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The IMF's Next Boss



Thursday, March 2, 2000; Page A18

THE MORE technology binds the world together, the more important but also controversial international institutions become. The World Trade Organization, for example, must oversee expanding international commerce. But its ability to do so has been compromised by fights among its members. Last year's search for a new WTO director general was prolonged and messy; partly because of that distraction, the organization and its members prepared poorly for last November's summit in Seattle. As a result, Seattle yielded high profile anti-WTO protests but no progress on trade liberalization.

Now a similar prospect faces the International Monetary Fund. Like the WTO, the IMF's responsibilities grow with globalization: The emerging-market financial crisis demonstrated how a panic originating in a middling country such as Thailand could threaten the world economy. But the IMF's growing importance is not matched by a growing determination to make it run properly. The search for a new leader for the organization is currently bogged down.

The IMF's new boss will face twin challenges. He or she will have to deal with questions about the organization's basic direction. Should it disengage from the world's poorest countries, leaving these to the World Bank? Should it stop bailing out bigger ones, lest it foster the impression that reckless actors will be protected from their own mistakes? If these questions are resolved, the new boss will then have to sell the answers to the IMF's constituents--both in rich countries that provide the IMF's capital and in poorer ones that depend upon its loans.

The first of these challenges requires a skilled economist, the second an accomplished politician. For varying reasons, none of the candidates proposed so far is ideal. Caio Koch-Weser, the official European candidate, is regarded by many within the IMF as insubstantial, and the Clinton administration's justified opposition to him is a severe handicap. Eisuke Sakakibara, the Japanese entrant, is clever, but his record as a booster of Japanese-style capitalism suggests wayward judgment. Stan Fischer, who is supported by several developing countries, is highly regarded as the IMF's number two and de facto policy chief--clearly the best of the current candidates. But his American nationality would complicate the diplomatic task ahead of him: In much of the world, the IMF is regarded as an American tool.

The Europeans, who traditionally provide the IMF's leader, need to come up with a better candidate quickly. If they don't, they will deserve to lose their historical hold on the job. The Clinton administration is right to insist upon strong leadership: 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.

© Copyright 2000 The Washington Post Company

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