Saturday, April 17, 2004
Outsourcing at the IMF?
I have blogged in the past about the imabalance on the U.N. Security Council and so on. The composition of the Council is reflective of the post-war power balance, not of reality today. Same goes for the G-7 which does not even include China, which is among the 5 largest economies in the world today. The most egregious of these imbalances, however, are at the World Bank and the IMF. Sometime in the dim and distant past, a decision was made at a resort in New Hampshire to carve up the IMF and the Bank as a duopoly between the U.S. and Europe. In effect, the president of the World Bank *has* to be an American (Jim Wolfensohn is an Aussie by birth, but is an American citizen) while the MD of the IMF *has* to be European. This equation is just assumed and not open to debate among the member states of the Twins. I cannot think of anything more absurd in a world where the power balance has clearly shifted and demographics are working in favour of countries outside of Europe.
Recently, Horst Kohler (he of the piss everyone off fame) gave up his post as MD of the IMF to take over the presidency of Germany from Johannes Rau. This is as good a time as any to perhaps democratize the decision making process at the top of the IMF. In an op-ed in the Economic Times, Chile's ambassador to India, Jorge Heine makes a similar case. Unfortunately, he is promoting the case of a Chilean economist and therefore the motives are probably a little suspect (drum up support in India etc). However, some of the points he makes at perfectly valid.
The recent resignation of Horst Koehler, the IMF DG, to stand for the German presidency, provides an extraordinary opportunity for the IMF to change. Fourteen of its 24 executive directors have said as much. Nobody is arguing for a mechanical application of the geographical rotation principle here. Simply opening the doors to the best candidates, wherever they may come from, will do.
The irony is that the World Bank and IMF that never tire of preaching the virtues of the market and competition, have until now refused to allow competition and transparency in the selection of their own respective leaders. It is, of course, much easier to handle this “discreetly” with a few trans-Atlantic telephone calls and be done with it. Yet, apart from this being a suboptimal approach to executive selection, the vast majority of the developing countries that, in the end, have to experience the IMF recipes and adjustment programmes find this quite questionable.
Running the IMF is a tough job as it is, without premising it on the curious notion that, although the overwhelming majority of the problems he or she will face will be in the South, only somebody who is not from the South can fill it.
Recently, Horst Kohler (he of the piss everyone off fame) gave up his post as MD of the IMF to take over the presidency of Germany from Johannes Rau. This is as good a time as any to perhaps democratize the decision making process at the top of the IMF. In an op-ed in the Economic Times, Chile's ambassador to India, Jorge Heine makes a similar case. Unfortunately, he is promoting the case of a Chilean economist and therefore the motives are probably a little suspect (drum up support in India etc). However, some of the points he makes at perfectly valid.
The recent resignation of Horst Koehler, the IMF DG, to stand for the German presidency, provides an extraordinary opportunity for the IMF to change. Fourteen of its 24 executive directors have said as much. Nobody is arguing for a mechanical application of the geographical rotation principle here. Simply opening the doors to the best candidates, wherever they may come from, will do.
The irony is that the World Bank and IMF that never tire of preaching the virtues of the market and competition, have until now refused to allow competition and transparency in the selection of their own respective leaders. It is, of course, much easier to handle this “discreetly” with a few trans-Atlantic telephone calls and be done with it. Yet, apart from this being a suboptimal approach to executive selection, the vast majority of the developing countries that, in the end, have to experience the IMF recipes and adjustment programmes find this quite questionable.
Running the IMF is a tough job as it is, without premising it on the curious notion that, although the overwhelming majority of the problems he or she will face will be in the South, only somebody who is not from the South can fill it.
