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EU finmins back Koehler for IMF top job

BRUSSELS: The European Union agreed unanimously on Monday to back Germany's Horst Koehler as its candidate to be the next head of the International Monetary Fund.

The bloc's finance ministers, meeting in Brussels, gave Koehler, currently head of the European Bank for Reconstruction and Development (EBRD), their full support despite signs that the United States was already lobbying against him.

"Ministers unanimously agreed to present Mr Horst Koehler as EU candidate for the post of managing director of the IMF," the EU said in a statement.

Koehler was put forward by Berlin after first choice Caio Koch-Weser withdrew when the United States, the IMF's biggest stakeholder, claimed he was not up to the task.

The 57-year-old EBRD chief and former deputy finance minister now faces his stiffest test - winning over Washington or gaining enough backing elsewhere in the IMF to force its hand.

"(The nomination) is a crucial step towards establishing the necessary support of the broad majority of IMF shareholders," Koehler said in a statement, adding it was also a "great honour" for him.

German Finance Minister Hans Eichel said Koehler's candidacy would be discussed with President Bill Clinton later on Monday.

German Chancellor Gerhard Schroeder, who has staked much on Germany winning this key global financial seat, vowed to press Koehler's candidacy hard.

"We, and above all the (EU) presidency, as it has assured us, will work intensively to achieve (a consensus with the U.S.)," he told a news conference in Berlin.

Portuguese Prime Minister Antonio Guterres, in Berlin for talks with Schroeder, said: "I always said the success of this candidacy is an enormous test of responsibility in the transatlantic relationship.

German weekly magazine Der Spiegel on Monday quoted unnamed Brussels diplomatic sources as saying, however, they believed Clinton was leading a "telephone campaign" against Koehler.

Washington has so far made no direct public comment on Koehler's chances of succeeding France's Michel Camdessus as managing director of the IMF.

Asked earlier about potential U.S. opposition to Koehler, Eichel said Europe would discuss its candidate with the U.S. ..."in a spirit of partnership and friendship on both sides".

Italian Treasury Minister Giuliano Amato, touted as a potential compromise candidate should a second German be rejected, said he did not think Washington would block Koehler.

French Finance Minister Christian Sautter said Koehler's experience in dealing with Eastern Europe could prove invaluable to the IMF in the period following Russian presidential elections due on March 26.

German government sources said the IMF executive committee may hold a first vote on Koehler's candidacy later this week.

IMF ROW EXPOSES RIFTS

The long-running hunt for a new IMF chief has rekindled deep rifts in the corridors of power in Berlin, according to Monday's International Herald Tribune.

It said the IMF issue had exacerbated frictions over foreign policy between Berlin's Chancellery and the Foreign Ministry.

It also quoted Michael Steiner, Chancellor Gerhard Schroeder's chief foreign policy adviser, as saying: "We have discovered that the (U.S.) superpower sees its global role not only in the military area but also in setting the rules of globalisation through the IMF."

Steiner told the paper he had documented evidence that Germany had initially been misled by the U.S. which had said it would accept any consensus European candidate.-Reuters