23:16 GMT +323 January 2019
Listen Live
    Opinion

    The end of the IMF succession

    Opinion
    Get short URL
    0 0 0
    MOSCOW. (RIA Novosti economic correspondent Oleg Mityayev) - There is no time left for nominating candidates to head the International Monetary Fund instead of Rodrigo de Rato, who retires in October.

    Since its formation at the end of World War II, the IMF has traditionally been led by a West European. But this time, the whole world will be watching closely the race between the European Union nominee Dominique Strauss-Kahn and the Russia-backed Czech Josef Tosovsky. For the first time in many years, the IMF's 184 members have a choice.

    The need to put an end to the feudal principle of succession has been long overdue. The tacit rule by which the IMF has traditionally been led by a West European and the World Bank by an American had a point after the end of World War II. At that time, the goal of both organizations was to restore the war-ravaged European economy, and the United States was taking an active part in this effort. Besides, it was not easy to find experienced financiers for these positions in other countries. But now the principle of succession is glaringly at variance with the role the organization is called upon to play in today's world.

    Today, the IMF's main task is to overcome, or better, prevent economic crises in developing countries, including those that have recently changed to the market economy. It would be more logical to make their representatives compete for the IMF's top position, all the more so since many of them, such as China, India, Brazil and Russia have become major global economies. But the world's biggest financial establishments have neglected this fact, and in the event of a crisis, these nations are still advised by Western Europe. Brazil, Australia and South Africa complained about this incongruity in their recent letter to the IMF.

    Moreover, the recent financial disasters - in Asia and in Russia in 1998, and in Argentina in 2000 - show that the IMF leaders cannot cope with their main function largely because they come from the prosperous West Europe and have not encountered such economic calamities. In this context, the Russian nominee, Josef Tosovsky, has a mega advantage -- rich and successful experience of handling finances in an unstable situation. Tosovsky was in charge of the Central Bank of Czechoslovakia and subsequently of the Czech Republic from 1990 to 2000, and headed the anti-crisis Czech government in 1997-1998. He successfully managed the separation of the Czech Republic and Slovakia, and launched independent monetary circulation in both countries without hyperinflation or any other serious complications.

    Russia's third place in the world in gold and currency reserves means it does not depend on IMF credits and has suggested Tosovsky's candidacy for the top position out of considerations that are now shared by the majority of the IMF members. This move by Russia has received broad support in the world, primarily among leading financiers.

    Nonetheless, it will be very difficult to change the established tradition although many countries are bound to support Russia in October. The EU and the United States hold almost half the votes - 49.85%. But in any event, Russia has already established a precedent. Western Europe is beginning to realize that the IMF leaders are of no practical help - their intangible political prestige is causing growing irritation among the developing nations. It is not surprising that some EU experts are convinced that after Strauss-Kahn, the IMF will be headed by a representative of these nations.

    The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

    Community standardsDiscussion
    Comment via FacebookComment via Sputnik