In the news

• Osborne misses IMF leadership shortlist, ICAEW economia.
• Europe Needs a Different Approach to IMF Leadership, Bloomberg.
• AMLO apoyaría a Agustín Carstens en caso de que aspire a dirigir el FMI, Grupo Formula.
• The tricky business of electing a new IMF managing director, Central Banking.
• EU candidates for IMF job narrowed down to three, Financial Times.
• The next head of the IMF should come from Asia. But will they?, East Asia Forum.
• Next IMF chief must be ‘ready to go to war’ – trade and currency, strategist says, CNBC.
• Next IMF chief must stand up to Trumpian protectionism, but need not be European, South China Morning Post.
• Look beyond Europe for the IMF’s new leader, East Asia Forum.
• IMF launches selection process for Lagarde successor, Financial Times.
• World Bank’s Georgieva added to EU list of candidates to lead IMF, Reuters.
• Europe lists 5 candidates to succeed Lagarde at IMF, Apex News.
• Raghuram Rajan can be a strong contender to head IMF if it’s looking beyond Europeans, the Print.
• Europe is at odds over who will replace Christine Lagarde at the IMF, CNBC.
• Commentary: The rare, huge reform opportunity before the IMF, CNA.
• Is Asia Serious About Running the IMF?, AsiaGlobal online.
• UK Parliament panel seeks backing for an Indian IMF chief, Economic Times.

Here we go again: Surprise IMF leadership change litmus test for its legitimacy

On 16 July, Christine Lagarde announced she had submitted her resignation from the IMF as managing director, effective 12 September, in light of her nomination for the presidency of the European Central Bank. In the interim, IMF first deputy managing director, David Lipton, was appointed acting managing director by the executive board. The board intends to complete the selection process by 4 October.

Handy yardstick for health of neocolonial and neoliberal system

The surprise announcement kicked off the customary speculation of potential candidates to fill the IMF leadership position and the time-honoured tradition by civil society and others of calling for the abolition of the historic ‘gentleman’s agreement’ on World Bank and IMF leadership.

The unofficial agreement, in place since the founding of the institutions 75 years ago, has ensured that the IMF has always been led by a European, and the World Bank by a US citizen (see Inside the Institutions, What is the ‘gentleman’s agreement?‘). Civil society organisations around the world have for decades pointed out that the Fund and Bank continue to undermine their legitimacy by adhering to this arrangement. They have demanded an end to the European stranglehold on the top IMF post and for it to live up to its commitment to “adopt an open, merit-based and transparent process for the selection of IMF management” (see Update 76).

The selection of yet another European managing director immediately after this year’s appointment of US-nominee David Malpass as World Bank president (see Observer Spring 2019) would unambiguously demonstrate that the leadership succession processes at the Bretton Woods Institutions remain undemocratic, opaque and illegitimate. The expected quashing of the 15^th IMF quota review – which was an opportunity to more fairly distribute voting powers at the IMF executive board (see Observer Summer 2019) – further exacerbates the Fund’s crisis of legitimacy, at a time when the adequacy of the current multilateral system is increasingly being questioned. In the words of Ambrose Evans-Pritchard of UK newspaper the Daily Telegraph, “If the Europeans persist in treating the International Monetary Fund as a hereditary fiefdom, they will destroy the institution. Global credibility will wither away.”

A fragmented Europe selects three IMF managing director candidates

On Friday 26 July, Europeans identified five candidates for the position of IMF managing director ahead of the nomination deadline on 6 September. The initial list of contenders was whittled down to just three on Monday 29.

Traditionally, leadership selection at the World Bank and IMF is subject to a historic ‘gentleman’s agreement’, which has ensured that the IMF managing director has always been a European and the World Bank president a US national. IMF managing directors have disproportionately been French nationals. Of the 11 managing directors, five have been French, followed by two from Sweden, and one each from Belgium, the Netherlands, Spain and Germany. This time round, French Finance Minister Bruno Le Maire is coordinating the European selection promise.

A fragmented Europe fails to reach consensus

Customarily, Europeans select one candidate and the process of deliberation towards consensus building around that candidate is largely done behind closed doors. This time however, as Europe faces the possibility of growing fragmentation, European governments have struggled to select someone that could win enough support, with reports that the French have sought to widen the pool of candidates, not by looking outside of Europe, but by scrapping the age limit for the job.

Mutiny at the IMF

Power, including the power to appoint, is never given: it must be taken, and now it can be

The Europeans are, once again, circling to nominate one of their own as head of the IMF. They are doing so despite their solemn undertaking given during the sex-scandal-European-IMF-succession in 2011 to stop doing so. Promises promises.

The Trump administration—having already got its end of the bargain with European consent for the all-too-evidently unsuitable Mr. Malpass as President of the World Bank, and at best disinterested in International Organizations—is set to let the Europeans have their way at the IMF yet again.

The European short-list, comprising the usual crop of second-tier politicians, is being drawn up in great haste to pre-empt any head of steam building up in protest. The self-declared-and-so-called-great-and-good friends-of-the-IMF that recently met at the Paris conference on Bretton Woods at 75 have circulated their way around this stench. And the broader world looks on, unable either to coalesce around an alternative candidate or to outvote the US and the Europeans.

So is it all a done deal, even though this practice would rightly be condemned in no uncertain terms by the IMF itself as corruption and tribalism were it to be conducted for senior appointments by any African government.

In the news

• U.S. Mnuchin sees some ‘very good’ European candidates to lead IMF, Reuters
• The choice of the IMF’s next boss could be a coronation, the Economist
• Europe is at odds over who will replace Christine Lagarde at the IMF, CNBC
• [Ashoka Mody] Let’s choose the best person to lead the IMF, Bloomberg
• The International Monetary Fund leadership is not a bargaining counter, Social Europe
• A reform opportunity for the IMF, Project Syndicate
• Europe Wants to Keep the IMF. Here’s How Its Likely Picks Fare, Bloomberg
• Lagarde’s exit, fresh beginning for IMF?, Leadership
• After Christine Lagarde, who will lead the world’s most important economic job?, Financial Express
• Why Europe should give up the IMF, Politico
• IMF prospects fade for Dijsselbloem, Carney, Politico
• Raghuram Rajan to replace Christine Lagarde? Former RBI governor among top picks for IMF chief role, Business Today
• France urges IMF age-cap rethink in hunt for Lagarde successor, Financial Times
• Spain will propose economy minister as new IMF chief if backed by EU, el Pais