Although most of the recent IMF/World Bank meeting in Washington focused on the uncertain worldwide economy, there was another, behind-the-scenes story simmering at the conclave that could have a major impact on the international scene: the growing calls by the economic leaders of emerging nations for the next International Monetary Fund managing director to be a non-European and possibly, to come from the ranks of the emerging nations themselves.
A number of the participants from more than 180 member nations of the IMF were not shy about saying they would not mind if the next head of the monetary colossus came from Communist China.
“Yes, yes, one of our [Africa’s] main partners is China,” Therno Bocar Tall, director general of the African Biofuel and Renewable Company of Togo, told HUMAN EVENTS between sessions this weekend.
Emphasizing that “all the forecasts on emerging markets are in Africa,” Mr. Tall noted that there is a “new climate of change for Africa” and that an IMF managing director from China would be helpful to developing African nations.
He added that “Everybody wants to have links with China.”
The high profile at the session evinced by People’s Bank of China Governor Zhou Xiaocuan fueled speculation that he might be a candidate for IMF managing director when and if current director Dominique Strauss-Kahn steps down.
On Friday morning, the Chinese bank governor participated in a much-watched BBC forum that included Strauss-Kahn, former Obama White House economic advisor Christina Romer and former IMF chief economist Joseph Stiglitz. In that forum, Zhou joined with the others in strongly endorsing the concept of stimulus spending to jumpstart the economy.
Since the Bretton Woods conference established the two major international financial operations in 1945, the president of the World Bank has always been an American and the IMF managing director a European. With polls showing Strauss-Kahn the strongest candidate of the French Socialist Party against President Nicolas Sarkozy in 2012, the man known as “DSK” will have to leave his IMF post sometime next year if he is to compete for his party’s nomination in the December 2011 Socialist primary. Hence, the mounting speculation about a successor.
At a meeting of 27 European finance ministers in Brussels September 30, there was serious discussion about a non-European IMF managing director to follow Strauss-Kahn. At the IMF/World Bank meeting, there was an “informal discussion” of the same subject at the Saturday morning meeting of finance ministers, according to one participant who requested anonymity.
Later that morning, Brazilian Finance Minister Guido Mantega went on the record and denounced what he considered the “obsolete practice” of an American heading the World Bank and a European running the IMF.
An IMF spokesman told HUMAN EVENTS that there is actually no up-or-down vote taken by the fund’s 24-member governing board and that a decision on a managing director is reached by discussion and consensus among the board.
When Sarkozy suggested political rival Strauss-Kahn for the job in 2007, the former finance minister was selected in spite of two other Europeans putting their names forward to be managing director. Since another Frenchman would not likely be picked if Strauss-Kahn leaves and Spain and Germany previously held the post, the normal step would be to go to a choice from another Western European nation—say Mario Draghi, governor of the Central Bank of Italy and a respected economist.
But as the meeting in Washington this weekend made clear, “normal steps” appear less likely and winds of change seem to be blowing—possibly from the Far East.