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NO SILVER LINING TO THE IMF CLOUD

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JOHANNESBURG, May 25 2011 (IPS) - European powers appear set on perpetuating their arbitrary “entitlement” to the position of Managing Director of the International Monetary Fund in the wake of the controversy that precipitated the resignation of Managing Director, Dominique Strauss-Kahn. Despite claims from the IMF that the selection this time around would “take place in an open, merit-based, and transparent manner” as well as a longstanding commitment to open the position to nationals of all member states, most developed country representatives had expressed clear preferences for European candidates even before nominations opened on May 23. Their stances will do nothing to allay fears among developing countries and civil society that pledges to address unrepresentative governance at the Bretton Woods institutions are mere window dressing. They are in direct contravention of the explicit recommendation that resulted from extensive civil society consultations last year that the election would be conducted “without pre-selection by any sub-group of powerful countries”. Particularly since the arguments being proffered in favour of European candidates fly in the face of reason and logic.

In an act of collective amnesia, some Europeans have argued that their current economic woes demand a European at the helm of the Fund, having asserted that objectivity was necessary in the IMFÂ’s approach following the Asian economic crisis of the late Â’90s. This repeats the U-turn in logic that accompanied their shift to becoming net contributors from net recipients, when these institutions were founded following World War II. It is somewhat ironic that the current front-runner for the Managing DirectorÂ’s position is French since France was the first recipient of an IMF loan.

The apparent change of heart in evidence at the Spring meetings earlier this year were lauded by Joseph Stiglitz and others as “marking the Fund’s effort to distance itself from its own long-standing tenets on capital controls and labour-market flexibility”. Together with reform of quota shares, the pronouncements revived long-frustrated hopes in the possibility of a new IMF. At the Spring 2011 meetings Strauss-Kahn called for more cooperation of the sort that had staved off the worst effects of the financial crisis. “We are now in an interconnected world which does not leave any room for local solutions to global challenges that are decided by countries without taking into account the consequences on others” he said.

Such cooperation is unlikely when the Managing Director is perceived to serve the interests of a few countries. As Jesse Griffiths of the Bretton Woods Project puts it, "The head of the IMF must be -and be seen to be- independent of powerful governments, and well versed in the problems of low and middle-income countries, where most IMF operations take place. They should display a commitment to reducing levels of global inequality and poverty."

Developing countries and emerging economies that account for most of the worldÂ’s population, over half the worldÂ’s output and who are being pressed to increase their capital contributions, will have negligible say in the decision unless they are willing to take a firm, collective stance behind a consensus candidate. Statements from South Africa and Australia on behalf of the G-20 committee on IMF reform have been encouraging in this regard.

Farsighted developed countries too would do well to look beyond narrow, parochial, short-term interests in their choices or risk further erosion of the legitimacy of the Fund at a time when lack of trust from its stakeholders could fatally undermine its potential role in restoring and reforming the international monetary system at a critical time. In the words of Oxfam spokesperson Sarah Wynn-Williams : "The only way to give the new IMF head legitimacy and authority is through open voting, with the winner backed by a majority of countries, not just a majority of shares. The time has come for the IMF to accept an open and merit-based approach to choosing its leaders." (END/COPYRIGHT IPS)

(*) By Ingrid Srinath, Secretary General, CIVICUS:World Alliance for Citizen Participation.

 
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