Not 1, but 3 flawed appointments – US and China dividing up the spoils

According to Reuters the IMF is making great progress in filling out its senior management team. It also seems to be setting new records for the number of appointment processes in a single month that can violate the international agreements for all senior management to be appointed through open, transparent, and merit-based processes. It likes like the US and China are already dividing up the spoils.

The US first, with an update on yesterday’s post about Meg Lundsager’s non-appearance for the Lagarde interview with the board. Sources inside the IMF have said that indeed Lundsager, the US executive director, did not attend the board’s interview with Christine Lagarde. We are told she was instead at a meeting at the US Treasury with IMF staff who are conducting the IMF’s annual Article IV consultation – a check up on economic policy that all IMF members undertake. Is that justifiable? Or does it show that really the US had already made up its mind to continue backing the gentleman’s agreement than lets them appoint the World Bank president in exchange for backing a European for the head of the Fund, and so attendance at the interview was optional?

The effectiveness of Fund surveillance, mainly Article IV reports, over systemically important countries like the US has been a key issue in the debate over the Fund’s relevance and evenhandedness. But I would argue that a sign of the US taking IMF surveillance seriously would not be the attendance of Lundsager, who has no role in setting US economic policy, but the extensive participation of Tim Geithner, US Treasury Secretary and all of his deputy and under secretaries. Lundsager could have asked for a change in the meeting time or sent her deputy, so that she can attend make a fully informed decision about who should head the Fund for the next 5 years. But then again, who am I kidding, the American administration had already decided long before a board interview.

So what is the US next move? It seems that the reports that emerges in mid-May are being confirmed and the US still thinks is has the right to appoint the IMF’s first deputy managing director. According to Reuters:

“The IMF’s No. 2 job is also set to open up with the departure at the end of August of American John Lipsky, the Fund’s first deputy managing director. IMF sources have said the United States is considering naming White House adviser David Lipton for the job, keeping the post in U.S. hands.”

The very idea that the US  can ‘name’ the person to the post shows that the G20 pledge, “that the heads and senior leadership of all international institutions should be appointed through an open, transparent and merit-based process”, signed up to by President Obama himself, isn’t worth the paper it was written on. Nothing has been posted in the senior management section of the IMF’s job opportunities page and no announcement about a process has been forthcoming.

And China is now getting in on the act. Though during the run up to Lagarde’s anointment the Chinese called for an open process, when one of their own is up for a job, the rigour of the selection process seems not to matter. The Reuters report indicates that former People’s Bank of China senior official Zhu Min, who was working as a senior advisor to Dominique Strauss-Kahn, will have a new deputy managing director post created for him. No word of an open appointment process for that either.

So despite speculation about concessions that would have to be offered, it seems the bargain merely picked off the potentially biggest opponent. A good lesson in global power politics.



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