Tags: Strauss-Kahn Quits IMF | Kicking Off Global Succession Contest

Strauss-Kahn Quits IMF, Kicking Off Global Succession Contest

Thursday, 19 May 2011 07:01 AM EDT

Dominique Strauss-Kahn resigned as the 10th leader of the International Monetary Fund, kicking off a contest for his successor as Europeans seek to retain the job amid a lack of unity among emerging-market nations.

“I want to devote all my strength, all my time, and all my energy to proving my innocence,” Strauss-Kahn said in a statement released by the Washington-based IMF four days after his arrest on sexual-assault charges. The fund said it will comment “in the near future” on the succession. Strauss-Kahn, 62, had been leading polls for France’s 2012 presidential election.

European officials, who have picked IMF heads for 65 years under a deal that also gives the U.S. the lock on the top World Bank post, moved to retain the privilege, with Sweden backing French Finance Minister Christine Lagarde. Russia and South Africa have called for an emerging-market candidate, while some Asian policy makers suggested someone from their region.

“Time is of the essence,” said Julie Chon, a senior fellow at the Washington-based Atlantic Council and former adviser to the U.S. Senate Banking Committee. “The longer the IMF allows the specter of uncertainty to hang over its leadership, the more exposed it becomes to the jittery actions of sovereign debt and foreign-exchange traders who have been speculating on what the leadership vacuum means for their portfolios.”

The Washington-based lender that approved a record $91.7 billion in emergency loans last year and provides a third of the euro-region’s bailout packages said John Lipsky, the No. 2 official at the fund, remains as acting leader, according to its statement late yesterday. Lipsky, a former chief economist at JPMorgan Chase & Co., is scheduled to retire in August.

Incomplete Term

Strauss-Kahn’s five-year term had 17 months remaining. In past successions, incoming managing directors were appointed to fresh five-year tenures.

“I would argue that Christine Lagarde has outstanding credentials,” Swedish Finance Minister Anders Borg said in a Bloomberg Television interview today. Her gender is also an “advantage” since “half of the world has not been represented as managing director,” he said.

Nout Wellink, a European Central Bank Governing Council member, told the Dutch talk show Knevel & Van den Brink late last night: “I know a fantastic candidate, that’s Jean-Claude Trichet,” whose term as ECB president ends in October.

Japan, U.S.

Japan, which has the second-biggest share of voting power at the IMF with 6.25 percent, has yet to decide its stance on a Strauss-Kahn successor, Tetsuro Fukuyama, the government’s deputy chief cabinet secretary, told reporters in Tokyo today.

The U.S., which has the largest share of votes, at 16.8 percent, has also given no indication of a preference.

South African and Russian officials said yesterday the next head should come from an emerging economy. Trevor Manuel, head of South Africa’s National Planning Commission, is “highly respected in the world,” Finance Minister Pravin Gordhan said of his predecessor in an interview in Pretoria.

Russian central bank Deputy Chairman Sergei Shvetsov said a developing country should be given the chance to run the IMF to better reflect the role of those economies in global trade. South Korea’s central bank governor made similar remarks before the announcement late yesterday that Strauss-Kahn would resign.

“A new brand of leadership will send a positive signal that the IMF is indeed responsive to the changing world,” Philippine Finance Secretary Cesar Purisima said in a mobile phone text in response to questions. “Wherein Asia increasingly plays a major role as a growth driver of the global economy, there is no time more fitting than now for an Asian leader to take the helm.”

Thai Suggestion

Thai Finance Minister Korn Chatikavanij told his Singapore counterpart, Tharman Shanmugaratnam, he should apply for the job if it opens, the Post Today newspaper reported today.

“So far the leader of IMF is always from Europe — we would welcome an opening to a candidate from Asia,” Indonesian Finance Minister Agus Martowardojo told reporters today in Jakarta.

Morris Goldstein, a fellow at the Peterson Institute for International Economics in Washington who was an IMF official for 24 years, said earlier this week that potential emerging- market candidates include Singapore’s Shanmugaratnam, former Turkish Economic Minister Kemal Dervis and India’s Montek Singh Ahluwalia, a top aide to the prime minister. Turkish Finance Minister Mehmet Simsek said there’s no reason it can’t be him.

‘Move Decisively’

“The most important thing is to move decisively to appoint the best qualified person for the job,” Australian Treasurer Wayne Swan said through a spokesman. “Uncertainty around a new Managing Director of the IMF is not in the interests of the global economy or the institution itself.”

Strauss-Kahn, a former French finance minister, was arrested May 14 on accusations of sexually assaulting a hotel maid in New York, and has been held at New York’s Rikers Island jail complex since he was ordered held in custody at his arraignment May 16. He is asking a second judge to release him on bail.

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Dominique Strauss-Kahn resigned as the 10th leader of the International Monetary Fund, kicking off a contest for his successor as Europeans seek to retain the job amid a lack of unity among emerging-market nations. I want to devote all my strength, all my time, and all my...
Strauss-Kahn Quits IMF,Kicking Off Global Succession Contest
Thursday, 19 May 2011 07:01 AM
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