The Next Leader of the I.M.F.
NY Times-Feb 28 (Editorial)-The International Monetary Fund, the guardian of global financial stability, will soon select its next director. Unhappily, and true to form, it is proceeding in secret, with little opportunity for the public to appraise the leading candidates or their views on critical questions about the future of the fund. The lack of openness is intolerable for one of the world's most influential organizations.
The fund's primary mission is to stamp out currency crises like those that struck Korea, Thailand and Russia in recent years. In exchange for a bailout, the fund extracts commitments by beleaguered countries to change their monetary, fiscal, banking and other economic policies to the liking of the fund.
Critics accuse the fund of overreaching. It intervenes in dozens of countries, only some of which are in immediate financial turmoil, to fight poverty or to help shift their economies from socialism to capitalism. The fund's mixed record of success has led powerful members of Congress to ask whether the fund should leave issues of poverty and development to the World Bank. There are also important questions about whether the fund should bail out fewer countries, pour less money into bankrupt nations, impose less onerous conditions on its loans or lift the debt of poverty-stricken societies.
The next director will face these and many other difficult issues. Yet not one of the three top candidates has adequately described in public how he would handle them or made clear whether he would try to lead the fund in new directions.
Stanley Fischer, deputy director of the fund and a former chairman of the economics department at M.I.T, has been endorsed by several African and Arab countries. He is widely respected for his intelligence, policy acumen, experience and commitment to helping poor countries. If Mr. Fischer is prepared to rethink some of the fund's policies, and can shake free of the customs of an institution that he has helped lead since 1994, he would almost certainly be the best man for the job. The White House, which would doubtless like to see Mr. Fischer installed as director, cannot openly support him. The reason is an outdated gentlemen's agreement among nations that a European should run the I.M.F. while an American manages the World Bank.
For the moment, the leading European candidate is Caio Koch-Weser, deputy finance minister of Germany and a former official at the World Bank. Though he was effective at the World Bank, his leadership skills and qualifications to run the fund are questionable. The third candidate, Eisuke Sakakibara, a former vice minister of finance in Japan, is a sophisticated financial expert, but he has a parochial view of many global economic issues. He long extolled the superiority of Japanese economic institutions, even as his country sank into a decade-long hibernation.
The European members of the fund may decide as early as today to back Mr. Koch-Weser. The governing board of the I.M.F. could take a straw vote on its official candidates as early as this week. This is much too hasty. Whatever else the fund does in days ahead, it must shed the secrecy that surrounds its deliberations. The best way to begin is by opening up the process of selecting its next director.