Fight to succeed IMF head Strauss-Kahn may pit Europe against developing nations

The fight to succeed Dominique Strauss-Kahn as head of the International Monetary Fund is shaping up as a bare-knuckled match between the developed nations that pay the agency’s bills and the developing nations that are reshaping the global economy.

In a statement on Thursday, U.S. Treasury Secretary Tim Geithner called for “an open process that that leads to a prompt succession for the Fund’s new Managing Director.” He said that in the wake of Strauss-Kahn’s resignation, acting managing director John Lipsky “will provide able and experienced leadership to the Fund at this critical time for the global economy.” Lipsky is scheduled to retire from the agency this summer.

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Europe's top officials closed ranks Thursday to demand that the next leader of the International Monetary Fund be one of their own, a claim developing nations like China and Brazil challenged as unfair. (May 19)

Europe's top officials closed ranks Thursday to demand that the next leader of the International Monetary Fund be one of their own, a claim developing nations like China and Brazil challenged as unfair. (May 19)

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Dominique Strauss-Kahn has resigned as head of the International Monetary Fund. The Fund released a statement saying Strauss-Kahn's resignation was effective immediately. (May 19)

Dominique Strauss-Kahn has resigned as head of the International Monetary Fund. The Fund released a statement saying Strauss-Kahn's resignation was effective immediately. (May 19)

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In his first public appearance since being named acting IMF chief, Lipsky took Strauss-Kahn’s place at a conference in Washingon -- the first of two high-profile events Thursday where he is to fill in for the former IMF head.

“I deeply regret the circumstances that have made it necessary for me to substitute for Dominique Strauss-Kahn,” Lipsky said before addressing the annual meeting of the Bretton Woods Committee.

Lipsky said he expected the board to act “expeditiously” to pick a successor and that meetings would begin Thursday.

“The interregnum is going to proceed without any problem,” he said, adding that his approach is to “get up in the morning, come to the office and operate as we always do.”

He did not comment on whether competition for the top job should be opened to non-Europeans, saying that was an issue for the board to decide.

Lael Brainard, Treasury undersecretary for international affairs, said at a luncheon later at the IMF that the United States had not settled on a candidate.“We have not taken a position on any particular candidate,” she said, echoing Geithner’s statement that “it’s important that we move quickly to an open process to promptly select the next managing director.”

European officials, however, were quick to close ranks Thursday, insisting that one of their own be allowed to serve the remainder of Strauss-Kahn’s five-year term, which was to end next year. French Finance Minister Christine Lagarde is considered a top possibility.

Since World War II, the head of the IMF has been a European male, a tradition that developing economic powers such as China, India and Brazil think it is time to end.

A host of European leaders, however, said Thursday that they were hunting for a consensus candidate among themselves. As a bloc, the European nations hold about a third of the votes within the IMF.

“I think that in the current situation, in which we have significant problems with the euro and the IMF is strongly involved in this, there is something to be said for it being possible to put up a European candidate and to canvass for that in the international community,” German Chancellor Angela Merkel said in Berlin.

She said the developing nations had a “legitimate claim” to hold the position, but in the “medium term.” Europe is involved in sensitive negotiations to resolve a series of government debt and other economic problems, and European officials argue that someone with strong political credentials within the European Union — like Strauss-Kahn had — should at least complete Strauss-Kahn’s term.

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