December 1, 2023

Europeans Focus on Keeping I.M.F. Leadership

PARIS — As the International Monetary Fund prepared to accept nominations Monday to replace Dominique Strauss-Kahn at its helm, European officials rallied over the weekend around Christine Lagarde, France’s finance minister, as their top choice for the post, despite fresh warnings from leaders of emerging markets and other countries that simply handing the job to another European could undermine the fund’s legitimacy.

Ms. Lagarde’s candidacy gained momentum after the British   chancellor of the Exchequer,  George Osborne, backed her Saturday over the former prime minister, Gordon Brown, effectively ending Mr. Brown’s bid for the post.

Calling Ms. Lagarde an “outstanding” choice, Mr. Osborne said he thought it would be “a very good thing to see the first female managing director of the I.M.F. in its 60-year history.”

Following endorsements by Germany, Italy and other European countries, Mr. Osborne’s decision thrust Ms. Lagarde to the forefront of Europe’s efforts to keep a European in a post the Continent has held for more than 40 years.

The job, one of the most prestigious among multinational institutions, is up for grabs since Mr. Strauss-Kahn resigned last week to fight charges that he sexually assaulted a maid in a New York hotel May 14. Ms. Lagarde is widely respected in the world of international finance, although she is facing some scrutiny in France over allegations that she may have overstepped her authority in two cases during her early days as finance minister.

No European leaders have raised similar concerns. But other countries are taking a dark view of the aggressive European push.

Australia and South Africa issued an unusual joint statement Sunday criticizing a long-standing arrangement between Europe and the United States in which a European typically heads the I.M.F. and an American leads the World Bank.

“In order to maintain trust, credibility and legitimacy,” the statement said, “there must be an open and transparent selection process which results in the most competent person being appointed as managing director, regardless of their nationality.”

Leaders of Brazil, Mexico, China and other fast-growing emerging markets want a more open process that could see an official from one of their countries appointed to the position for the first time. These economies are gaining influence in the world as debt crises and economic downturns plague Western economies. Unlike Europe, however, the emerging-market countries are not speaking with a unified voice or throwing their weight behind a main candidate.

Names mentioned over the weekend included Agustín Carstens, central bank governor in Mexico; Montek Singh Ahluwalia, the deputy chairman of the planning commission in India;  a former finance minister of South Africa, Trevor Manuel; and Leszek Balcerowicz, who helped oversee Poland’s transition to a free market economy from communism.

Kemal Dervis, a former finance minister of Turkey whose name was widely circulated last week, took himself out of the running Friday.

President Barack Obama, Chancellor Angela Merkel of Germany and other leaders of the Group of 8 industrialized economies are expected to consider the issue when they gather this week in Deauville, France, to discuss major political and economic issues.

The I.M.F. wants to pick a new leader by June 30, a rapid timetable that would help get the organization back on track to deal with a growing debt crisis in Europe. Fears are mounting that another meltdown in Greece may be unavoidable and could ricochet through other troubled European countries.

Since Greece received its €110 billion, or $156 billion, bailout, the country has been unable to resolve its financial crisis, sending European leaders and the I.M.F. scrambling for a way to keep Greece from default.

On Friday, Ms. Lagarde suggested that France could support a rescheduling of Greece’s debts if banks that owned the debt agreed to extend the amount of time for repayment, an apparent shift in position that aligns France and Germany against the European Central Bank, which opposes any restructuring of Greece’s debt.

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At I.M.F., Men on Prowl and Women on Guard

Some women avoid wearing skirts for fear of attracting unwanted attention. Others trade whispered tips about overly forward bosses. A 2008 internal review found few restraints on the conduct of senior managers, concluding that “the absence of public ethics scandals seems to be more a consequence of luck than good planning and action.”

This is life at the International Monetary Fund, the lender of last resort for governments that need money and, under the leadership of Dominique Strauss-Kahn, an emerging force in the regulation of the global economy.

But with Mr. Strauss-Kahn’s arrest earlier this week and indictment on Thursday on charges that he tried to rape a New York hotel housekeeper, a spotlight has been cast on the culture of the institution. And questions have been revived about a 2008 episode in which the I.M.F. decided that Mr. Strauss-Kahn had not broken any rules in sleeping with a female employee.

What may draw even more attention to the culture of the fund is the revelation of an affair involving a potential successor to Mr. Strauss-Kahn, who resigned as managing director on Wednesday. Kemal Dervis of Turkey had a liaison while working at the World Bank years ago with a woman who now works at the I.M.F., according to a person with direct knowledge of the relationship.

Interviews and documents paint a picture of the fund as an institution whose sexual norms and customs are markedly different from those of Washington, leaving its female employees vulnerable to harassment. The laws of the United States do not apply inside its walls, and until earlier this month the I.M.F.’s own rules contained an unusual provision that some experts and former officials say has encouraged managers to pursue the women who work for them: “Intimate personal relationships between supervisors and subordinates do not, in themselves, constitute harassment.”

“It’s sort of like ‘Pirates of the Caribbean’; the rules are more like guidelines,” said Carmen M. Reinhart, a prominent female economist who served as the I.M.F.’s deputy director for research from 2001 to 2003. “That sets the stage, I think, for more risk-taking.”

In 2007, officials at the fund declined to investigate a complaint by an administrative assistant who had slept with her supervisor, and who charged that he had given her poor performance reviews to pressure her to continue the relationship. Officials told the woman that the supervisor planned to retire soon, and therefore there was no point in investigating the charges, according to findings by the I.M.F.’s internal court.

The official, who is not named in the records, told investigators that he also had a sexual relationship with a second employee, and that he did not believe he had acted improperly.

In another case, a young woman who has since left the I.M.F. said that in 2009, a senior manager in her department started sending her increasingly explicit e-mails seeking a relationship. She complained to her boss, who did not take any action.

“They said they took it seriously, but two minutes later they were turning around and acting like everything was O.K. to the person who had done it to me,” said the woman, who spoke on condition of anonymity because she still works in the international development community. “He wasn’t punished. Not at all.”

Virginia R. Canter, who joined the I.M.F. last year with responsibility for investigating harassment claims, said the institution recently took a series of strong steps to protect employees. A new code of conduct adopted on May 6 specifies that intimate relationships with subordinates “are likely to result in conflicts of interest” and must be disclosed to the proper authorities.

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Europe and Emerging Nations Vie to Fill I.M.F. Job

Mr. Strauss-Kahn stepped down late Wednesday after explosive accusations that he had sexually assaulted a housekeeper in a New York hotel room. Treasury secretary, Timothy F. Geithner and others pushed to seek an interim leader for the fund quickly.

Within hours of Mr. Strauss-Kahn’s resignation, politicians from across Europe closed ranks, appearing to coalesce behind Christine Lagarde, the French finance minister, to succeed Mr. Strauss-Kahn, who is also French.

German news organizations reported that Chancellor Angela Merkel would back Ms. Lagarde as Mrs. Merkel publicly called for a European to assume the job.

“Of course developing nations are within their rights in the medium term to occupy the post of either I.M.F. head or World Bank chief,” Mrs. Merkel said,  according to news reports. “But I think that in the current situation, with serious problems with the euro and the I.M.F. strongly involved, there is a lot in favor of a European candidate being put forward.”

José Manuel Barroso, the president of the European Commission, echoed that thought. “It should be a European,” he said at a business conference in Brussels on Wednesday. Taken together, European members “are the biggest stakeholders in the I.M.F. Why now choose someone because he is not European? That makes no sense.”

Mr. Strauss-Kahn’s lawyers are scheduled to appear in a New York court Thursday afternoon to make another plea for his release from prison on Rikers Island, after a judge ordered him held without bail earlier this week.

“It is with infinite sadness that I feel compelled today to present to the executive board my resignation from my post of managing director of the I.M.F.,” he said in a statement dated Wednesday and released early Thursday by the I.M.F.

He added: “I deny with the greatest possible firmness all of the allegations that have been made against me.”

As they absorbed the news of Mr. Strauss-Kahn’s resignation, officials from the rising economic powers said they should get to play a bigger role in choosing the I.M.F.’s next leader.

“In principle, we believe that emerging and developing countries should have representation at senior levels,” a Chinese Foreign Ministry spokesman said Thursday, the second such statement in two days.

Brazil’s finance minister, Guido Mantega, said late Wednesday: “We must establish meritocracy, so that the person leading the I.M.F. is selected for their merits and not for being European.”

Mr. Geithner on Thursday urged that the selection process take place quickly and transparently, but he did not give any clues as to who the United States might support.

An I.M.F. official predicted some sort of compromise. “Presumably there will be some horse trading, given the push for a European and for a person from the emerging markets,” he said, speaking on condition of anonymity because of the political sensitivity of the situation.

One scenario insiders were discussing would allow a European like Ms. Lagarde to step in for the rest of Mr. Strauss-Kahn’s term, which expires in October 2012, and then hand the reins to an official from an emerging market. That would give Europeans a level of comfort over the I.M.F.’s role in Europe’s debt crisis, especially if a default threatens Greece, or a new round of contagion hits Portugal, Ireland or other countries in crisis.

President Nicolas Sarkozy of France spoke with Mrs. Merkel by phone Wednesday and will speak with Prime Minister David Cameron of Britain on Friday about succession, said an official in his office who spoke on the condition of anonymity. The issue will also be on the agenda when President Obama and other heads of the nations known as the Group of 8 meet in Deauville, France, next week to discuss major global issues, the official said.

John Lipsky, Mr. Strauss-Kahn’s deputy, has been named temporary managing director and will also attend the Deauville meetings representing the I.M.F. While he had already announced plans to leave the agency in August, officials said he would  stay in the job until a new chief is appointed.

Gerry Mullany contributed reporting from New York, Katrin Bennhold from Paris and Keith Bradsher from Hong Kong.

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