If Strauss-Kahn is out, who might become IMF chief?
Dominique Strauss-Kahn was arrested only two days ago, but the jockeying for his post is under way. Could a non-European win the influential job?
That hasn't stopped governments around the world from looking for a successor.
The list of possible replacements is already long – and also indicates that the jockeying for Mr. Strauss-Kahn's post could be contentious and full of conflict. What's more, non-European candidates may be making a strong run for the position.
There's French Economy minister Christine Lagarde. She's known as a competent and smooth operator, but she is the object of a corruption investigation in France. Then there is Peer Steinbrück, former German Finance minister who has been credited with helping consolidate Germany's budget. He is also famously short-tempered. Kemal Dervis is another name on the list, the former Turkish Finance minister steered his country successfully through a financial crisis in 2001.
Europe (mainly France) has traditionally occupied the seat at the top of the IMF. In return, the US gets the post of World Bank director. But with the global economic balance shifting, up-and-coming economies from outside the EU are demanding a bigger say.
The selection process for a new IMF director should be based on fairness, transparency, and performance, says Jiang Yu, spokeswoman for the Chinese Foreign Ministry. India, Mexico, and South Africa all have their own candidates ready. But German Chancellor Angela Merkel insisted that now is not the time for Europe to let go.
"We know that in the medium term, the emerging markets have a right to the top positions at the IMF and the World Bank," she said Monday in Berlin. "But in the current situation Europe is well advised to have its own candidates."
Officially, the 24-member IMF executive directors elect the person for the top spot. In reality, however, they act on behalf of national governments, and the power balance among them reflects a Western dominance. Nine of them are European, and the US representative's vote counts as four.
With $900 billion at the IMF's disposal, its managing director can have a major influence on where that money is spent. In recent months, some of the most crucial investments have been in bailing out ailing economies, preventing whole countries from defaulting. In return, the IMF asks for the kind of tough austerity programs that have often turned it into a target of disdain among the political left and trade unions.
Strauss-Kahn made his name as the firefighter of the European economy. A French socialist, he took over as IMF managing director in 2007, not long before the global financial crisis drove several EU countries close to the brink. Nobel Prize-winning economist Joseph Stiglitz called him a “sagacious leader."