Master of the Universe

Anyone who owns stocks in the world's poorer nations ("emerging markets") may want to know this name: Horst Khler.

And anyone interested in how the global economy will fare in the early 21st century will need to know what makes this German financier tick.

Mr. Khler is the rich nations' favorite to be the "Alan Greenspan of the world" - managing director of the International Monetary Fund.

The IMF is the tugboat that tries to keep all boats afloat - whether the world economy is rising or not - by giving bail-out loans to economies in financial trouble.

Like the World Trade Organization, the IMF is one of those world bodies now viewed critically for its impact on the daily lives of almost everyone. Since 1997, it has helped rescue Thailand, South Korea, Indonesia, Russia, and Brazil - and perhaps the world financial system.

The largest backer of the IMF, the US, argued with Europe (mainly Germany) over who would replace Michel Camdessus, the Frenchman who has held the post for 13 years. The argument was about many things, such as Germany seeking more recognition of its large role in the world. But it really comes down to a question of how to help manage the global economy.

A Republican Congress and the Clinton administration are both eager to make sure the new IMF chief follows more hard-line economic principles in rescuing other nations.

Lessons from recent IMF "rescue packages" show many loans were ineffective (Russia), caused undue hardship (Indonesia), or failed to adequately punish banks and investors for risky investments (South Korea).

Khler, a long-time finance ministry bureaucrat, will need strong diplomatic skills to deal with Congress and others in sorting out the IMF's role. He's learned plenty by being head of the European Bank for Reconstruction and Development, which was set up in 1991 to promote market economies in Eastern Europe and the former Soviet Union. He was also involved in Germany's reunification and in creating the European Union's single currency.

But does he have a vision for a new "global financial architecture"? Will he understand the impact of e-commerce? Will he know when IMF loan conditions create too much hardship? Does he believe the IMF should not help countries that can raise money in private capital markets? Should the IMF exist at all?

Such questions need public answers. The battle to select a new IMF chief was more open than in the past. But as a compromise candidate, Khler should let it be known soon how he will lead this vital global body.

(c) Copyright 2000. The Christian Science Publishing Society

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