How Not To Choose An Imf Leader

There are few leaders in the world more powerful than the director of the International Monetary Fund. Yet the selection process for choosing the IMF director resembles the worst kind of closed-door politics, long since abandoned in America. The process is undemocratic, unrepresentative, and overlooks some of the best people for the job. The recent row over the next IMF director, with the U.S. rejecting outright Europe's choice, illustrates the sad state of affairs and the need to change them.

By custom the IMF job has always gone to a European and the top World Bank job to an American. Perhaps it made sense to divide up the jobs decades ago. It doesn't now. The most qualified candidate should run the IMF, regardless of nationality. It still makes sense to pick someone from among the countries that provide most of the IMF's funding, but the selection process should take place in the light, not the dark, and the candidates' positions on key issues should be made known to one and all. This is especially important at this moment in time.

Washington is pushing for a major downsizing of the IMF's role in international finance, which has expanded enormously in recent years. It wants the private capital markets to play a more significant role in the financial adjustment process. But none of the three contenders is making his views known on this key issue. Caio Koch-Weser, Germany's State Secretary for International Finance and Europe's first choice, is not only an unknown on the global financial scene, but he's said nothing about the IMF's role in the world. American candidate Stanley Fischer is already No. 2 at the IMF. He was instrumental in applying the IMF's standard austerity policy during the 1997 Asian financial crisis and exacerbating the region's recession. Not a great resume for an agent of change. And Eisuke Sakakibara, a former Japanese vice-minister of finance for international affairs, is better known for irritating American and European finance officials by defending narrow Japanese interests than for pondering global problems. He, too, has said nothing about what he would do as IMF chief.

Horse trading and back-room deals should no longer play any role in the politics of any international organization, be it the IMF, the World Bank, the United Nations, or the World Trade Organization. Democracies should practice what they preach.

Before it's here, it's on the Bloomberg Terminal.