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Israel's Frenkel tipped for top IMF job

LONDON: With just a month to go until Michel Camdessus steps down as head of the International Monetary Fund, some European diplomats are tipping outgoing Israeli Central Bank governor Jacob Frenkel as his successor.

Europeans, who traditionally get the job as head of the world's leading international financial institution, have so far failed to unite behind a common candidate. At the same time, many private economists have called for a emerging market candidate as the IMF acts predominately in the developing world.

"Frenkel would in many ways be a very good successor," one diplomat said.

The IMF's chief economist and head of research for six years until 1991, Frenkel stepped down as governor of the Bank of Israel on Friday after eight years at the post.

Widely respected by both bankers and businessman, he is seen as a deft communicator who has successfully proven his diplomatic skills in Israel's intense political hurly-burly.

Frenkel's office declined comment when contacted by Reuters on Friday.

Frenkel himself has not said what he will do next, although local speculation had suggested a move to the private sector, possibly investment bank Merrill Lynch.

Officials from the Group of Seven industrialised countries (G7) are due to hold preparatory meetings in Tokyo this weekend, ahead of the G7 summit on January 22, with unofficial discussions over Camdessus's replacement on the agenda. A final choice is expected in March.

"You couldn't find a better economist, although his appointment would point to a more technocratic IMF than at present," West LB head of emerging markets Isaac Tabor said.

There are few bigger jobs in the world of international financial diplomacy than the head of the IMF, which has helped stave off financial crises from Asia to Latin America in the past two years - albeit amid some stiff criticism.

France is seen to be ruled out after Camdessus's 13 years at the helm. Germany's proposed candidate, the Finance Ministry State Secretary for International Affairs Caio Koch-Weser, has drawn opposition from some European partners.

British Chancellor of the Exchequer Gordon Brown and his predecessor Kenneth Clarke have quashed rumours that they are in the running for the job. Nigel Wicks, Britain's G7 deputy, has reportedly said he wants to stay in Britain.

"The UK hasn't yet publicly put forward a candidate, and other proposals don't seem to have caught anyone's imagination," the diplomat said.

Frenkel could prove a good compromise.

His impeccable background - he spent three years as a Professor of Economics at the University of Chicago and is a close friend of IMF First Deputy Managing Director Stanley Fischer - should stand him in good stead with the United States, which wants to reform the IMF and give it a tighter focus and limit its role to short term loans.

However, Israel's close U.S. links might irk some Europeans who fear the Fund is already too closely aligned to the U.S.

"Frenkel could bridge the various calls for IMF reform. But would the Europeans really go for him?" Tabor wondered.-Reuters