September 28 - Issue 30 - IMF Selects Strauss-Kahn by Consensus in “Transparent, Competitive Process”

New York, September 28, 2007 - The Executive Board of the International Monetary Fund formally named Dominique Strauss-Kahn as Managing Director of the IMF today, September 28. It was widely expected that he would be selected after the European Union and United States both announced their support for him, on July 10 and September 19, respectively. Strauss-Kahn, a former French finance minister, will succeed Rodrigo de Rato of Spain when he steps down on October 31.

Executive Board's Selection Process

The IMF held informal meetings and formal interviews with both candidates earlier this month, and each candidate released a statement to the IMF detailing their views of the Fund. (Comparison of candidates' statements)

According to the IMF's press release, the Executive Board "selected Mr. Strauss-Kahn based on the candidate profile and the selection procedure established by the IMF's Executive Board on July 12, 2007." (See UNelections Monitor Issue #21- IMF Head Resigns; IMF Opens Selection Process to All Member States (July 17))

The statement said that the 24-member board "considered the strengths of the candidates and proceeded to select Mr. Strauss-Kahn formally by consensus." (Press Release from IMF Executive Board) Outgoing Managing Director De Rato described the selection process as "transparent and competitive." (Statement by De Rato)

Brazil and Argentina reportedly gave their official support to Strauss-Kahn only yesterday, September 27, while Chile had announced support on Monday, September 24. An analyst from the IFIs Latin American Monitor commented, "The decision to wait the final announcement in a Latin American country intended to be a symbolic message to those awaiting for so long the promised reforms."

No Developing Country Candidates Nominated

For 60 years the European Union has controlled selection of the Fund's MD under an unwritten agreement with the United States. But this year, a relatively more legitimate process was introduced when the Executive Board announced that it would consider candidates from any of the 185 member countries and that the candidates would be considered on "professional record and qualifications" and "without geographical preferences."

However, only one additional candidate was nominated, Josef Tošovský. Tošovský is a Czech national who briefly served as prime minister of the Czech Republic and was nominated by Russia.

Some analysts commented that the EU and U.S. did not give strong enough assurances that they would consider non-European candidates, and thus no developing countries wanted to name nominees.

In choosing between the two European candidates, IMF Board members presumably were influenced by the official support for Strauss-Kahn from the EU and U.S.

Some observers have expressed concern that with Strauss-Kahn's election, the leaders of the European Central Bank, the World Trade Organisation, the European Bank of Reconstruction and Development, and the IMF are now all French.

Commitments to Developing Country Concerns

Strauss-Kahn indicated in interviews and statements that reform of the Fund will be a priority for him, noting that the Fund is at a "crossroads." He acknowledged that many developing countries question the legitimacy of the Fund. Further, many developing and least developed countries find the Fund less relevant to and less representative of their needs. To address this, Strauss-Kahn advocated a double-majority decision-making structure, which requires two separate majorities, one based on "one-country-one-vote" and the second based on economically weighted quotas. He also commented on the current selection process for Managing Director of the Fund, calling it "less and less defensible" and stating that "the MD has to be chosen on merits without any reference to his or her nationality."

In his statement upon being selected, Strauss-Kahn spoke of his "strong legitimacy" based on broad support including from low-income countries. He committed to "pursue without delay the reforms needed for the IMF to make financial stability serve the international community, while fostering growth and employment." (Statement by Strauss-Kahn)

The EU has implicitly promised not to insist on a European MD after Strauss-Kahn's five-year term is over. The president of the Eurogroup said in August, "within the Eurogroup and among the EU's finance ministers, everybody agrees that Strauss-Kahn will probably be the last European to lead the IMF in the foreseeable future." The comment was interpreted by many commentators as an offer to support a non-European candidate next time, if developing countries would support Strauss-Kahn now.

In the News

Frenchman is Named New IMF Chief - September 28

Former French Finance Minister Expected to be Named Head of International Monetary Fund - September 28

IMF Faces a Question of Identity - September 27

Chile Endorses Stauss-Kahn for IMF Post - September 24

French Candidate to Lead IMF Criticizes Method of Selecting Heads of IMF, World Bank - September 20

Strauss-Kahn Says IMF's Relevance, Legitimacy at Issue - September 20

'Broad Support' in Developing World for Tosovsky at IMF: Russia - September 19

EU Prepared to Consider Possibility of Having Non-European Lead IMF in the Future - September 15

The IMF Wants to Change. Honest. Just Not Yet - September 11

My Vision for the IMF (by Dominque Strauss-Kahn) - September 6

UK Backs Strauss-Kahn for IMF - September 4

Strauss-Kahn to Inherit IMF Job With Reduced 'Clout' - August 31

More News on UN Elections and Appointments