A week, to paraphrase Harold Wilson, can be a long time in business as well as politics. Only seven short days ago all that the big noises in European macroeconomics had to worry about was the Portuguese bail out, the prospect of Greek sovereign debt default, whether/how long it would be before Spain joined the rescue queue with its begging bowl well to the fore, and if the Euro could remain standing under such a multi-pronged financial assault.
But now all that earnest contemplation of the big picture has gone out of the window, to be replaced by every Eurocrat’s favourite pastime, personal power politics. Who is going to be the new IMF boss? Speculation is rife, and with Dominique Strauss-Kahn so unexpectedly out of the frame following his resignation as head of the bail-out fund on Wednesday, the stage is set for exactly the kind of wide-open contest that is never supposed to happen for these big jobs.
Normally, succession to a position as crucial as this one is a carefully stage-managed affair where the outcome is set-up and agreed by the key players well in advance so as to avoid any unseemly or boat-rocking upsets to the proper order of things. But the best laid plans of mice, men and the Franco-German European power nexus have well and truly gang aglay this time, and the view across the channel at present is largely one of blindsided politicians rushing around trying to limit the damage.
What makes it particularly ticklish is that, had things gone according to the script, the next incumbent at the top of the IMF was supposed to come from one of the emerging nations. After Strauss-Kahn had sorted out the Eurozone crisis and was ready to hand over a steady ship, natch. So there have been many calls for an injection of new blood into the post, which has only ever been held by individuals hailing from the usual European/US hegemony, notably from Zhou Xiaochua, the governor of China’s central bank.
But the Eurozone job is so far from being over that those western powers which between them hold the majority of the IMF’s voting rights are having to backtrack hastily, pointing out that so much of the IMF’s work is going to be Eurocentric for the next few years that a European candidate is the obvious choice.
The hot favourite at present is French finance minister Christine Lagarde, who has not officially thrown her hat into the ring but will in all likelihood receive the backing of both Germany and France if and when she does so. Although her candidacy would not be without its problems, as she faces investigation into allegedly favourable judgements given to French tycoon - and chum of president Sarkozy - Bernard Tapie.
Jean-Claude Trichet, currently head of the ECB, is also being touted in diplomatic circles, and even our own Gordon Brown has been mentioned - although the chances of Gordo getting much support from the current government (the UK is the fourth largest contributor to the IMF, after Germany and equal to France) are slim to none we’d say.
The candidate most likely to upset the applecart seems to be a Turk, the country’s well-regarded former finance minister Kemal Dervis. But there is much talk about the need for the new boss to ‘unite all Europeans’ which is probably Brussels code for ‘needs to be one of us’. So unless there’s a dramatic change of heart, Russia, Brazil, China, India and the rest will probably just have to wait a bit longer. But the unexpected does happen, sometimes - if it didn’t, the post wouldn’t be vacant in the first place…
- Photo credit: bixintx/Flickr