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FINANCE: Critics Urge IMF to Open Up Selection Process for Top Job

Emad Mekay

WASHINGTON, Apr 1 2004 (IPS) - With European economic and finance ministers set to meet Friday to pick a candidate for the top job at the International Monetary Fund (IMF), one of the world’s most influential economic bodies, the selection process continues to come under fire for being too exclusive.

On Wednesday, representatives at the IMF of more than 100 countries in Asia, Africa, Latin America and the Middle East, along with Switzerland, Australia and Russia, reiterated their call for "an open and transparent process" that would include consulting the 24 members of the executive board of the Washington-based lender.

In their statement the representatives, calling themselves the Group of 11 – because their countries have 11 members on the IMF board – echoed their unprecedented call Mar. 19 for a more representative procedure to choose a candidate to replace outgoing Horst Koehler, who resigned Mar. 3 after being nominated for the German presidency.

The G-11 says the interests of the IMF, born along with the World Bank at the U.S.’ Bretton Woods following the Second World War, would best be served by a "plurality of candidates representing a diversity of members across regions".

Their position contradicts a longstanding custom that the IMF chief is European while the leader of the World Bank comes from the United States.

But the G-11 says it is only following recommendations made in 2001 by a World Bank-IMF joint working group on how to choose the managing director.

It was appointed following behind the scenes bickering over the appointment of Koehler in 2000 by the western powers that control the two Bretton Woods institutions.

The working group report concluded, "a plurality of candidates representing the diversity of members across regions would be in the best interests of the fund; the goal is to attract the best candidates regardless of nationality".

The G-11 invoked the report in their Wednesday statement, saying, "we believe it is essential to abide by the principles underlying those recommendations".

Taking the advice to heart, IMF Executive Director A. Shakour Shalaan of Egypt, who is reportedly influential inside the G-11, nominated three candidates of his own for the post.

All three come from corporate backgrounds or have worked for either the IMF or World Bank.

They are Mohamed El-Erian, a managing director at the California-based Pacific Investment Management Co; Stanley Fischer, a renowned academic economist who is also a Citigroup executive and a former deputy managing director at the IMF; and Andrew Crockett, an executive at J.P. Morgan Chase International and former head of the Bank for International Settlements (the central bank for the world nations’ central banks).

Fischer is a Zimbabwe-born naturalised U.S. citizen, Crockett is a Briton and El-Erian is a French Egyptian.

Non-governmental organisations (NGOs) and watchdog groups have also joined the call, labelling the selection process undemocratic. Some say they are not heartened by the Shalaan nominations.

"A banker is a banker. It may be a banker with dark skin but it’ll still be a banker, and (the IMF) is going to be run according to the same principles," said Kevin Danaher, co-founder of Global Exchange.

"If the Titanic has hit an iceberg should we change captain? It’s irrelevant. It’s going to go down no matter who leads," Danaher added. "It’s a structural problem and it’s a structural crisis, and changing the people in power is, in a sense, a diversion from the real issue which is structural not instrumental."

Several European groups on Tuesday also criticised the nomination process for being "nationality-oriented". The groups include Oxfam, Attac and Friends of the Earth.

In a Mar. 12 letter to U.K. Chancellor of the Exchequer Gordon Brown, a number of U.K. NGOs argued that the selection process for top management jobs at the IMF and World Bank should be merit-based, and subject to transparent criteria that could be monitored by independent groups.

World Bank President James Wolfensohn is due to end his second term in office in 2005.

Other U.S. groups have downplayed the importance of who leads the Bretton Woods bodies as long as their policies, which include austerity programmes and privatisation of public assets, continue in the developing world.

"Until the process is open and a greater array of stakeholders have a voice in this selection à then there is not going to be any fundamental change in the policies and operations of the fund," said Steve Hellinger of Development Gap in Washington.

Although the IMF has 184 country members and lends to 94 nations around the globe, it remains largely controlled by the Group of Seven (G-7) most industrialised nations.

The IMF and the World Bank are scheduled to hold their spring meetings in Washington from Apr. 24-25 and the fund needs to settle on a candidate before that.

During the institutions’ annual meetings last year, grassroots groups and some developing nations renewed their push to have countries of the developing South given more say in running the two agencies.

The request netted only promises from rich nations to keep the issue alive for future consideration.

Seats and votes on the two bodies are allocated according to member countries’ economic bulk, leaving poor nations defenceless before heavyweights like the United States, Japan and European Union nations.

The bank and the fund each have 184 members, including developed and developing countries, and 24 board members who represent countries or groups of nations.

But while the 46 sub-Saharan African countries, for example, are represented by only two executive directors on the boards of each institution, eight rich nations, including Germany, France, Britain and the United States, are served by their own executive directors.

Directors from rich countries now control more than 60 per cent of the votes at both bodies.