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Home News US backing makes Strauss-Kahn IMF frontrunner

US backing makes Strauss-Kahn IMF frontrunner

Published on 20/09/2007

20 September 2007

WASHINGTON (AFP) – Now backed by the United States, the socialist former French finance minister Dominique Strauss-Kahn is set to sail to victory next week in the race to become the International Monetary Fund managing director.

The United States weighed into the two-man contest on Wednesday, one day ahead of Strauss-Kahn’s interview with the IMF board.

US Treasury Secretary Henry Paulson urged the IMF Board to back the Frenchman as a replacement for Rodrigo Rato.

“The US is supporting Mr. Strauss-Kahn because we believe he will work to make the bold reforms necessary to lead a strong and relevant Fund into the future.”

Strauss-Kahn had already been widely seen as the favourite against Josef Tosovsky, a former Czech prime minister and central bank chief who was surprisingly nominated by Russia.

Rato is to step down after the 185-nation institution’s annual meeting in late October. The former Spanish finance minister announced in June he would leave nearly two years early, citing personal reasons.

The 24-member IMF executive board, which interviewed Tosovsky on Tuesday, will announce the results of a vote on September 28.

With 16.83 percent of the voting rights, the United States is the largest shareholder in the IMF. The 27-nation European Union has 32.09 percent of the votes.

Russia has only 2.70 percent of the voting rights. The Czech government is supporting Strauss-Kahn.

Aleksei Mozhin, the Russian director on the IMF board, said that Russia was counting on developing countries to support Tosovsky.

“We count on a very broad support among the developing countries,” he told AFP.

“We are very proud of this nomination,” said Mozhin. Tosovsky was “selected exclusively on the basis of merit and his professional background.”

Russia’s nomination process sets a “very positive precedent,” he said.

“It’s a case where a board member from one country has nominated a candidate from another country exclusively on the basis of his professional merit, not on the basis of national prestige or national vanity,” he said.

The US treasury secretary, lauded Strauss-Kahn’s credentials though.

“Mr. Strauss-Kahn’s experience and drive have prepared him well to vigorously pursue reform of the IMF, including implementation of the Fund’s new decision on exchange-rate policies and giving a greater voice to emerging market countries,” Paulson said.

As finance minister in 1997-1999, Strauss-Kahn, 58, won praise for his role in preparing the ground for the introduction of the euro, the single European currency.

He recently completed a world tour campaigning for the IMF job and said he would champion reform at the institution, including giving a greater voice to emerging markets and developing economies.

The Washington-based financial institution, founded six decades ago in the aftermath of World War II, today faces the challenge of intensifying globalization and rising economic powers.

Many developing countries protest the dominance of the United States and Europe in the strategy and management of the IMF and its sister institution, the World Bank.

Under an unwritten agreement, Europe chooses the head of the IMF and the United States picks the World Bank president.

Russia’s surprise nomination of Tosovsky last month caused a stir in Europe as the EU had already backed the French candidate.

Tosovsky, in his interview with the IMF executive board, said a “truly level” playing field was crucial for the Fund’s future.
IMF members “must be confident that they will be treated uniformly, that differences in prescriptions will be due only to differences in circumstances, not to differences in influence within the institution,” said Tosovsky.

Tosovsky is chairman of the Financial Stability Institute of the Bank for International Settlements in Basel, Switzerland.


Subject: French news