice. But with nominations not closing until the end of August, there is time for other candidates to emerge and, crucially, to be nominated by a country on the IMF board.

To follow the latest, including other possible candidates for nomination, see www.imfleadership.org.