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Koehler wins wide support for IMF top slot

BERLIN: Germany succeeded on Tuesday at the second attempt in landing the top job at the International Monetary Fund as Japan added its support to that of the United States for Berlin's back-up candidate Horst Koehler.

Chancellor Gerhard Schroeder said he was pleased that U.S. President Bill Clinton had endorsed the head of the European Bank for Reconstruction and Development to become the first German to head the global lender in its 50-year-old history.

"I am delighted at the decision taken by the U.S. president," Schroeder said after Clinton assured him of Washington's backing in a telephone call on Monday night.

Japan withdrew its own long-shot candidate, former financial diplomat Eisuke Sakakibara, and threw its weight behind the 57-year-old chief of the EBRD, which was set up to provide credit to formerly communist countries in eastern Europe.

Koehler, in a statement issued from EBRD headquarters in London, welcomed the U.S. and Japanese support but said winning the backing of developing countries was also "very important".

That support looked to be assured after emerging countries like Russia declared for him, making his appointment a formality.

The sense of relief was palpable in Berlin after the candidacy of Schroeder's first choice, Deputy Finance Minister Caio Koch-Weser, collapsed in acrimony just over a week ago in the face of implacable U.S. opposition.

A second rejection would have sorely tested transatlantic ties and might have wrecked Schroeder's strategy of crafting a more assertive German foreign policy to match the economic pre-eminence of Europe's largest economy.

"The USA did not just agree because of Koehler's qualifications but also because it did not want to snub the European Union and Germany a second time," Karsten Voigt, who coordinates German ties with Washington, told Reuters.

KOEHLER BEGINS CONSULTATIONS

Koehler, a conservative former deputy finance minister, met Schroeder in Berlin on Tuesday evening. A government spokesman said he delayed a scheduled Tuesday flight to Washington to present himself to the IMF Executive Board -- perhaps with Finance Minister Hans Eichel -- until later this week.

German officials said he was also expected to meet his likely future deputy Stanley Fischer, an American who has been temporarily in charge of the IMF since Michel Camdessus stepped down last month after 13 years in charge.

Koehler, thanks to the speedy endorsement from major IMF shareholders, will start on a stronger footing than Koch-Weser would have done after months of damaging criticism in the media and from Germany's partners finally destroyed his candidacy.

The European Union, which agreed on Monday to put forward Koehler jointly, was expected to nominate him formally on Tuesday, paving the way for his election by the IMF executive.

FUNDAMENTAL DIFFERENCES REMAIN

But even though Europe and the United States now agree on personalities, they remain at odds over how the IMF should interpret its role as the guardian of world financial stability.

Washington, under pressure from a hostile Congress, wants to scale back the Fund's activities to make it a fire-fighter designed to contain economic crises.

Europe favours a more relationship-based role in which the IMF offers long-term funding and guidance to countries in financial trouble. Germany expects to flesh out its own view of the IMF role in the coming days, the Finance Ministry said.

Koehler, who as an adviser to former Chancellor Helmut Kohl took a tough line on monetary stability in the run-up to European monetary union, is seen as closer to the U.S. line than ex-World Bank executive Koch-Weser, whose background was in development.

"It is clear that Koehler is a hard-liner who will sympathise with the reform project that the United States has initiated," said Norbert Walter, chief economist at Deutsche Bank.