BRICS raise the banner of revolt

BRICS raise the banner of revolt

New Delhi: In an unprecedented move, a group of prominent emerging economies have demanded that the new chief of the International Monetary Fund (IMF) be chosen on the basis of competence rather than nationality.

IMF executive directors of Brazil, Russia, India, China and South Africa (BRICS) issued a joint statement seeking an immediate end to the practice. Traditionally, Washington-based IMF has been headed by a European, while the World Bank, also based in Washington, has been led by an American since the institutions were set up in the mid-1940s.

The move by BRICS nations to seek the powerful position for developing countries comes after IMF managing director Dominique Strauss-Kahn, a Frenchman, quit last week following his arrest on charges of sexual assault on a New York hotel chambermaid. It reflects the churn in many multilateral organizations where emerging economies have been aggressively seeking a greater representation and role for themselves following the 2008-09 global slump that crippled once-powerful Western economies.

The statement by the executive director representing India on the IMF board was backed by the government. Prime Minister Manmohan Singh, who is in the Ethiopian capital Addis Ababa for an India-Africa summit, called on emerging economies to “stand united" on the issue of reforming international financial institutions such as IMF.

“I’m not very well informed on what is going on with regard to the managing director of IMF, but I do recognize that the struggle for transformation of global institutions, including Bretton Woods (a reference to IMF and World Bank), is not a one-shot operation. It is a long process in which all developing countries have to stand united," the Press Trust of India (PTI) cited Singh as telling reporters.

Expressing “concern" over recent comments by high-level European officials that the position should go to someone from the continent, the representatives of the BRICS countries demanded that the “convention that the selection of the managing director is made, in practice, on the basis of nationality undermines the legitimacy of the fund".

The statement was signed by Brazil’s Paulo Nogueira Batista Jr, Russia’s Aleksei Mozhin, India’s Arvind Virmani, China’s Jianxiong He and South Africa’s Moeketsi Majoro.

“The recent financial crisis, which erupted in developed countries, underscored the urgency of reforming international financial institutions so as to reflect the growing role of developing countries in the world economy," it said.

BRICS has about 15% of the vote share, the US has about 17% and the Europeans nearly 35%.

“Several international agreements have called for a truly transparent, merit-based and competitive process for the selection of the managing director of IMF and other senior positions in the Bretton Woods institutions," the statement said. This requires “abandoning the obsolete unwritten convention that requires that the head of IMF be necessarily from Europe".

If IMF is to have “credibility and legitimacy", its chief should be selected after “broad consultation with the membership".

“It should result in the most competent person being appointed as managing director, regardless of nationality. We also believe that adequate representation of emerging market and developing members in the fund’s management is critical to its legitimacy and effectiveness," it said.

In an interview to Mint in December, Strauss-Kahn had said IMF was giving serious thought to having a representative of a developing economy become chief after him. “I think it is very serious. I think the agreement between the US and Europe that US will lead the World Bank and Europe will lead IMF is there. But there is very good reason that in those institutions, the next leaders will come from other part of the world," he said.

In April, British Prime Minister David Cameron said IMF should look beyond Europe for its leader. “It may well be time actually to have a candidate from another part of the world in order to increase its standing in the world," he had said.

Last week, the IMF board pledged “an open, merit-based, and transparent" selection process based on consensus, though it could come to a board vote.

PTI and Reuters contributed to this story.