In the discreet world of international
finance, important decisions are supposed to
be settled behind closed doors, preferably
over cigars and brandy. So the unseemly--
and very public--squabble that broke out
last week in Washington when the directors
of the International Monetary Fund
deadlocked over who would become the
Fund's new managing director was quite
out of character. Shouting matches have
so far been avoided, but stress levels are
rising on the executive floors of the IMF's
headquarters. The maneuvering has
embroiled not only the White House, just
three blocks away, but governments in Paris,
London, Tokyo and--especially--Berlin. The
Germans are furious that the Americans
have openly blackballed their candidate to
lead the IMF, State Secretary Caio Koch-
Weser. Complained German Finance
Minister Hans Eichel, "The U.S. does not
have the right to say who Europe's
candidate should be."
On the face of it, Eichel seems to have a
point. According to an informal convention
dating back to the founding of the IMF in
1946, a European is always selected to head
the Fund, while an American runs the
World Bank. When Frenchman Michel
Camdessus decided to step down after 13
hectic and controversial years in the job,
the Germans-who believe that they have
been shortchanged when it comes to
leading major international organizations-
quickly floated Koch-Weser's name as
Europe's candidate.
Some Europeans-notably the French and
British-were cool toward KochWeser, but
went along rather than start an unnecessary
squabble with the Germans. Koch-Weser,
after all, seemed a perfectly reasonable
choice. Urbane, fluent in five languages, he
had more than a quarter-century of
experience at the World Bank. But
competent and congenial as KochWeser
might be, his critics say he lacks the
experience of heading a central bank or
finance ministry. Nor do they consider him
tough enough to successfully butt heads
with presidents and prime ministers, which
is part of the job description.
But there were other problems with Koch-
Weser's nomination aside from his
shortcomings on the gravitas scale. With
182 members, the IMF is no longer a
private bankers club for the major Western
industrial nations. "There is a growing
sense in the developing world that this
institution is more important to us than it is
to the rich G-7 nations," says an IMF
executive director representing a group of
Third World nations. The governments of
many developing countries were annoyed
that neither the Germans nor the Europeans
bothered to consult them on Koch-Weser's
selection.
The Japanese felt equally aggrieved at
European presumption. "We don't think it
should be automatic that a European gets
the job [of IMF director general]," says
Takatoshi Ito, a deputy vice minister of
finance in Tokyo. The Japanese nominated
Eisuke Sakakibara, a former senior Finance
Ministry official who is in some ways the
antithesis of Koch-Weser. Known as Mr.
Yen for his ability to jawbone the currency
markets, Sakakibara is brash, bold and
bubbling with ideas. Perhaps too many
ideas, say his critics. He stands no chance
of getting the job, but by putting his name in
play the Japanese have gone on record that
next time around a non-European clearly
should be considered for the top IMF job.
More serious-but just as problematic-is the
nomination of Stanley Fischer, the first
deputy managing director of the IMF.
Fischer is extremely popular with the Fund
staff and admired as a brilliant economist.
Born in what is now Zambia of Latvian-
Jewish parents, Fischer was nominated as
an "African" by a group of 20 African
countries. That was a clever gambit, but it
did not mask Fischer's fatal flaw: he is a
naturalized American. President Clinton
made it clear that he was unwilling to buck
IMF tradition-and his European allies-by
backing an American. "I think the
Europeans should lead the IMF," said
Clinton. "And it would suit me if a German
led the IMF."
A straw poll of the 24 members of the
Executive Board last week failed to give
any of the three candidates a winning
majority. The high number of abstentions
indicates that many countries are waiting
for a new consensus candidate to emerge.
As the world's most important financial
institution and the safety net for troubled
economies, the IMF can ill afford many
months of squabbling over who's going to
be the new boss. The fund is also under
attack from one set of critics for imposing
severe austerity measures on emerging
economies it is claiming to help, and from
another group for pouring too much money
into coffers of corrupt governments. A
reform program for the IMF, nearly
everyone agrees, is urgently needed. So last
week, central bankers and finance ministers
around the world were once again getting
out the cigars and brandy in hopes that they
can find a candidate willing-and able-to
take on the job.
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