KEY POINTS:
You don't have to be French to head the International Monetary Fund, but historically it has certainly helped.
However, the European Union finance ministers meeting in Brussels this week look unlikely to agree on their nominee for the next managing director of the IMF, despite the strong and
public lobbying by the French President, Nicolas Sarkozy, in favour of former French finance minister Dominique Strauss-Kahn.
Even the informal convention that a European fills the post while its sister organisation, the World Bank, is headed by an American is increasingly under fire.
Yesterday, the British Chancellor, Alistair Darling, joined the ranks of those condemning the post-war tradition as outdated and suggested that Rodrigo Rato's unexpectedly early departure this October could be an opportunity for reform.
Sarkozy said at the weekend: "I know this post is very coveted. To get it you need to have a lot of credibility, undeniable credibility and be a polyglot. Dominique Strauss-Kahn has these qualities. He and I have the same vision for the workings of the IMF."
A Portuguese spokesman played down the chance of a candidate emerging from the EU meeting, despite Sarkozy's efforts. "I expect to have a broad exchange of views between the ministers on the head of the IMF ... I do not expect to have a name coming out from the meeting, but we will see."
The Austrian Finance Minister, Wilhelm Molterer, also said that no common European position on the IMF had been agreed, and British Prime Minister Gordon Brown's spokesman said it was very early days.
Nonetheless, a spokesman for German Finance Minister Peer Steinbrueck said that Germany held Strauss-Kahn in high regard as a "good European candidate", and Luxembourg's Jean-Claude Juncker added: "Dominique Strauss-Kahn has all the qualities you need in order to become managing director of the IMF."
There is a growing lobby challenging the convention whereby Europeans head the IMF with US support and an American leads the World Bank with Europe's blessing.
Japan has long been disadvantaged by this unwritten rule, as, more recently, have emerging nations such as China and Brazil. Developing countries also feel that they deserve a turn; an Egyptian candidate was turned down in favour of Rato in 2004.
When he stood down as IMF chief seven years ago, the Frenchman Michel Camdessus said it was time to think again: "This was justified in 1950, when the rest of the world was not there except for a few countries from Latin America. Now the emerging countries are there, now the poorest countries must have their say."
However, the US Treasury Secretary, Henry Paulson, said yesterday that the US would not stop Europe from naming the next IMF head.
A number of other European names are being canvassed, including another former French finance minister, Laurent Fabius; the head of the European Bank for Reconstruction and Development, Jean Lemierre; the former head of the National Bank of Poland, Leszek Balcerowicz; the former Swedish prime minister, Goran Persson; the Briton Sir Andrew Crockett, formerly of the Bank for International Settlements; and the former EU competition commissioner, Mario Monti, from Italy.
The former Dutch finance minister, Gerrit Zalm, the Governor of the Bank of England, Mervyn King, the Italian Finance Minister, Tommaso Padoa-Schioppa, and the governor of the Italian central bank, Mario Draghi, have ruled themselves out.
The IMF Group of 11, or G-11, which represents more than 110 emerging and developing countries, has called for the next IMF head to be selected on merit, and has pledged to put up a candidate.
The European/American World Bank-IMF duopoly is maintained because in both institutions voting is largely determined by how much money ("the quota") members put into the fund, that is to say economic power.
Despite some recent reforms to governance, the US has 17 per cent of the vote in the IMF, whereas India, with more than three times the population, has about 2 per cent. Constitutional changes in the IMF require 85 per cent of the vote, so America has a veto.
It is unlikely that there will be any radical changes at the IMF, despite growing disquiet from anti-globalisation campaigners, from President Chavez of Venezuela and from former staff members that it is, allegedly, for the benefit of the rich nations and large corporations.
And while the IMF's "medicine" - structural adjustment programmes - to deal with currency and other economic problems has never been popular, there have been cases where the austerity and free-market treatment has arguably been worse than the illness. Many economists feel that IMF intervention in nations has exacerbated their difficulties.
- INDEPENDENT
