It is now common knowledge that Dominique Strauss-Kahn has stepped down as head of the IMF amidst allegations of sexually assaulting a woman in New York, an allegation for which he was arrested and now faces trial. With this sensational story having broken sometime last week the question that everyone is trying to answer is: who will succeed Dominique Strauss-Kahn as managing director of the IMF? All kinds of names have been thrown around, with the likes of former British Prime Minister Gordon Brown, French Finance Minister Christine Lagarde, Singapore’s Finance Minister Tharman Shanmugaratnam, former Turkish Economy Minister Kemal Davis and former South African Finance Minister and current Planning Minister Trevor Manuel being amongst the favourites to take over the reins at the IMF when Acting MD John Lipsky, a former Chief Economist at J P Morgan Chase retires in August. [box type=”info”]The role of IMF head has traditionally gone to Europe under an agreement that was entered into since its formation post-World War Two, which gives the United States of America the post of head of the IMF’s sister institution, the World Bank. Typically the Europeans are fighting tooth and nail to ensure that the next IMF MD comes from their region in line with tradition but given the current changes in the global geo-political sphere it would seem that a break with tradition may be on the cards. This week senior figures in both the South African and Russian governments called for the next head of the IMF to come from an emerging economy in order to reflect the changing nature of global geo-politics.[/box] This seems to me to be a reasonable request as the agreement between the Americans and the Europeans entered into post-World War Two was an accurate reflection of the world at that time, but now that the world is changing rapidly and emerging economies are becoming increasingly more significant (especially the BRICS countries) it would surely be prudent for the Europeans and the Americans to allow someone from the developing world to head up the IMF. With America having the most votes, at 16,8 percent and Germany, France and the United Kingdom having a combined percentage of 14,43 percent between them it is clear that for there to be any change the Europeans and the Americans are going to have to play along. It is imperative that key global institutions like the IMF, the World Bank, the UN etc be transformed in order to reflect the current shift in the global balance of power and the election of the next IMF head will prove to be a key test of whether Europe and America have embraced change or are still trying to cling to the past. Given that the voting power in the IMF is a direct reflection of the financial contribution of each nation, if the developing world wants to be better represented it is pretty obvious that they need to be willing to contribute more financially. If the developing world wants to be treated as equals then it’s time that they also put their money where their mouths are and contribute more. There is no point calling for the developed world to embrace change when developing countries are still coming to such forums with a begging bowl. [box type=”note”]The next IMF head should definitely come from an emerging market, no doubt about that as we live in a different world to the post-World War Two world, however as long as the Americans and the Europeans are contributing the most it only makes sense that they retain their power and influence in such forums. Change will only come if both sides show a different mentality. The developing world can do this by committing more money to the IMF and the developed world can do so by breaking from tradition and allowing an emerging economy candidate to head up the IMF.[/box]
- Whereto from here?
- I’m A Masculinist