IMF's next leader: Don't rush this choice
The quality and openness of the selection process for a new International Monetary Fund leader matters as much as the outcome. It will be key not only to the future legitimacy of that institution but to the very notion of cooperative global economic management.
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The G20 countries, where most of the voting shares in the IMF reside, thus have a delicate problem. Though rightly projecting their rising clout, the message they should send is that meritocracy matters more than country of origin or who won the “entitlement” debate in this round. If the latter becomes the issue, no one would win with respect to the larger agenda of building cooperative global governance.Skip to next paragraph
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The new managing director of the IMF would then begin with both the reality and the perception of uneven support and enthusiasm among the shareholders. That would only weaken the new leader and the institution.
The problem here is the framing. The principal signal needs to be the quality of the process, not the outcome. In substance, the process has to assess candidates objectively against a number of criteria on the technical and political side. Under present circumstances, one criterion will legitimately be a knowledge of and an ability to operate in the European context. But it is only one. Dealing firmly but realistically with similar fiscal and sovereign debt issues on the other side of the Atlantic, is one. Rebalancing and restoring global demand with implications for growth and sustainability, effective financial regulation, and the coordination of monetary and exchange rate policies around a new set of principles as yet to be developed, are a few others. It would be wrong to attach all the weight to any one of these.
No arbitrary deadline
Officials in a number of countries have suggested that it is worth taking the time to get this done properly and interactively, rather than meeting an arbitrary deadline. This is surely right. The IMF has the technical depth and leadership strength to carry on, even without a new managing director in place – in significant part due to the legacy of Strauss-Kahn.
It will not be easy to make the quality of the process the message, regardless of the outcome in terms of nationality. But it is worth the effort. If successful, it will send a powerful message that at least in some areas, the management of global integration and interdependence is not trumped by national, regional, or stage-of-development interests.
What is needed is time, and a process involving all the shareholders of the IMF, large and small, leading to a reasonably objectively based consensus on the next leader. Not all of that process can or should be conducted in public. Transparency has its limits. But at the end, the outcome should be strongly endorsed by advanced and emerging economies. That will be the signal that the process has worked. It will also be the crucial solid foundation of initial support for the new IMF leadership.
Michael Spence received the Nobel Prize in Economic Sciences in 2001 and is the author of “The Next Convergence: The Future of Economic Growth in a Multispeed World.” He is an adviser to the 21st Century Council.