Clinton Administration Rejects European Candidate for IMF Leadership

Strategic Insights -

The leadership succession at the International Monetary Fund has become the biggest battle for control of a major international institution since the United Nations Secretary General selection in 1996. President Clinton has vowed to block Caio Koch-Weser, a German finance ministry official, from becoming the head of the IMF, citing concerns about his ability to lead the world's chief financial firefighter. This decision challenges the automatic European prerogative to choose the leader of the IMF, a tradition that dates back to World War II.

Key Takeaways:

  • The Clinton administration has rejected Caio Koch-Weser, a German finance ministry official, from becoming the head of the IMF, citing concerns about his ability to lead the world's chief financial firefighter.
  • The IMF selection process is stuck in a global mindset of a half-century ago, when Europe and the United States controlled nearly every important international position and divided posts between them like members of a gentleman's club.
  • The United States has a 19 percent share of votes at the IMF, more than any other single nation, while the European Union has 37 percent of the votes if the 15 nations that make up that bloc vote together.
  • Supporters of both Stanley Fischer, the No. 2 official at the IMF, and Caio Koch-Weser are working to line up support from developing countries and generate momentum for their candidates.
  • The IMF leadership selection process is likely to be delayed, as it remains unclear which candidate will ultimately get the job, with the Japanese nominating Eisuke Sakakibara, a former high-level Finance Ministry official, and the United States withholding support for Fischer.
  • European finance ministers have formally backed Caio Koch-Weser, who has benefited from an aggressive German lobbying campaign over the last three months.

Statistics:

  • The IMF has intervened in many of the largest developing countries in the late 1990s to help them grapple with the spread of financial panic that began in Asia.
  • The fund's power to influence how nations manage their economies and their currencies is at a record high.
  • The United States has a 19 percent share of votes at the IMF, more than any other single nation.
  • The European Union has 37 percent of the votes if the 15 nations that make up that bloc vote together.
  • Caio Koch-Weser has benefited from an aggressive German lobbying campaign over the last three months.

Sources:

  • "[The New York Times, October 27, 2000]"