New York Times - February 25, 2000
In Making I.M.F. Choice, U.S. Must Decide Whom to Offend By DAVID E. SANGER
WASHINGTON, Feb. 24 -- The Clinton administration found itself at the center of a clash today that will force it to choose between angering close European allies or the world's developing nations in appointing the chief of one of the world's important financial institutions -- the International Monetary Fund.
The battle has echoes of the administration's move in 1996 to oust the head of the United Nations and replace him with Kofi Annan. This job, too, is sensitive and complex: chief trauma manager for the world's economic crises.
The White House must now decide whether to vote for a German candidate it regards as unsuited for the job, or for Stanley Fischer, the highly regarded deputy director of the I.M.F. Mr. Fischer, an American Jew who was born in Africa, has emerged as the choice of developing nations. These include much of Africa and most Arab nations -- including Iraq, Syria and Libya, not exactly friends of United States policy. The Arab countries have never before supported a Jewish nominee for such a high international post.
American officials say they have nothing but the highest regard for Mr. Fischer, who was backed for the No. 2 post at the I.M.F. by Secretary of the Treasury Lawrence H. Summers, a former student of Mr. Fischer at the Massachusetts Institute of Technology. But Mr. Summers seems unlikely to be able to cast America's decisive vote -- it has 19 percent of the voting shares of the I.M.F., more than any other country -- for his old friend and economic colleague.
The top I.M.F. post has customarily been Europe's to fill, and the White House fears angering Europe, and particularly Germany, by taking the choice out of its hands. Germany's candidate is Caio Koch-Weser, its deputy finance minister and a former World Bank official.
The White House argument goes like this: Washington traditionally chooses the head of the World Bank -- it just succeeded in gaining reappointment of James D. Wolfensohn -- and it is already accused of dominating major international institutions.
Yet many inside and outside the government fear that backing Europe's choice, and rejecting that of developing nations, would be a great mistake.
"Here, the U.S. has this incredible chance to do what it said it wants to do -- make a new partnership with the developing world -- and vote for the man who is obviously most qualified for the job," said Robert O. Boorstin, who left the Treasury last year after acting as an international policy adviser to former Secretary Robert E. Rubin. "It says volumes that the developing world," which has often been at odds with the economic strictures of the I.M.F., "has found itself able to back someone like Stan," Mr. Boorstin said.
As the No. 2 official of the fund, Mr. Fischer runs its day-to-day operations. He was the field commander from the early stages of the Asian financial crisis in 1997, and he was criticized for imposing too much austerity in Thailand, Indonesia and other nations. But he changed gears and the formula he put together for economic recovery, while still controversial, has brought about results. Thailand, even with some overcapacity, is back in business; South Korea has largely recovered, and Indonesia's pain is chiefly a result of continuing political ferment.
Never before, however, has the top job at the I.M.F. been filled from its lower ranks. And if Mr. Fischer loses in his surprise bid for the top job, it raises questions about whether he could continue as the deputy.
In an interview today, though, he said: "If the members choose to appoint me, I will be honored to fill the job. I have every intention of continuing in this job if I am not elected."
The movement to nominate Mr. Fischer appears to have originated with South Africa and other African countries. He was formally nominated by Angola, which represents 20 African nations on the I.M.F. board.
Support quickly grew, and now includes India, Mexico and other major developing nations.
The American strategy now appears to be to persuade the Europeans to drop Mr. Koch-Weser and come up with another candidate from a list that includes Gordon Brown, the British chancellor of the exchequer, and a small group of other European finance officials. France is unhappy with the choice of Mr. Koch-Weser and has been trying to come up with an alternative -- though it appears unlikely to support Mr. Fischer.
"We have not supported or encouraged any of the nominations to date," said Michelle Smith, spokeswoman for Mr. Summers. "Our position has been, and continues to be to work toward a strong European candidate who can command widespread respect and support, including from the emerging markets. We want to work with Europe toward that objective."
But one of Mr. Fischer's main backers, Shakour Shaalan, an Egyptian member of the I.M.F. board who represents 12 other countries as well, said his group was trying to do more than block the European candidate. "Stan has gained the respect of the developing nations and has been sensitive to its concerns," he said. And he noted the oddity of the Arab countries' nominating a Jew, but said: "Members of my constituency are not looking at him as Jewish or non-Jewish. That's not the issue."
There is a third candidate, as well: Eisuke Sakakibara, the outspoken, sometimes nationalistic former vice minister of finance for international affairs in Japan. He has Tokyo's support, and support in some other Asian capitals, but is not considered a viable candidate for the job. After an initial, secret vote in a straw poll, probably next week, he may drop out. In that case, Japan and some of the other Asians would presumably choose between the European candidate and Mr. Fischer.