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IMF succession race enters last leg

WASHINGTON: The ball bounces between Brussels and Washington this week as officials, in the start of the end-game in a painfully prolonged contest, try to find a new boss for the International Monetary Fund.

In the first stage, in Brussels on Monday, European finance ministers are set to put forward Germany's Caio Koch-Weser as the third official candidate to head the international lender.

In the second stage, the IMF's executive board, responsible for appointing a managing director, will hold informal talks on Tuesday in Washington, participants in the selection process said.

But any vote could bring a dangerous split between the Europeans, who want to keep the IMF job, and the United States, which has no objections to a European candidate, but little liking for Koch-Weser.

"You do not want a managing director where either Europe or the United States has basically said 'We are not prepared to support this person'," said Thomas Bernes, Canada's Executive Director on the 24-member IMF board.

"Then the question is at some point through this process, does Europe find a new candidate who could enjoy broader support?"

Developing countries, seeking a strong, experienced leader for the IMF, have nominated acting managing director Stanley Fischer, a naturalised American born in what is now Zambia.

Japan, determined to boost its international profile, has proposed Eisuke Sakakibara, a former finance ministry official known as "Mr. Yen" for his ability to move financial markets.

Washington likes Fischer, but would probably find it hard to vote for him for fear of infuriating the Europeans. The U.S. administration says it has not yet endorsed anybody.

"Our position remains that we want to see a strong candidate with stature and credibility who is able to command broad support, including among emerging economies," a senior administration official said last week.

Some sources say lack of support for existing candidates could force Europe to look for someone else -- perhaps Britain's Chancellor of the Exchequer (finance minister) Gordon Brown or Andrew Crockett, the British head of the Bank for International Settlements.

Canadian Finance Minister Paul Martin could be a long-shot compromise candidate.

STRAW POLL

Board members said this week's action could include an informal poll on the names likely to be in the ring and some said this could be followed by a formal vote.

"When there were two candidates 13 years ago, there was a straw poll and many people expect we will have that at some stage," said one source. "But it may be that this time members will want more time for reflection and for consultations."

The IMF post, a high-profile international position that has traditionally gone to a European, fell vacant earlier this month when France's Michel Camdessus stepped down ahead of schedule after 13 years as managing director.

Fischer, first deputy managing director for the last five years, has taken over on a temporary basis.

But both the Fund and its members fear the institution could lose credibility if a new managing director is not named soon -- it is already more than three months since Camdessus said he planned to quit.

The IMF board normally operates by consensus rather than by votes and if a straw poll was held, the dean of the board, long-serving Iranian Executive Director Abbas Mirakhor would be charged with canvassing board members for their views.

But in the current leadership debate, consensus means two candidates have to step down. "We have no precedents for this," said one board member. "It is not even clear how long the nomination period lasts, or when elections must take place."

The new managing director will take office at a challenging time for the IMF, which faced fierce criticism for its initial handling of the world financial crisis of 1997-99 and now faces intense pressure to change the way it works.

U.S. Treasury Secretary Lawrence Summers is urging the Fund to concentrate on short-term lending to countries in trouble. A congressional report, due for publication next month, is expected to propose more radical restructuring.-Reuters