Sarkozy candidate Dominique Strauss-Kahn Named New IMF Chief

Strauss-Kahn’s candidacy was first proposed by the president of France, Nicolas Sarkozy in July and the campaign soon gained momentum with the support of the EU, which collectively holds 32.09 percent of IMF voting rights, and the US, the single largest contributor with 16.83 percent.

France’s Strauss-Kahn Named New IMF Chief
Dominique Strauss-Kahn

29.09.2007

The International Monetary Fund has named Frenchman Dominique Strauss-Kahn as its managing director at a time when the 63-year-old institution faces a crisis of relevancy and legitimacy in a world flush with cash.

Strauss-Kahn was handed the reins of the struggling multilateral IMF with backing from the European Union and the United States after a late effort from Russia to install its own candidate, Josef Tosovsky, a former Czech central bank chief who was briefly prime minister of the Czech Republic.

The former French Socialist finance minister takes over at the helm of the IMF from Rodrigo de Rato, who is stepping down next month.

His nomination puts a Frenchman back at the helm at the IMF,
alongside Pascal Lamy at the Geneva-based World Trade
Organisation, Jean-Claude Trichet at the European Central Bank
in Frankfurt and Jean Lemierre at the European Bank for
Reconstruction and Development in London.

"France is no passionaria of globalisation," French daily Le Monde said in an article ahead of Strauss-Kahn’s nominaton. "But it is over-represented in this world of international economic and financial institutions. Is there something in the French DNA for this kind of job?"

Strauss-Kahn’s candidacy was first proposed by the president of France, Nicolas Sarkozy in July and the campaign soon gained momentum with the support of the EU, which collectively holds 32.09 percent of IMF voting rights, and the US, the single largest contributor with 16.83 percent.

With the campaign nearing its potentially successful conclusion, Russia, which holds 2.70 percent, put forward Tosovsky, who currently heads the Financial Stability Institute of the Bank for International Settlements in Basel, Switzerland, claiming that he had wide support in the developing world.

However, the lending of additional support by Brazil, Argentina, India and a certain number of other large, emerging countries gave the Strauss-Kahn campaign its winning momentum in the days leading up to Friday’s vote.

New IMF chief’s fight for organization’s legitimacy

Strauss-Kahn will have his work cut at the IMF. The institution faces a financial crisis, as emerging economic powerhouses like China and Russia are flush with cash reserves and the need for IMF loans and their stringent conditions has declined sharply. Interest paid on loans helps finance the institution’s operations.

"It will be a hard task for all of us to rebuild both the relevance and the legitimacy of this organization. But I am prepared to do that and I ask you to be prepared as well," Strauss-Kahn told the IMF executive board.

A broad reform program spearheaded two years ago by the current IMF managing director Rato, to adjust organization’s role to today’s globalizing world, has made only incremental progress in giving a greater role to the developing economies in key decisions.

Developing world unhappy at financial duopoly

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Rato’s resignation came after his reforms seemed to fail

It is believed that Rato’s abrupt announcement in late June that he was resigning nearly two years before his term ends for personal reasons was linked to the failure of the reform program and the developing world’s unhappiness with the traditional arrangement of power at the IMF and the World Bank.

Under an unwritten agreement struck in the aftermath of World War II, Europe chooses the head of the IMF and the United States picks the president of the World Bank.

After Paul Wolfowitz was brought down as head of the World Bank in May after accusations of nepotism, the US fielded the only candidate for the vacant position Robert Zoellick, who was widely approved to lead the poverty-fighting lender.

This seemingly unchallenged appointment caused further discontent in the developing world, adding to the dissatisfaction surrounding the appointment procedure at the IMF.

In a bid to restart discussions on the developing world’s involvement at the IMF and to give the crippled reform process a lift, the Europeans have promised that Strauss-Kahn would be the last of the automatically European managing directors.

Strauss-Kahn urged to re-engage poorer nations

The man himself has pledged to implement reforms that will restore the legitimacy of the institution, continue those aimed at giving emerging economies a bigger stake in the fund’s voting power and to strengthen the IMF’s monitoring of a changing global economy, where countries like China had a bigger role.

Development agencies and funds have called on Strauss-Kahn to promote changes in the way the IMF is managed so that all developing countries get a fair say in its decisions.

"Recently, Mr. Strauss-Kahn has emphasized the importance of such reform and the need for the IMF to adapt to a rapidly changing world," Oxfam’s Washington-based policy advisor Elizabeth Stuart told Reuters. "This is welcome, but he’ll need to set the tone from day one in the position to make it happen," she added.

http://www.deutsche-welle.de/dw/article/0,2144,2801510,00.html