It's disappointing to see Europe attempting to preserve the outmoded mid-20th century custom of Europeans naming the head of the IMF, and in exchange letting the U.S. name the head of the World Bank. As the Economist today succinctly described the quickly emerging European consensus on France's nomination of Dominique Strauss-Kahn, a former finance minister of France:
The EU finance ministers said this week they would consider a more open process--but not until next time. Their reasoning was simple. The Americans got to pick one of their own to replace Paul Wolfowitz, ousted from the World Bank in May for personal indiscretions, so why should the Europeans give up their customary privileges first? Thus does the world of economic statesmanship resemble a playground squabble.
Europe's failure to take the lead in opening the nomination process, to make it more competitive and merit-based, is risky for the rich world, because it undermines the legitimacy of the international financial institutions that help to promote and safeguard prosperity for us all. The risk is that China, India and other major emerging market economies, lacking a meaningful say in the running of these institutions, will continue to quietly disengage.
We haven't had a major global financial crisis since the late 1990s, so people are forgetting how dangerous and damaging these events can be. But as history is our guide we will surely have another crisis. When that happens we will need an international financial institution such as the IMF to provide technical expertise and a legitimate global forum for dealing with the crisis. I wish that Europe, or at least some of the leading European powers, would send a signal that they really do welcome nominations from other countries, as the IMF board has said in its official communications.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise.
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