In response to the news that the IMF has selected Christine Lagarde to replace Dominique Strauss-Kahn as Managing Director of the IMF, Jesse Griffiths, Coordinator of the Bretton Woods Project has said:
“The Europeans have shamefully held onto control of the Fund in a well orchestrated stitch-up. Unfortunately, the outcome was clear long before the selection process officially started, once the Europeans decided to use their unfair over-representation at the Fund to force through their candidate.”
“There was a shocking lack of transparency to the whole process with no public interviews held and Board decisions once again made behind closed doors.”
Nick Dearden, Director of the Jubilee Debt Campaign adds:
“The nature of Lagarde;s selection shows once again how out of touch the IMF is. This further tarnishes the IMF’s legitimacy in a rapidly changing world.”
“This decision is bad news for European countries in crisis: the key architect of disastrous austerity policies in Greece is now at the helm of the Fund and she has already made clear to Greek legislators that they should listen to Northern Europe’s interests, rather than the interests of their own people. The IMF has learnt nothing from the debt crises of the past.”
For information: Jesse Griffiths + 44 (0) 7968 041 747 / email@example.com
Open statement on the IMF selection process
24 June 2011
In the wake of the Dominique Strauss-Kahn scandal, the IMF board set out a procedure for selecting a new head of the IMF, attempting to meet commitments for an open, transparent, and merit-based selection process. Even before the board’s action, a broad swathe of civil society organisations from around the globe had already articulated clear standards and procedures for how an IMF managing director should be selected.
The board’s procedure fell short of both their own previous agreements and the calls from civil society groups. This weaker process was then subverted by European real-politik which saw the continent’s governments clinging to an outmoded system of global economic governance which accords them undue privileges.
The imminent selection of Christine Lagarde to lead the IMF has laid bare the hypocrisy of a selection process which was neither truly fair and open, nor merit-based, especially given the existing imbalance in voting shares at the IMF. The rushed de facto appointment of Lagarde by European powers contradicts commitments by the G20, the IMF board and European finance ministers over the past years. Under Lagarde, the IMF is likely to further lose legitimacy, and be relegated to being the junior partner in the European Central Bank’s destructive bailouts of private creditors and punishment of ordinary eurozone citizens.
This does not have to be. There is still a chance to rescue this process and possibly the IMF’s legitimacy. The IMF board needs to start over, revamp the process and take a more professional approach that leads to a field of candidates committed to reforming the IMF and its approach to both rich countries and developing ones. In the meantime, it is imperative that the US publicly declare that it no longer expects tradition to hold, and that the filling of the posts of IMF first deputy managing director and president of the World Bank should be decided on merit and without regard to nationality. It is time the governance of our international financial institutions moves into the 21st century.
- Oxfam International
- ActionAid International
- Bretton Woods Project
- New Rules for Global Finance
- 11.11.11- Coalition of the Flemish North-South Movement
- African Forum on Alternatives (Senegal)
- AMODE (Mozambique)
Association for Women’s Rights in Development (AWID)
- CAFOD (UK)
- CEE Bankwatch Network
- Centre for Health Policy and Innovation
- Centre For Social Concern (Malawi)
- Christian Aid (UK)
- Compass (UK)
- CRBM (Italy)
- European Network on Debt and Development (Eurodad)
- Fundar, Centro de Análisis e Investigación (Mexico)
- Just Foreign Policy (US)
- International NGO Forum on Indonesian Development
- Jubilee Australia
- Jubilee Debt Campaign (UK)
- Jubilee USA Network
- Public Interest Research Group (India)
- Sisters of St Joseph of Springfield
- SLUG (Norway)
- The Norwegian Forum for Environment and Development
- Third World Network
- World Economy, Ecology & Development Assoc. (Germany)
Jubilee Debt Campaign have launched an action calling for Christine Lagarde and Agustín Carstens to commit to a public hearing with people affected by the IMF around the world. They say:
Millions of people around the world are affected by the impact of the IMF’s loan conditions and economic ‘advice’, yet there’s been no opportunity for anyone outside the global financial elite to question them in detail and in public … It’s time those on the receiving end had a chance to ask the questions in a public hearing
As well as refering to questions already set out by civil society, the action focuses particularly on the following two questions:
First, I believe it is outdated, undemocratic and illegitimate for senior management at international financial institutions to be nominated and chosen on the basis of their nationality. Powerful countries must stop undermining multilateral institutions by maintaining their stranglehold over certain positions. Will you commit to appointing your deputy managing directors through a genuinely open, merit-based and transparent process?
Second, IMF-sanctioned austerity policies are causing irreparable social, and economic damage in many countries across the world. Will you commit to reviewing and reversing these policies, to support instead sustainable job creation and prevent the poorest from being the victims of global economic problems?
Go here to TAKE ACTION!
By John Jacobs, program officer for the Halifax Initiative. A coalition of development, environment, faith-based, human rights and labour groups, and the Canadian presence for public interest work and education on the IFIs.
Originally published in the Chronicle Herald
The candidates being considered for International Monetary Fund’s new boss do not inspire much hope for an institution in need of credibility. Much of the media’s focus has been on the nationality of the candidates rather than on which capabilities are needed to address the IMF’s major challenges: shifting to a more flexible policy orientation and adapting to a changed global economy.
According to a recent report by the IMF’s Independent Evaluation Office, the Fund’s effectiveness has been hindered by a “high degree of groupthink, intellectual capture and inadequate intellectual approaches.” The groupthink was founded on the belief that “market discipline and self-regulation [are] sufficient to stave off serious problems in financial institutions.”
Put another way, the IMF believed that the global financial markets should be left to their own devices to chart the contours of economic globalization. As a result, mere months before the financial crisis, the “IMF’s banner message was one of continued optimism and … pointed to a positive near-term outlook and fundamentally sound financial market conditions.” The Fund continued to endorse “light-touch regulation and supervision policies” — policies that we now know contributed to the crisis.
Continue reading “Is IMF choosing the right boss?” →
Carstens is due in China today to drum up some support from the Asian economies. Though neither candidate has the official backing of the Chinese, there have been some statements in Lagarde’s favour, which the French have been happy to take as endorsements. Both sides should be cautious when jumping the gun – in Indonesia; the Finance Minister Angus Martowardojo is under fire for his “personal support” of Lagarde, which is not yet the official stance of the county.
In an interview with the Miami Herald Carstens put forward a case for unified BRICS support:
“If I win, it would be a strong statement of Latin America’s power … And even if we don’t win, a strong Latin American vote against the status quo would be a strong signal that we don’t agree with the way things are being done at the IMF. That’s why it is so important to have a region-wide Latin American vote.”
Continue reading “In the news: Carstens in China, US to move in on Number 2” →