The International Monetary Fund (IMF) has for long been the preserve of a certain kind of thought and, at least at the top level, a certain set of people. The financial crisis in recent years forced a rethink of the first, evidenced in the scathing criticism of the Fund’s performance delivered by its Independent Evaluation Office in February. Now the debacle over Dominique Strauss-Kahn is threatening a revision in the second. Strauss-Kahn resigned as the Fund’s managing director on Wednesday, after being charged and held over the weekend for sexual offences against a chambermaid at a New York hotel.
For the Fund, there is an immediate quandary to solve -the personal conduct of its top executive. Though Strauss-Kahn-a formidable mind whose prowess spans the political-economic spectrum of Europe-has been in the gray zone of sexual improprieties even before the New York affair, the Fund has turned a far too indulgent eye on him. That attitude should change with future leaders.
Then there is the larger aspect. For 65 years, the top job at the IMF has been reserved for Europeans. It is this entrenched European leadership, and the accompanying intellectual stasis, that has arguably led to the Fund’s hubris and the ensuing mistakes. A more open flow of ideas, generated by a more inclusive set of leaders, could have prevented this.
IMF’s influence had started fading by the time the crisis struck. Strauss-Kahn, to his credit, managed to turn the Fund around as it took on the burden of curing ailing European economies one after the other. It has been argued that this malaise in the euro zone -where the Fund accounts for one third of all bailout packages—is sufficient reason for Strauss-Kahn’s successor to be a European with continental expertise. This is reminiscent of a not too dissimilar strand of thought in India— that the national cricket team be led by a countryman. We all know how that idea fared.
The real problem is that the age-old system that elevated Europeans to the Fund and Americans to the World Bank is a difficult one to get rid of, given the voting powers of the constituent countries. But the IMF, chastened by the Great Recession, should recognize the instructive power of crises.
Who should be the next IMF managing director? Tell us at firstname.lastname@example.org