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Home arrow Business arrow EU backs former French official to lead IMF
EU backs former French official to lead IMF PDF Print E-mail
Written by DAN BILEFSKY, International Herald Tribune   
Jul 11, 2007 at 01:06 AM
BRUSSELS: The European Union on Tuesday broadly backed the former French finance minister Dominique Strauss-Kahn to become the next head of the International Monetary Fund, even as Britain said the race remained open and questioned Europe's 61-year grip on the Fund's top job.
Remy Gabalda/AP
Dominique Strauss-Kahn.

BRUSSELS: The European Union on Tuesday broadly backed the former French finance minister Dominique Strauss-Kahn to become the next head of the International Monetary Fund, even as Britain said the race remained open and questioned Europe's 61-year grip on the Fund's top job.

Portugal, which holds the EU's six-month rotating presidency, said a majority of EU finance ministers had backed Strauss-Kahn, 58, a respected lawyer and economist who was finance minister from 1997 to 1999. He failed to win the Socialist Party's nomination for president last year.

The Portuguese finance minister, Fernando Teixeira dos Santos, praised Strauss-Kahn for his financial acumen and political experience and said he had been endorsed quickly and with little fuss. But Britain, clearly piqued by the manner in which President Nicolas Sarkozy of France had sought to impose his own candidate, retorted that the decision - made over a one-hour breakfast meeting in Brussels on Tuesday - was not final.

Even as Portugal sent out text messages to reporters announcing Strauss-Kahn's nomination, the British finance minister, Alistair Darling, was saying that the nomination process remained open and that Britain was not bound by the decision. When questioned on Strauss-Kahn's nomination, he appeared startled to learn of the news.

Darling said the time had come to revamp the unwritten agreement dating to the end of World War II under which the Washington-based IMF is headed by a European, while its sister institution, the World Bank, is run by an American.

"We think there needs to be an opportunity for all members of the IMF to make their own assessments as to individual candidates and then pick the best candidate for the job," he said.

He said candidates from outside Europe should also be considered to replace the current IMF chief, Rodrigo de Rato, a Spaniard, when he steps down in October. "We don't believe the situation whereby it is assumed that there will automatically be a European candidate for the IMF just as there is an American candidate for the World Bank is sustainable in the long term."

It remained unclear, however, whether Britain would put forward its own candidate or move to block Strauss-Kahn's nomination. EU officials noted that the IMF board, by convention, is expected to approve the candidate chosen by Europe. They said Britain, which has called Strauss-Kahn a competent candidate, would face an uphill struggle if it tried to take on 26 other member states who backed him.

Thus far, few other contenders have emerged to challenge Strauss-Kahn. Two other European candidates - Mario Draghi, the Bank of Italy governor, and Gerrit Zalm the former Dutch finance minister - took themselves out of the running on Monday, while Poland failed to get endorsement for the nomination of Marek Belka, a former prime minister.

But Britain's call for a more open selection process was echoed by the Netherlands and Italy, possibly setting the stage for an acrimonious process to confirm Strauss-Kahn. The Dutch finance minister, Wouter Bos, said "it's still an open race." The Italian finance minister, Tommaso Padoa-Schioppa, said he supported Strauss-Kahn but stressed that his "passport shouldn't be the determining thing."

Britain's decision to question the nomination process threatens to open up a rift with Washington, which has shown little inclination to question the tradition governing the leadership of the IMF and World Bank. Following the recent resignation of Paul Wolfowitz as the World Bank president in an ethics scandal, Washington categorically rejected suggestions by some countries that his replacement should be chosen solely on merit rather than on nationality.

The French finance minister, Christine Lagarde, said on Tuesday that questioning how the IMF candidate was selected would also mean reopening Washington's prerogative to pick the World Bank president. Diplomats said EU countries, including France, were frustrated with the long delay in Wolfowitz's departure, but had not pressed the issue with Washington for fear that it would respond by trying to circumscribe Europe's leadership at the IMF.

Despite the broad endorsement of Strauss-Kahn, some European officials questioned whether appointing him would give France too much control over European financial institutions. Frenchmen are currently in charge of the European Central Bank, the European Bank for Reconstruction and Development and the World Trade Organization. But the officials also noted that Jean-Claude Trichet, the head of the Central Bank, and Pascal Lamy, the head of the WTO, had proven to be economically liberal internationalists, despite their country's well-known aversion to globalization.

Strauss-Kahn would lead the 185-member IMF at a time when the institution is searching for a way to be relevant to the world economy. The IMF, which shepherds the global financial system by monitoring exchange rates and offering financial assistance to developing countries, has seen its lending portfolio shrink to $11.8 billion from a high of $81 billion in 2004.
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