Ben Sills in Granada and Larry Elliott Thursday May 6, 2004 The Guardian
If the International Monetary Fund has sometimes looked in need of a firm hand on the tiller in recent months then its new managing director, Rodrigo Rato, has been a captain in search of a ship. For that reason alone, his appointment this week has a satisfying neatness to it.
Convenience and availability do not, however, guarantee that Rato will be a success in running the world's most important financial institution. The IMF's history is pock-marked with managing directors chosen for reasons of political expediency rather than their credentials for the job.
In Rato's case, there were four plus points. First, he is a European, and a European by tradition runs the IMF - moreover, he came from a country that supported the war in Iraq, which guaranteed a fair wind from Washington. Second, he was not Gordon Brown, who could have had the job for the asking. Third, he was from a big European country but not Germany or France, which provided the last two IMF chiefs. Finally, he had nothing better to do after eight years as finance minister in José María Aznar's government, deposed in the recent Spanish elections.
Rato has been a key figure in Spanish politics for nearly 30 years. He was an architect of the centre-right People's party and now has to convince IMF staff and the international community he has the wherewithal to lead the organisation out of its recent doldrums.
Despite leaving the Spanish treasury on a much firmer footing than he found it, Rato's honeymoon is likely to be short. Latin American countries will expect a Spaniard to be more understanding of their financial difficulties and Africa will be looking for signs that Rato has a development agenda.
While his party's administration came to an end with its election defeat, Rato's career had reached a crossroads some months earlier. Despite his success, Rato has never been able to fully flex his political muscles in Madrid. "He's had to stick to the script and be careful not to eclipse Aznar," says José Garay, a veteran financier who has known Rato for 20 years.
Rato comes from a wealthy, entrepreneurial family in the north of Spain. His father, Don Ramón, was a patriarch, arch-supporter of Franco and head of the Bank of Siero, a provincial lender. When the bank collapsed and had to be bailed out by the Bank of Spain, both Ramón Rato and his eldest son, Moncho, were jailed.
According to the Rato legend, as a result of this humiliation Don Ramón had a burning desire for his youngest and favourite son, Rodrigo, to become central bank governor and restore the family honour.
Rato has paid the family debt in spades now - as the governor's boss. But his personal ambitions remain unsatisfied.
Aznar always said he would serve only two terms and Rato was the favourite of many to succeed him. Last year, as speculation over the succession began to grow, Rato publicly announced his availability. There are several theories as to why he was overlooked. Some say he blew it simply by revealing his ambition; others that Aznar had reservations about his business interests after Rato was implicated in - though never charged in relation to - a financial scandal in 2001.
The setback proved a blessing in disguise for Rato when, after a stumbling campaign, the party's new leader, Mariano Rajoy, was soundly beaten by the socialist opposition in an election overshadowed by the terrorist attacks on Madrid.
The move to Washington will mark a return for Rato. In the 1970s he spent two years in California, earning his MBA from Berkeley - a choice of university which, famed for its student activism, seems at odds with his subsequent career as a centre-right politician.
Since Berkeley, he has maintained his contacts with the US at the highest level, building relationships with Washington players such as Clinton's treasury secretary, Robert Rubin, that suggest he had an eye out for opportunities on the international stage. But he joins the IMF during a period of transition, with political interference blurring its role and undermining staff morale.