WASHINGTON, Sept 29: Dominique Strauss-Kahn, the next head of the International Monetary Fund, faces the daunting task of redefining a 185-nation institution increasingly seen as irrelevant.
The Frenchman won, as expected, the IMF executive board’s “consensus” nod on Friday, setting the business-friendly socialist on track to lead the IMF at a critical juncture for its survival.
The 58-year-old former French finance minister and presidential candidate pledged to immediately get down to work on reforms at the IMF when he takes office as managing director on Nov 1.
“I am determined to pursue without delay the reforms needed for the IMF to make financial stability, serve the international community, while fostering growth and employment,” the European Union’s candidate said in a statement.
He will succeed Rodrigo Rato of Spain, the shortest-serving managing director in IMF history. Rato, who took office in May 2004, surprisingly announced in late June he was stepping down in October for personal reasons.
Strauss-Kahn has promised to fulfil “at least” a five-year mandate to carry through reforms to redefine the IMF and resolve a financial crisis due to a steep decline in the demand for loans, whose interest payments help pay for operations.
“The Fund is an essential organ of global governance facing twin challenges: a crisis of relevance and a crisis of legitimacy,” said Edwin Truman, a senior fellow at the Peterson Institute for International Economics.
The Frenchman casts himself as a “consensus-builder” for a six-decade-old institution mired in the past, still dominated by the United States and Europe, and out of touch with today’s realities of rising economic powers like China, India and Brazil, analysts say.
“I don’t want to be the candidate from the North against the South or from the wealthy against the poor,” he told the board in an interview last week, otherwise the Fund would be “doomed to fail.” He will have his work cut out for him, analysts said.
Strauss-Kahn will take office “at a time that is probably the most challenging that the IMF has had in its 60-year history,” said Desmond Lachman, resident fellow at the American Entreprise Institute, a conservative think tank.
“The IMF simply has not changed with the times, in terms of either its voting rights of members or their representation at the IMF board,” said Lachman.
The IMF’s mission to bail out countries in crisis has been eclipsed by the newfound riches of former clients in the 1990s, such as Russia, Indonesia, South Korea, Argentina and Mexico, many of which have paid off their IMF debt.—AFP/Reuters
