How will the new IMF head be chosen?
It takes Mohamed El-Erian until the very last paragraph of his FT op-ed to rule himself out of the running for managing director of the IMF: “I will not be part of this process,” he says, adding that “I already have a great job, here in California.”
But it’s clear what process he wants:
It is therefore critical that, in the coming weeks, the IMF Executive Board finalise and publicise a process that would be used, should Mr. Strauss-Kahn be forced to resign. Specifically, the post of Managing Director should be open to all nationalities, with candidates assessed on the basis of transparent job qualifications.
It should also involve an internationally balanced committee to evaluate applicants and put forward 2-3 finalists for Executive Board consideration, and the final choice should emerge from a fair vote of the Board.
The first problem with this is that Strauss-Kahn will and should resign much sooner than that. But that problem isn’t insurmountable: he should just say that Lipsky is the new interim managing director, and that one of Lipsky’s main jobs will be to put together a transparent, qualifications-based process for choosing his permanent successor.
More generally, the international community can no more ignore a candidate’s nationality when it comes to running the IMF than can FIFA when it comes to choosing a referee for the World Cup final. Since it’s the board and shareholders who are going to be choosing the IMF’s next managing director, it’s the board and shareholders who are going to be nominating candidates. And when a country nominates a candidate, that candidate is always going to be considered a partisan of that country.
Which is the main reason, in fact, why Christine Lagarde might not end up getting the job. Taimur Ahmad, the editor of Emerging Markets — the very magazine which helped cement Lagarde’s status as front-runner back in April — has an interesting theory on this front. Essentially, Lagarde is Sarkozy’s finance minister, and while she might make sense as IMF managing director with DSK as president, it seems a bit much to have her at the IMF when Sarkozy has a real chance of retaining the presidency.
If it’s not Lagarde, then, who will emerge as the consensus candidate of the EU? Lorenzo Bini Smaghi? It’s all, still, very murky.