Europe aims to keep IMF top job

the agency’s jailed leader, Dominique Strauss-Kahn, to step down.
US Treasury Secretary Timothy F. Geithner said the IMF needs to name an interim leader because Strauss-Kahn is “obviously not in a position” to run the fund.
Austrian Finance Minister Maria Fekter told reporters in Brussels yesterday that Strauss-Kahn “risks damaging the IMF”.
Senator Mark Kirk, a Republican from Illinois, sought his resignation.
At stake is leadership of an institution that approved a record US$91,7 billion in emergency loans last year and provides a third of bailout packages in Europe.
Strauss-Kahn’s arrest may give emerging markets, the drivers of global growth, momentum to their push to end a postwar deal under which a European heads the fund and the US picks the World Bank president.
“There is no lack of talent – whether in Europe or the emerging markets – to replace Strauss-Kahn,” said Joseph Tan, the Singapore-based chief economist for Asia at Credit Suisse Group AG’s private-banking division.
“There has been a gradual shift of economic power and representation to emerging markets but institutions like the IMF and the World Bank are still centred heavily in the West.”
The charges that Strauss-Kahn (62) sexually assaulted a maid in a midtown Manhattan hotel over the weekend started the rounds of speculation on a possible successor.
His lawyer denies the claims and says the IMF chief will plead not guilty.
“It’s important that the board of the IMF formally put in place for an interim period somebody to act as managing director,” Geithner, who previously worked at the fund, told an audience in New York yesterday.
He said “you want the IMF to have the capacity to be helpful” on global financial issues, particularly in Europe.
European officials defended their 65-year lock on the top job at the Washington-based lender.
Finance ministers from Sweden to Spain say there’s a need for a European as Strauss-Kahn’s potential successor while the region contends with a sovereign-debt crisis.
“If they are serious about this and they really think it’s time for them to put forward a candidate and get the job, then they have to get moving,” said Morris Goldstein, a fellow at the Peterson Institute for International Economics in Washington who was an IMF official for 24 years. “If they do nothing and wait and wait and wait it will again be a European.”
The name most frequently cited for a European candidacy is France’s Finance Minister Christine Lagarde, Goldstein said. Former UK prime minister Gordon Brown has told friends he has global support for his candidacy, the Financial Times reported.
Brown hasn’t asked the British government to back him for the IMF role, Chancellor of the Exchequer George Osborne said yesterday, sidestepping questions on whether he would back such a bid. Prime Minister David Cameron said last month that Brown might not make the “most appropriate” IMF head because the job needs someone who “understands the danger of excessive debt”.
Lagarde may face legal challenges of her own. Jean-Louis Nadal, the public prosecutor attached to France’s highest appeals court, this month requested a judicial inquiry into whether Lagarde abused her powers in reaching a settlement with businessman Bernard Tapie. Lagarde pledged co-operation while saying the allegations are without foundation.
German Chancellor Angela Merkel said May 16 there are “good reasons” for Europe to keep the top job. She was echoed that day by Belgian Finance Minister Didier Reynders, and by his counterparts Anders Borg of Sweden, Jan Kees de Jager of the Netherlands and Elena Salgado of Spain yesterday.
Strauss-Khan, a former finance minister and possible contender for the French presidency, was arrested May 14 and later ordered held without bail as a flight risk. The next court date is scheduled for tomorrow. – Bloomberg.