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IMF race appears over after US endorsement

WASHINGTON: The acrimonious struggle to find a new head for the International Monetary Fund effectively ended on Monday when the United States promised to back Europe's new candidate for the high profile position.

White House spokesman Joe Lockhart, ending months of bickering between the Washington and Europe, said President Bill Clinton would support Horst Koehler, the new European candidate to head the global lender.

Koehler, the head of eastern Europe's development bank, would come to Washington soon to put his case to the IMF's board of directors, which is responsible for appointing a new managing director, Lockhart added.

"The president told (German) Chancellor (Helmut) Schroeder that the United States was prepared to support Mr. Koehler as the new head of the IMF," Lockhart said in comments which stopped short of a ringing endorsement for the German nominee and his qualifications.

"The president and Schroeder agreed that Koehler should come to Washington to meet with the IMF board, particularly with the developing countries...The president and Schroeder also agreed that Koehler should retain the talented management team at the IMF."

Koehler is Europe's second candidate for the IMF job. Schroeder nominated him last week after Washington effectively vetoed Germany's first candidate, complaining that Deputy Finance Minister Caio Koch-Weser did not have the clout or the experience needed for the job.

Washington also wants to ensure developing countries are not alienated in the hunt for a new IMF boss and has repeatedly insisted these countries are consulted in the debate.

The IMF, under fire in the U.S. Congress for misguided policies, controls tens of billions of dollars which it can lend to member states. It monitors the economic performance of countries around the world and provides advice to governments and central banks.

The job of IMF managing director has been vacant since France's Michel Camdessus quit last month after 13 years at the fund. The post is traditionally held by a European, while an American traditionally heads the World Bank.

The prolonged argument about a new IMF boss added to doubts about the institution's role.

Koehler, who won a 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.

ROLE FOR FISCHER

But Lockhart's comments about the IMF's "talented management team" made clear that Washington wants IMF acting managing director Stanley Fischer, a naturalised American, to stay on and to play a major role in the international lender.

Developing countries have already nominated Fischer to head the fund. Washington says it respects Fischer but will not vote for him because it does not want to break with the tradition of a European IMF boss.

Fischer, for his part, says he will stay at the IMF, regardless of who is appointed at its helm.

IMF sources expect Europe to nominate Koehler on Tuesday and the board could hold an informal straw poll on his candidacy later this week.

If a consensus emerges in that straw poll, a final, formal vote could be held and Koehler would win the job.

The race to find a successor to Camdessus had dragged on for more than four months, first because of doubts in Europe about who the European candidate should be and then because of an ugly row about whether Koch-Weser was up to the job.

Germany, accusing the United States of bully-boy tactics, responded to the U.S. rejection of Koch-Weser by nominating Koehler, and European ministers gave him their backing at a meeting in Brussels on Monday.

Koehler described the nomination as a great honour. "(The nomination) is a crucial step toward establishing the necessary support of the broad majority of IMF shareholders," he said in a statement.-Reuters