Why Asia should blame Europe as IMF’s Georgieva seeks new term

Kristalina Georgieva is seeking a second term as Managing Director of the International Monetary Fund (IMF), according to news reports. European finance ministers have rightly (and unseemly hastily) stood up in support of a second mandate, with France’s Finance Minister Bruno Lamer saying Georgieva should be “in the right job at the right time.” He is reported to have said that he was the right person for the job. He would say it makes sense, since the job at the top of the IMF has become part of Europe’s coffers since World War II, just as Americans have led the World Bank. I hasten to add that this commentary is not about whether Georgieva deserves a second term, but rather about the system that gives European technocrats an unfair advantage over those in other countries.

Leaders from Emmanuel Macron to Olaf Scholz regularly remind emerging markets of the importance of global governance and the rules-based international order, the way countries are run established in the late 1940s. Europe’s hypocrisy must be condemned, as it lectures on the importance of maintaining global norms (with respect to global norms). The world economy is clearly outdated today. European pressure on the rules-based international order peaked against the backdrop of Russia’s invasion of Ukraine in 2022, with the EU furious at India and other developing countries buying Russian oil and gas in defiance of sanctions. . The continent is doing much the same in the name of energy security. Rhetorical question: If global governance and the rules-based international order are so important to Europe, why is the EU willing to accept the continent’s voluntary next move in exchange for global support for Georgieva’s second term? Will he not announce that he will not field a candidate during his term? Will she enter the IMF race after she leaves office?

Now, many Europeans would object to me targeting Europe and giving America a free ride on this issue. The unfair distribution of spoils between the United States and Europe for top positions at the World Bank and IMF is a vestige of a very different world, and the United States has an equal responsibility to eliminate this practice. To America’s credit, without the support of the U.S. Treasury (and urging Europe to do the right thing), no meaningful governance reform would have occurred over the past two decades. My personal observation from working at the IMF is that Europe was quite content with the status quo until the 2008 global financial crisis upended the order and gave developing countries slightly more voice and representation. I did. The fact remains that Europe has a disproportionately large say in the running of the IMF. How can we explain that South Korea, with a GDP of $1.8 trillion, has a lower vote share at the IMF than the Netherlands (with a GDP of $1 trillion)? How can we defend Belgium (GDP $595 billion), a small country with a much higher share compared to Indonesia (GDP $1.1 trillion)?

Yet, as Europeans well know, the combined voting power of China, India, Indonesia, Japan, and South Korea in the IMF today outweighs that of any major European country. Including the shares of Saudi Arabia, Brazil, and South Africa, developing countries now control a significant portion of the IMF, and a future agreement on realignment of allocations would increase their power. will increase even more. It is therefore time for Asian governments to speak up and be heard on how future appointments at the IMF, World Bank and other multilateral institutions should be designed.

They should insist on a fair, transparent, meritocratic process aimed at selecting the most qualified candidates from anywhere in the world to run what remains a powerful multilateral institution. . I have no objections if such a process allows European candidates to succeed.

Without this, successive candidates for the IMF and World Bank directorships would not have been able to afford to do so simply because their “parents” happened to be in the right place at the right time when the spoils of a faraway world were up for grabs. He is just a baby Nepo who has been appointed to the role. War was being distributed.