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IMF nominee a sign of W. Europe losing hold

By Chen Weihua in Brussels | China Daily Global | Updated: 2019-08-07 10:28

If choice approved, first East European will be taking the helm of institution

The European Union's nomination of World Bank Chief Executive Officer Kristalina Georgieva as head of the International Monetary Fund has raised doubts about Western European domination of the institution.

The EU's nomination of Georgieva, a Bulgarian economist, came after two days of negotiations and two rounds of contested votes in a selection process led by French Finance Minister Bruno Le Maire. The other candidates included former Dutch Finance Minister Jeroen Dijsselbloem, Portuguese Finance Minister Mario Centeno, Bank of Finland Governor Olli Rehn and Spanish Minister of Economy and Business Nadia Calvino.

If approved by the IMF's board in October, Georgieva will be the first Eastern European to head the organization. All the previous 11 IMF chiefs since 1946 came from Western European nations. Under an informal agreement between Europe and the United States, the World Bank is headed by an American and the IMF by a European. Together, they control 46 percent of the IMF vote.

"Ms Georgieva certainly has strong credentials in the world of international finance and is likely to do a competent job managing the economic and political challenges the IMF faces," Eswar Prasad, a professor at Cornell University and a senior fellow at the Brookings Institution, told China Daily on Monday.

"However, the process of her nomination, which was orchestrated by a set of advanced European countries, still reeks of a global governance system that is dominated by advanced economies who put their interests first," Prasad, a former chief of IMF China division, said. "Yet again, the leadership of the major international financial institutions is being determined not based on technical competence but by a small group of advanced economies, with even major emerging market economies having little say in the process."

He said the outcome also points to the lack of unity among emerging market economies, whose competing interests and lack of cooperation have yet again prevented them from mounting a cohesive and credible challenge to the existing international order.

Mina Andreeva, the European Commission spokeswoman, did not say whether the EU would support a non-European candidate for the IMF top job.

"We do support the nomination of a European candidate who can make an effective contribution to the IMF's global mission of maintaining the stability of international economy," she told a regular news briefing in Brussels on Friday.

IMF nominee a sign of W. Europe losing hold

While saying that the European Commission does not have a formal role in the selection process, she said: "We believe there are a number of well-qualified European candidates."

Georgieva's nomination has created a conflict with the current IMF age limit that managing directors take office before turning 65. She will turn 66 on Aug 13. The IMF board would need to change its law to let her succeed Christine Lagarde, who resigned last month to take the job as president of the European Central Bank.

Echoing Prasad's view, Ferdinando Giugliano, an editorial board member of Financial Times, tweeted on Monday that Georgieva "is a strong contender to head the IMF, but Europe has no divine right to this post.

"There should be other candidates - from Mark Carney to Tharman Shanmugaratnam - and the IMF board should simply pick the best," Giugliano said.

Carney is the governor of the Bank of England and holds Canadian, British and Irish citizenship, while Shanmugaratnam is the chairman of the Monetary Authority of Singapore.

In a Bloomberg column on Monday, Giugliano argued that "the choice should be open. Other people, especially from emerging markets, should be encouraged to apply too."

He said the world economy is changing as Europe's share of global income continues to fall. "At a fraught moment for international politics and economics, the IMF needs the best possible head regardless of where she or he comes from. A selection based truly on merit is far better than an anachronistic America-European stitch-up," he wrote.

Writing in The Guardian on Monday, Amanda Khozi Mukwashi, chief executive of Christian Aid, a relief and development agency in the UK and Ireland, said the new IMF chief should not be chosen by Europe alone.

"As the world becomes ever more politically polarized and vulnerable to populist leadership, and as the US administration turns away from multilateralism and takes a skeptical approach on the climate crisis, there is all the more reason for these major institutions - which are so keen to boast of their globalist credentials - to take an inclusive, merit-based approach to what ought to be a diversified recruitment process," she wrote.

"The coming window for new leadership is an opportunity for the IMF to demonstrate a different model that is democratic and - crucially - inclusive of candidates from the global south."

(China Daily Global 08/07/2019 page3)

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