Germany set to buckle under US pressure over IMF
By Stephen Fidler in Washington, Haig Simonian in Berlin and Robert Graham in Paris
Germany is preparing to withdraw its choice to lead the International Monetary Fund and rally round a new European candidate.
The retreat marks a tacit acceptance that US opposition to Caio Koch-Weser, a senior German finance official who spent 25 years with the World Bank, makes his candidacy unsustainable.
This week, European governments have begun quietly canvassing for a new candidate, allowing Mr Koch-Weser's withdrawal with the smallest loss of face possible to Chancellor Gerhard Schröder.
The IMF board is due on Thursday to conduct a straw poll of support for the three candidates so far declared to find a successor to Michel Camdessus of France, who retired last month after 13 years with the Fund.
The official candidates are Mr Koch-Weser; Stanley Fischer, acting managing director of the Fund; and Eisuke Sakakibara, a former senior Japanese finance ministry official.
A large majority of the 24 directors is expected to either abstain or vote for Mr Fischer or Mr Sakakibara.
Despite the likely deadlock, the results will be closely followed to see how much support Mr Koch-Weser, formally nominated by the European Union this week, garners from non-European governments.
Germany tried on Wednesday to depict the dispute over the IMF succession as a potential turning point in relations between Europe and the US.
Michael Steiner, Mr Schroder's foreign policy adviser, said the government remained committed to Mr Koch-Weser. But he also stressed the need to maintain European unity behind a common candidate. And since the US has made clear it is ready to accept a European candidate of sufficient stature, this would allow new names to come forward.
French officials said they were convinced Britain and Italy had "candidates in their back pocket".
Among names circulating were Giuliano Amato, the former Italian prime minister; Mario Draghi, a senior Italian treasury official; Kenneth Clarke, former UK chancellor of the exchequer; and Andrew Crockett, general manager of the Bank for International Settlements.
Mr Steiner suggested that US opposition was part of a broader attempt to ensure that the IMF's next managing director would bow to Washington's concept of the role of the institution.
France is convinced the Europeans can come up with a suitable alternative once Mr Koch-Weser withdraws. Paris officials say the new name or names should be withheld until the straw poll on the three existing candidates is out of the way, arguing that any premature leak would merely serve to wound further German pride.
US officials continued to insist that Washington would support a suitable alternative European candidate who enjoyed widespread backing outside Europe - but have also avoided mentioning names, assuming that to do so would jeopardise the candidate's chances.
====
[from the World Bank's daily clipping service]
BERLIN READY TO CONCEDE ON IMF CANDIDATE, BUT EUROPE REPORTED BACKING KOCH-WESER.
Germany is preparing to withdraw its choice to lead the IMF and rally round a new European candidate, reports the Financial Times (p.1). The retreat marks a tacit acceptance that US opposition to German Deputy Finance Minister Caio Koch-Weser [who was nominated by the EU this week] makes his candidacy unsustainable.
Meanwhile, though, the Washington Post (p.A1) reports that French and British officials, who were not enthusiastic about Koch-Weser as a candidate, said US action had galvanized European solidarity behind the German. Whatever doubts they once had about Koch-Weser's abilities, they said, were swept aside by US intrusion. Over the weekend, French President Chirac called Schroeder to tell him that his country's support for Koch-Weser had solidified because it was important to demonstrate to the US that interference in the issue is intolerable. Chirac said it was important that Europe stand together, according to the story.
Still, the FT says European governments are quietly canvassing for a new candidate, allowing Koch-Weser's withdrawal with the smallest loss of face possible to German Chancellor Gerhard Schröder, the story says. Schröder's foreign policy adviser, Michael Steiner, yesterday said the German government remained committed to Koch-Weser but also stressed the need to maintain European unity behind a common candidate. And since the US has made clear it is ready to accept a European candidate of sufficient stature, this would allow new names to come forward.
He suggested that US opposition was part of a broader attempt to ensure that the IMF's next managing director would bow to Washington's concept of the IMF's role, while US officials continued to insist that Washington would support a s uitable alternative European candidate who enjoyed widespread backing outside Europe.
French officials said they were convinced the UK and Italy had "candidates in their back pocket", continues the FT. Among names circulated were former Italian Prime Minister Giuliano Amato, senior Italian Treasury official Mario Draghi, former UK Chancellor of the Exchequer Kenneth Clarke, and BIS General Manager Andrew Crockett.
Paris officials are convinced the Europeans can come up with a suitable alternative once Koch-Weser withdraws, but say the new name or names should be withheld until the straw poll scheduled for today on the three existing candidates-Koch-Weser, acting IMF chief Stanley Fischer, and former Japanese Vice-Finance Minister for International Affairs Eisuke Sakakibara-is out of the way. Any new leaks would merely serve to wound German pride further, they say.
A board statement said today's straw poll would only be "indicative" of the board's views on the three candidates, Reuters notes. It would not end the contest, and further votes were likely.
The news comes as Reuters says in a separate report that Koch-Weser arrived in Washington yesterday for last-minute talks apparently aimed at bolstering support for his hotly contested bid to lead the institution. Koch-Weser declined to take questions from reporters as he arrived at Washington's Dulles International Airport, the story says, noting that he was expected to meet with members of the IMF's board, apparently in a bid to sway their opinion ahead of the informal vote today.
Meanwhile, reports the International Herald Tribune (p.13), former IMF Managing Director Michel Camdessus said yesterday Fund members should quickly name the best possible person as his successor rather than seek "acrobatic solutions" for political reasons. "An institution like the IMF deserves that people look beyond their own parochial interests," Camdessus said in Paris. Agence France-Presse also reports, quoting Camdessus as saying: "Speaking as a free man for the first time after 13 years, it would be a good thing if a woman headed the IMF, even if she is not a European and does not come from the public sector."
Asked what were the ideal qualities for an IMF head, Camdessus said "a sense of humor, independent spirit, and a good knowledge of the institution."
The New York Times (p.A1), and USA Today (p.6B) also report.
The Washington Post (p.A18) carries an editorial on the succession to the Fund top job, arguing that the Clinton administration is right to insist upon strong leadership for the IMF: Without it, the IMF is likely to be thrown off balance by its numerous critics, much as the WTO has been. Indeed, a congressional panel is just now finalizing a report questioning the organization's mission, and demonstrators are planning to descend on April's IMF-World Bank meetings in Washington. Globalization makes the challenge of fortifying global institutions constant, and constantly essential.
In an op-ed in the Wall Street Journal (p.A26), Charles Calomiris of the Columbia Business School, and member of the International Financial Institutions (IFI) Advisory Commission, writes that the specific controversy over a new managing director for the Fund has blossomed into a larger debate over the IMF as a whole. Changing the way the IMF anoints its leadership will call for deep reforms of the entire organization.