Wake up Europe! Shots across the Euro-bow
May 22, 2011 1 Comment
Strange times produce strange bedfellows. In a direct challenge to the European gang’s attempt to shoehorn in yet another French MD, South Africa and Australia have issued a joint statement saying that, “For too long, the IMF’s legitimacy has been undermined by a convention to appoint its senior management on the basis of their nationality.”
This is precisely the point that European governments – seemingly stuck in a nineteenth century timewarp – seem pigheadedly determined to ignore. Forcing in another European undermines the legitimacy of the IMF, making it look absurdly out of touch in a global economy powered by China, India and other emerging markets. It will also do them no favours in Europe – will an insider who owes their position to the backing of the Euro club really speak truth to power and help them take the hard choices ahead? I doubt it and so do leading analysts at the Peterson Institute. In a thoughtful article, Veron and Subramanian argue:
“if and when Greece comes back for its second tranche of borrowing, the MD will have … to convince Europe, in what promises to be a heated discussion, that Greece has a solvency problem and requires debt restructuring; or, if the IMF concludes that Greece merits international support and all other options are worse, to convince the rest of the world to extend further financial commitments. Either way, there is less need for a European and more for an objective outsider.”
Amar Bhattacharya of the G24 group of developing countries at the Fund puts it well: “There are very, very strong able candidates from the developing world and there has never been a more important time for change for the institution given the challenges it faces and the need for true multilateralism.” It seems obvious to me that Europe’s best interest lies in a truly open, merit-based process: but are there any leading European politicians far-sighted enough to see that?