Who will lead the IMF?

Sean O'Grady

112275250 Who will lead the IMF?As caretakers go, the IMF’s acting leader, First Deputy Managing Director John Lipsky is at the top of the janitorial premier league. Were it not for his nationality and the fact that he has declared he wants to stand down from Fund duties since the autumn, he would be a perfectly plausible candidate to take over from Strauss-Kahn permanently. As an American, however, he is by long convention debarred from the top job at the IMF, the usual rule being that an American runs the World Bank (currently Robert Zoellick) and a European gets to be boss of the IMF.

True, he is also a former investment banker and IMF staffer, so outside the usual pattern of retired or resting politicians, but he is held in wide respect for the quiet but supremely important work he has been doing on reforming global banking regulation. If the last few years have taught us anything it is that the banks matter. Behind his extravagantly Edwardian moustache lurks a thoroughly modern mind.

So the field – for both the top job and the number two position – is open. The obvious front runner would have been Gordon Brown, but the explicit veto applied to him by David Cameron pretty much stymies his chances. That’s a pity in some respects, as he did much in the meltdown of 2008-09 to prevent the banking crisis triggering a fill-blown global depression. But he has too much baggage, and it is difficult to see Brown praising the coalition government’s stagy of deficit reduction, as successive IMF reports on the UK have in recent months.

Had Mr brown agreed to take on the IMF job when it was first suggested to him way back in 2004, he might now, as DSK was until a few days ago, be a “king over the water” instead of a busted flush. The likelihood is that, ironically as Brown long suggested, the IMF role will now go  to someone from the emerging economies – a Turk (Kemal Dervis) , a Mexican (Agustin Carstens), an Indian (Montek Singh Ahluwalia), Israeli (Stanley Fischer) or a South African (Trevor Manuel). But would any of them they have the same clout as DSK?

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  • Pragmatist

    “But would any of them they have the same clout as DSK?”

    More importantly is each countries rank on the Transparency International least corrupt countries index rating out of 178 countries, Isreal 30th, South Africa 54th, Turkey 56th, India 87th, Mexico 98th.

    It gives a useful indication of the amount of corruption they are used to in their natioanl cultural setting.

  • CC Aitch

    Gordon Brown led the way in transferring the world’s banking sector’s losses from bank bondholders (who should and could have borne them) onto the world’s indebted governments and their taxpayers (who can’t afford them), thereby ensuring we went from a nasty short term credit crisis to a far, far more dangerous and destructive long-term sovereign credit disaster whose worst is yet to come.

    The basic rule of capitalism – those who garner the rewards shoulder the risks – was usurped. Bondholders have been largely protected. Moral hazard is now pervasive. Systemic risk has been increased.

    And for locking the UK into a structural deficit during a benign and booming economic period he should be disqualified from even playing “banker” in a game of Monopoly.

    Despite the image he attempted to nurture of the so-called “Iron Chancellor” (oh, the irony!), the man’s economic legacy is one of unmitigated disaster.

    Christine Lagarde will probably fill the IMF vacancy.

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