Kristalina Georgieva, who is currently the World Bank chief executive and a Bulgarian national, was nominated on 2 August by European governments for the position of IMF managing director (MD). However, as pointed out in a previous IMFBoss blog, Georgieva is 65 years old, meaning that the IMF would need to change its MD age limit rules for the board to officially appoint her as the new head of the Fund.
It was already reported in the Financial Times on 26 July that France had floated the idea of changing the age limit, but that the idea did not attract support from the board at the time. The article added that, “Nonetheless, people familiar with the matter said the age limit could still be tweaked at a later stage if Ms Georgieva emerged as the board’s choice.”
While officially, governments can still nominate candidates until 6 September, after which an “open, merit-based, and transparent selection process” should take place to suss out the very best candidate, upon Kristalina’s European nomination it seems the IMF executive board is already paving the way for her to assume the leadership position.
Chronicling the ‘open, merit-based, and transparent process’ thus far
It struck me that in the event Kristalina Georgieva becomes the next IMF managing director (MD) and serves out her two terms, that, ten years from now, when there will once again be calls to end the gentleman’s agreement, we might find ourselves wondering how exactly another European got the job at the time. By what ‘open, merit-based and transparent process’ did the powers-that-be decide that, across their entire membership, the former World Bank CEO from Bulgaria was the most qualified and distinguished candidate (“without taking geographic preferences into account”, of course)?
As most decisions thus far have taken place behind closed doors with only occasional crumbs of information coming through, mostly from a few ardent reporters’ twitter feeds, this is an attempt at establishing a record of the step-by-step ‘open, merit-based, and transparent’ process leading up to Kristalina’s nomination by the European Union, based on public reporting and the, albeit sparse, official information made available (reflecting Brussels’s location in the centre of the known IMF universe, all times are CEST).
2 July: Aaaaand we’re off! Lagarde announces her European Central Bank presidency nomination and relinquishes her responsibilities as IMF MD during the nomination period.
8 July: Bloombergreports European finance ministers say it is a “priority” for them to put another European in place, jointly presented by the EU and, in the words of French politician Bruno Le Maire, “without useless rivalries” (erm, should we just stop there?)
12 July: The day the Dutch government demonstrates how aggrieved they really feel about being side-lined in the negotiations for top EU positions:
Dutch government nominates its former finance minister Jeroen Dijsselbloem and kicks off its lobbying campaign for his candidacy with key governments;
Dutch prime minister Rutte softens his stance on US requests to provide military support in the Strait of Hormuz and Syria ahead of his visit to the White House the following week.
16 July: Lagarde submits resignation as IMF MD effective from 12 September, after being confirmed as new ECB president.
19 July: José Antonio Ocampo, former nominee in 2012 for World Bank president, with “experience in all the areas that might be considered most relevant for the IMF Managing Director post”, publishes his vision for reforming the IMF toward a more effective and inclusive future – to deafening silence from officials…
Experience and qualifications matter, though of course they aren’t the only factor in success. But understanding the issues could be argued to be even more important at the IMF, which deals with complex topics in macroeconomic management, than at other international institutions.
Christine Lagarde, despite her tenure as French finance minister, came in with limited understanding of macroeconomics from her experience in the legal world. Her departure presents the world an opportunity to look at candidates for the IMF top job based on their merits. So which of the candidates being mentioned in the media have the most relevant experience and qualifications?
The following table summarises experience and qualifications of six frequently mentioned candidates along six criteria.
Partial points are awarded to Ms. Georgieva on experience in low- and middle-income countries because while she worked on these types of countries at the World Bank, her only period working in a low- or middle-income country was as an academic in Bulgaria. Mr. Rajan also gets partial points for management within an intergovernmental setting, as he was Chief Economist at the IMF, which while intergovernmental in nature, his department was supposed to be insulated from intergovernmental negotiations.
The maximum age for a candidate to be appointed Managing
Director is currently under 65 years old, and currently stipulates that this
person cannot hold the position of managing director beyond their 70th
birthday. However, rumours have been circulating as to whether the Fund will
scrap this to shoehorn in a favoured European candidate.
Kristalina Georgieva, who is currently the World Bank chief
executive and a Bulgarian national, is rumoured to be backed by the French in
the leadership race. France plays a particularly powerful role in the selection
process as Bruno Le Maire, the French finance minister, is coordinating the European
selection process. Georgieva is however 65 years old, meaning that should she
be appointed, the IMF would need to change its age limit rule.
It was reported
in the Financial Times on July 26 that France had floated the option of
changing the age limit, but that did not attract support from the board on
Friday . The Financial Times article added that “Nonetheless, people familiar
with the matter said the age limit could still be tweaked at a later stage if
Ms Georgieva emerged as the board’s choice.”
Just on the same day as the publication of the article – and on the same day that France floated the age limit change – the IMF published an update entitled “Frequently Asked Questions on Managing Director (MD) Selection”. The update had a section at the very bottom of the page entitled “How can the age limit be changed? When can it be changed?”, which noted that: “The Fund’s By-Laws would need to be amended by the Board of Governors by a majority of the votes cast. The age limit could be changed either before or after the nomination period closes. A nominee who is above the age limit could not be appointed Managing Director until the By-Laws were amended to remove or modify the age limit.”
In an interview
with Bloomberg published on July 29, Andres Manuel Lopez Obrador (ALMO),
Mexico’s President, noted that he would support former central bank governor who
now heads the Bank for International Settlements, Agustin Carstens, should Carstens
be nominated as a candidate.
ALMO noted that despite their “political differences”, he
would hypothetically support Carstens, stating that: “I would like to. I would
always support a Mexican, if they’re a specialist in the material…” Earlier
this month, Carstens declined
to comment as to whether he would be eager to run for the position of IMF managing
The discussion around Carstens potential candidacy will conjure
up memories of the 2011 leadership race for the IMF managing director. Carstens
alongside Christine Lagarde for the position, following the resignation of former
head of the IMF Dominique Strauss-Kahn, who was arrested in the
US on charges of an alleged sexual assault.
Carstens, however, subsequently failed to galvanise support among emerging economies, who are structurally underrepresented in the current IMF governance configurations. Interestingly, as part of his bid, Carstens noted that should the IMF follow through with the ‘gentleman’s agreement’ and select a European candidate for the post, it may produce a conflict of interest, as Europe struggled with a post-crash debt crisis. He noted: “We could have a situation where borrowers dominate the institution,” stressing that the European region needed a fresh perspective in order to solve the problem.