November 10, 1999
Longtime I.M.F. Director Resigns in Midterm
By DAVID E. SANGER
ASHINGTON -- Michel Camdessus resigned Tuesday in the middle of his
third term as managing director of the
International Monetary Fund, setting off a
behind-the-scenes struggle involving the
Clinton administration and European nations over who will head the agency that is
in effect dictating national economic policy
from Russia to Indonesia and Africa.
Camdessus, who has steered the
I.M.F. for nearly 13 years through a succession of economic crises, said Tuesday that
"entirely personal reasons" had prompted
his resignation two years before the end of
his term. Colleagues said constant travel
and a succession of international crises
had exhausted him.
But in a half-hour conversation in his
office here Tuesday afternoon, the 66-year-old
former French central banker appeared
vigorous, telling tales of political intrigue,
responding to attacks from conservatives
in the United States Congress who had
accused him of wasting billions in bailing
out Russia, and arguing that his much-attacked prescriptions saved Asia from a
far worse economic fate.
And in discussing the fund's growing
political impact throughout the world, he
acknowledged for the first time that its
actions in Indonesia served as a catalyst in
forcing out the man who led the nation, the
world's fourth most populous.
"We created the conditions that obliged
President Suharto to leave his job,"
Camdessus said. "That was not our intention," he said, but quickly added that soon
after Suharto's resignation he traveled
to Moscow to warn President Boris N.
Yeltsin that the same forces could end his
control of Russia unless he acted.
Because the I.M.F. has become such a
far-reaching political force, the struggle
over who will occupy Camdessus' spacious office, situated halfway between the
White House and Federal Reserve headquarters, is likely to be a fierce one. Traditionally, the fund has been run by a European, and for 30 of its 51 years the top
job has gone to a Frenchman. Washington has usually had only a bit role
in selecting the monetary fund's director because it has sole discretion
in choosing the head of the I.M.F.'s
much-larger sister institution, the
World Bank. The bank focuses on
alleviating poverty and promoting
development, while the I.M.F.'s mission is economic stabilization, particularly in times of crisis.
All that may change. Europeans
appear divided on the question of
who should succeed Camdessus
when he steps down in February, and
the Clinton administration has signaled that it intends to play a much
bigger role in the selection.
"This is a very important decision
for the fund at a very important
time," a senior Treasury official said
tonight. "The stakes are higher now
because the fund's profile is so much
higher." The official said the United
States was looking for a candidate
"who will have strong credibility in
the markets," and was not necessarily ready to back a European.
Among the top candidates for the
job are Caio Koch-Weser, a state
secretary of finance in Germany and
former managing director of the
World Bank, and Andrew Crockett of
Britain, who heads the Bank for International Settlements in Switzerland. Other possible successors include the current governor of the
Bank of France, Jean-Claude Trichet, who is scheduled to be the next
head of the European Central Bank;
Mervyn King, deputy governor of the
Bank of England; Nigel Wicks, a top
official in the British Treasury, and
Horst Koehler, head of the European
Bank for Reconstruction and Development.
In his nearly 13 years at the fund,
Camdessus earned praise, particularly from American officials, as
a knowledgeable political operator
who could cajole, wheedle and
threaten foreign leaders who were
reluctant to enact economic changes.
"Damn right he can be tough,"
former Treasury Secretary Lloyd
Bentsen once said of him, though he
added, "Sometimes you have to lean
on him real hard to get things done."
But when Washington appealed for
help, Camdessus was almost always there -- particularly in 1995,
when an early-morning telephone
call from Treasury Secretary Robert
E. Rubin with the news that Congress would not back a bailout of
Mexico led him to take extraordinary action on his own.
He committed $18 billion without
the usual round of negotiations with
the board that directs the fund. He
later told them, "Gentlemen, I don't
ask your permission because you
would have to speak with your ministers or governors, and you have no
time for that." The bailout worked.
Camdessus' critics, and they
were legion, had many complaints.
They viewed him as arrogant -- "I
am French," he once said in an interview during the Asian crisis, "and
what Frenchmen is not accused of
that" -- and far too quick to urge the
devaluation of currencies and fiscal
austerity. In fact, that is what the
I.M.F. did when the Asian crisis
started in Thailand and Indonesia,
but within months it backed away,
restoring subsidies for fuel and rice
to contain widening street protests.
In Congress, conservatives complained that the fund wasted billions,
particularly with a $17 billion bailout
of Russia last year that collapsed in
months -- and which has led to continuing investigations into where
I.M.F. money went.
Camdessus repeated Tuesday
that "the charges are completely unsubstantiated," and said "we must
not loose sight of the fact that Russia
is now a democracy and a market
economy, even if it is blurred by
corruption and cronyism, and mistakes in Chechnya."
What undercut some of Camdessus' credibility on Capitol Hill,
where financing for the I.M.F. seems
always under attack, was his tendency to act as a public cheerleader for
countries in trouble. Speaking of the
capital flight from Russia in the
spring of 1998, for example, he said:
"Contrary to what markets and commentators are imagining, this is not
a crisis. This is not a major development." It became one quickly, leading to one of the fund's biggest and
least successful stabilization efforts.
Tuesday, Camdessus said he had
become resigned to the idea that
Europeans and Asians viewed him
as a lackey for the United States --
"they call me a damn U.S. neo-liberal in Europe," he remarked --
while in Congress he is viewed as not
doing enough to advance the United
"The fact is that the American
influence in the I.M.F. is strong, very
strong, and for good reason," he said.
"America has a systemic vision of
the world. The problem is that America does not always put its money
where its mouth is. When my countrymen in Europe complain about
that, I say that if you had the guts to
stand united, you would have more
power than the U.S."
And then he ushered a visitor past
his collection of sculptures, including
one of an Indian goddess who
"dances on ignorance and is the
force of creative destruction," to a
favorite painting. It shows a blur of
hands reaching into the pockets of a
pinstriped suit. The painting is titled
"Sorry, no funds."