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19th Aug 2022

New economies challenge EU claim to IMF throne

Brazil, China, Russia and Turkey have indicated they want their people to run for the top job at the International Monetary Fund (IMF) despite EU claims to exclusive ownership.

Speaking to EUobserver in Brussels on Thursday (19 May), Turkey's ambassador to the EU, Selim Kuneralp, said leading EU countries are bound to honour an agreement at the G20 in London in 2009 to appoint the next IMF chief on pure merit.

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  • Turkey's PM Erdogan (l) and US President Obama talking at the G20 in Seoul in 2010. The EU's seat at the top table is no longer guaranteed (Photo: Wikipedia)

He said the G20 promise came because the global balance of power is changing.

"The EU has a very heavy weight and so has the US. But emerging economies have increasing weight. This is precisely why this language was put in the G20 conclusions," he said.

"I was a sherpa for the [Turkish] prime minister for three G20 summits, so you can take my word for it: the feeling of a desire for change among the emerging economies is evident and obvious. People do not want to continue with this sharing of posts between the US and Europe."

Kuneralp is a personal friend of Turkish economist Kemal Dervis, a leading contender for the IMF job.

"I don't know if he is interested. But he was a minister in charge of the economy at a time when Turkey was undergoing a major crisis and with IMF help he managed to turn things around, so he has a lot of experience," the diplomat noted.

For his part, Russian finance minister Alexei Kudrin has backed Kazakhstan central bank chief Grigory Marchenko for the post.

"A comprehensive selection should be held without defining the region from which the new IMF head should come. This means that he [Marchenko] will take part in a selection on a level playing field," he said at a summit in Minsk on Thursday.

Brazil and China also said the IMF competition should be a free-for-all.

Brazil's finance minister Guido Mantega wrote in an open letter to the G20 that: "We're beyond the point now where it is remotely appropriate to reserve this important position for a European citizen." Chinese central bank head Zhou Xiaochuan said in Beijing on Thursday "the composition of the IMF's senior management should better reflect changes in the global economy."

India has said only it is "watching the situation." But it has also floated economist Montek Singh Ahluwali as a contender.

British betting shop William Hill on Thursday afternoon put French finance minister Christine Lagarde odds-on to win the race, followed by Dervis and Ahluwalia. The list of top 16 contenders contained just four EU names.

EU institutions and personalities the same day staked the EU's claim to the prize.

A spokeswoman for the European Commission said the chair should go to an EU candidate because EU countries in total are the biggest contributors to the multi-billion IMF kitty. Economy commissioner Olli Rehn while at a business conference noted: "It is a merit if the person to be chosen for this task has knowledge of the European economy."

German Chancellor Angela Merkel used the logic the EU should get the job because three EU members are currently being bailed out by the IMF.

"In the current situation, when we have considerable problems with the euro, and the IMF is very heavily involved in this, this points to the fact that it is possible to put forward a European candidate and we should promote this within the community of states," she told press.

Turkey's Kuneralp rejected the argument.

"In the past, many beneficiaries of IMF programmes were emerging economies, including my own," he said. "I don't see that [German] logic, because it did not apply to emerging economies."

The IMF position came up for grabs when Frenchman Dominic Strauss-Kahn resigned after his arrest on sex assault charges this week. The EU and the US have traditionally shared the IMF and World Bank posts in a carve-up dating back to World War II.

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