IMF successor
May 19, 2011
Last November the International Monetary Fund introduced fundamental reform plans that will see the emerging BRIC countries - Brazil, Russia, India and China - receive more voting rights and capital shares.
These nations, on account of their growing importance for the stability of the global economy, are meant to become part of the IMF's "top-10" alongside the United States, Japan, Germany, France and the United Kingdom. The US, as the fund's largest contributor, retains a vetoing minority with 16 percent of voting rights. All IMF decisions, according to the reform, must be passed with 85 percent of the governing body's votes.
The reform is slated to take effect next year and will be up for a follow-up inspection in 2013. Ever since the founding of the World Bank and the IMF following the end of World War II, an American has assumed leadership of the World Bank and a European the head of the IMF. This accord remains valid today, true to the motto: "Those who pay for the music determine what is played."
Too early for Chinese director
Seeing as the reform of the capital shares has yet to be implemented, it would be premature for a financial expert from one of the BRIC nations to lead this critical institution - which for some countries is central to their financial survival.
Although China is the world's second-largest economic power, it remains an undemocratic, one-party state that pays little heed to human rights. It would thus be more or less unthinkable to appoint a Chinese expert to the top IMF post. And with regard to economic output per capita, the US, Japan and Europe remain the world's three most powerful economic areas.
One also has to consider the experience with the international financial system that a European would bring to the table. And a last aspect not to be forgotten: The euro is still the second most important currency in the world. The Chinese yuan, by contrast, is not even freely tradable on international markets.
Europe has a particularly keen interest, in the face of the ongoing debt crisis within its currency union, to place a European at the top of the IMF. The institution is ultimately responsible for providing a third of all bailout packages and emergency loans, and will remain so.
German candidate?
Four of the to date 10 IMF managing directors have come from France. And with Pascal Lamy in the top office of the World Trade Organization, Strauss-Kahn's replacement doesn't exactly need to be French.
Based solely on voting rights, a German would be a logical choice. Berlin has the third largest capital share, yet only once before has a German led the institution, former President Horst Köhler from 2000-2004. If it weren't for Bundesbank President Axel Weber's recent falling out with Merkel over the prospect of ECB leadership, he would have made an appropriate candidate for the IMF post.
If the institution decides against appointing a European to the top desk, a suitable compromise between Europe and the BRIC states could be the former Turkish Finance Minister Kemal Dervis. He is a proven financial expert who has worked for the World Bank, supports Turkey's EU accession bid and also represents an emerging economic nation.
Author: Bernd Riegert / glb
Editor: Martin Kuebler