India's IMF director hits method for naming chief

20th May 2011, Comments 0 comments

India's IMF director on Thursday said the institution needs to revamp how it chooses it managing director, after decades of as "consensus" that let Europeans monopolize the top position.

Hours after the resignation of International Monetary Fund chief Dominique Strauss-Kahn of France to fight sexual assault charges in New York, Arvind Virmani said the IMF board needs to openly elect the head rather than choose via back-room negotiations.

"The credibility of a candidate depends on the credibility of the process," he told AFP.

"There are a lot of people who feel that the process has not been credible... that certain countries, certain nationalities were virtually pre-selected."

Virmani stressed that it was his own view, and not that of the countries he represents on the 24-member executive board -- India, Sri Lanka, Bangladesh and Bhutan.

But in the past two days there have been numerous calls from emerging economies for a more open process and an IMF chief from the developing world.

"The era is over in which it may have been even remotely appropriate to reserve that important post for a European national," Brazilian Finance Minister Guido Mantega said.

The IMF's executive board normally selects a new managing director from nominees by consensus, though it can do it by vote.

In practice, by an informal pact with the US, it has always led to a European managing director, while an American heads the World Bank.

But Virmani says that leaves other hopeful nominees facing an embarrassing, unexplained rejection.

"We are never told" why someone is rejected, he said.

"Consensus is a very flexible word. It can be used at any stage, not used, it is not transparent. One never knows how this consensus is achieved, who is achieving this consensus."

He said he knows potential candidates, already named in international media, who would not stand because the process is opaque.

"The kind of people I know who meet the criteria will just not take a chance if they know X or Y has already been selected and the whole process is just to make sure that he gets elected," he said.

"I would not advise them to stand, because it is pointless."

The process effectively locks out suitable candidates, he added.

Virmani proposes a three-step process in which directors submit nominations, based on already widely accepted criteria.

The names would remain secret while the nominees weigh their chances against the field. They could withdraw, still anonymously, within a certain time.

Those left would then face an election by the directors.

"Somebody will win, somebody will lose. The merit of this is, it's open and transparent... That's what a democratic process is in my view."

Virmani declined to name his own favorites or say what the countries he represents will propose.

But he said the selection should be completed by the end of July, in time for the IMF's August break and its September global meeting.

He meanwhile declined to comment about Strauss-Kahn's case, which could go to trial after a grand jury ruled Thursday that the evidence against him is strong enough. Strauss-Kahn has denied the charges.

© 2011 AFP

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