The Future of the IMF
IMF Managing Director Dominique Strauss-Kahn's detainment in New York City on Saturday has raised questions about the future of the International Monetary Fund (IMF). The short answer to those questions is that the IMF will continue to do its job effectively with or without Mr. Strauss-Kahn as its leader. No individual is or should be indispensable to an institution, and the IMF is no exception to this rule. The IMF has a talented management team, a dedicated staff, and a broadly supportive membership.
Leaders are important, but it was widely expected that the IMF would be looking for a new leader within the next six weeks or so in any case, because Mr. Strauss-Kahn was expected to resign to return to France to run for president. The events in New York City may have merely accelerated the prospect of his departure.
Who should be the next managing director of the IMF?
I share the widely held view that the convention that the head of the IMF should come from Europe and that the head of the World Bank should come from the United States is an anachronism. That is not the same as saying that the next IMF managing director should not be a European, but I am saying that there should be no presumption that a European should get the job. Many plausibly qualified non-European candidates have been suggested for the position as well as some Europeans.
Moreover, the presumption that the IMF should be led by a European at this time because the IMF is central to addressing the economic and financial problems within Europe makes no sense to me. The IMF exists to support each of its 187 members. The IMF has financial arrangements with 26 countries, excluding those involving low-income countries. Only five of those are members of the European Union: Greece, Ireland, Latvia, Poland, Romania, and soon Portugal as the sixth – not counting Iceland as a European country. Only 47 percent of IMF financial commitments of about $240 billion are to members of the European Union, although that share will rise a bit with the addition of a program with Portugal. Maybe the next managing director of the IMF will come from Europe, but there is no reason that the person should come from Europe.