EU, Ministers Choose Koch-Weser For IMF Post Despite U.S. Protest
By MICHAEL M. PHILLIPS and GEOFF WINESTOCK Staff Reporters of THE WALL STREET JOURNAL
After months of wrangling, the European Union finally chose Germany's Caio Koch-Weser as their choice to head the International Monetary Fund, only to have President Clinton shoot him down as unqualified.
In a phone call Saturday, Mr. Clinton told German Chancellor Gerhard Schroeder that he'd like the 15-nation EU to find someone else to replace Michel Camdessus, who retired this month after 13 years at the helm of the IMF. Despite the president's warning, the EU finance ministers met in Brussels on Monday and agreed to nominate Mr. Koch-Weser, the German state secretary for finance, for the job, setting the stage for a clash on the IMF board of directors.
Mr. Clinton "stressed the importance of the IMF managing director position and need for a strong candidate of maximum stature who would be able to command broad support from around the world," White House spokesman Joe Lockhart said after the EU decision.
Silence Broken
"In that context, the president told Chancellor Schroeder that the United States is not prepared to support the German candidate," Mr. Lockhart said, ending months of official silence on Mr. Koch-Weser's candidacy. "Our objective remains to work with Europe to find a strong European candidate that is able to command broad support."
The White House decision threw the already-confused succession process into further disarray, and created a new point of tension between the U.S. and its European allies at a time when economic relations have already been strained by a series of trade disputes.
The Clinton administration had desperately wanted to avoid a confrontation over the IMF job, which traditionally has been the preserve of the Europeans. But Mr. Schroeder had doggedly pushed the Koch-Weser candidacy over opposition from the U.S. and a number of developing countries, as well as initial doubt from France and Britain.
While publicly remaining uncommitted until Monday, U.S. officials let it be known they think the German candidate -- who spent more than 25 years at the World Bank -- lacks the requisite financial experience, the political weight to handle the IMF's sometimes-ornery member governments, and the support of the developing countries that borrow IMF money.
Alternative Candidates
Developing nations, which have similar concerns about the German candidate, last week made their own distaste for Mr. Koch-Weser clear by nominating Stanley Fischer, Mr. Camdessus's deputy, for the job. The Japanese, seeking to establish a general claim on top positions in the international financial system, nominated Eisuke Sakakibara, a former senior Ministry of Finance official who is considered a longshot for the IMF job.
Despite the serious setback -- the U.S. holds almost 18% of the voting power on the IMF board and the EU alone can't muster a majority -- Mr. Koch-Weser expressed confidence. "We have made a very good start," Mr. Koch-Weser said.
U.S. Treasury Secretary Lawrence Summers thinks very highly of Mr. Fischer, the former head of the Massachusetts Institute of Technology economics department. Born in what is now Zambia, Mr. Fischer has since become a U.S. citizen. But Mr. Summers is loathe to abandon the arrangement by which the U.S. picks the president of the World Bank and the Europeans select the IMF managing director.
His hope now appears to be that the EU will come up with another, more acceptable candidate. None has yet appeared, although British Chancellor of the Exchequer Gordon Brown and Briton Andrew Crockett, head of the Bank for International Settlements in Basel, Switzerland, are among the names still floating around international circles. Another possible candidate is Mario Draghi, a senior Italian Treasury official.
Christian Sautter, the French finance minister, said the emergence of a U.S. candidate, albeit one proposed by African nations, had accelerated the EU's choice of Mr. Koch-Weser. "It caused a very healthy European response," Mr. Sautter said.
Critical Choice
The succession question is of critical importance to the IMF and to countries -- from Russia to Argentina to Zimbabwe -- that seek its financial help in times of crisis. With controversy still looming over its response to the Asian financial crisis, the IMF faces mounting demands for reform.
Key to the EU decision to back Mr. Koch-Weser was support from France and Britain. The French, long circumspect about his candidacy, relented earlier this month, and Mr. Brown endorsed Mr. Koch-Weser Monday, saying, "We regard Caio Koch-Weser as a strong and experienced candidate and we are prepared to support him."
The IMF executive board, which represents the 182 member nations, is likely to hold a series of informal votes this week to judge whether any of the three current candidates can generate the necessary majority.