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. Last Updated: 07/27/2016

Squabbling May Leave IMF Headless




WASHINGTON -- When Michel Camdessus said last November that he wanted to quit after 13 years at the head of the International Monetary Fund, he thought he was giving the world plenty of time to find a successor.


But as time ticks away to Camdessus' Feb. 14 retirement deadline, his job is still vacant, and there's little consensus on who should fill his shoes.


Analysts agree First Deputy Managing Director Stanley Fischer will be an able stand-in for as long as it takes to find a new IMF leader, but markets are watching warily.


"I think it does matter to the private markets that the leadership issue of the Fund be resolved sooner rather than later," said Charles Dallara, managing director of the bankers' group, the Institute for International Finance.


The latest unsuccessful effort to find a successor to Camdessus took place at last weekend's meeting of the Group of Seven leading industrial nations, when Germany lobbied strongly for its candidate, Finance Ministry official Caio Koch-Weser, and the rest of the group pointedly looked the other way.


It is the latest in a long string of bitter rows about top-flight international jobs.


World leaders bickered for months before choosing New Zealander Mike Moore to head the World Trade Organization, and Europeans offered Dutchman Wim Duisenberg a shortened term as president of the European Central Bank to free the post for his designated French successor, Jean-Claude Trichet.


"It's a bit sad," said John Williamson from the Institute for International Economics. "The Germans seem unwilling to acceptthe fact that nobody else seems happy with their choice, and nobody else seems willing to come out with anybody else."


The job of IMF managing director has traditionally gone to a European as an international quid pro quo for giving an American the job of president of the World Bank. The next discussions are likely at a meeting of Europe's finance ministers in Brussels this weekend.


U.S. Treasury Secretary Lawrence Summers says Washington wants a strong candidate with "stature," but he concedes the tradition of a European boss has served the institution well.


But Washington, which is pushing for reforms to narrow the role of the IMF, does not think much of Germany's candidate. Koch-Weser's experience is with the development-focused World Bank rather than with a financial organization like the IMF.


The IMF, set up after World War II to rebuild a tattered world financial system, played a key role in efforts to resolve the 1997-99 financial crisis, providing tens of billions of dollars in emergency loans to Asia, Russia and Brazil.


But it won more enemies than friends in the process, and Allan Meltzer, who is heading a commission set up by Congress to review activities of lenders like the IMF, said the Fund was still seeking a post-crisis role.


"I do not think they have a clear idea what it is they want do to," he said. "They have not been an organization which, even according to their friends, have been blessed with great success if you look at Mexico, Ecuador, Russia."


Michael Casey, portfolio manager at Federated Investors, said it was more important to find the right person to head the IMF than to rush into a decision because Camdessus' time at the institution was running out.


Camdessus, the third Frenchman to head the IMF, will retire after a trade meeting in Bangkok next month.


"It's more important to get somebody who is good at the job than to get somebody in a hurry or someone with the right passport," he said. "If it takes a little longer, so be it. There's enough depth at the Fund that they would not have a problem."


Only half joking, he added: "If Stan [Fischer] were to get hit by a bus, I think people would begin to worry a bit more."