It’s official, Dominique Strauss-Kahn has resigned as the Managing Director of the IMF. I don’t care for ‘did he, didn’t he?’ gossip that led to this action, but I do care about the election process of his successor. That’s why I support the global coalition of campaigners calling for the next IMF head to be elected through an open and merit-based system, rather than a system based on nationality and post-war politics.
The campaigners include the Bretton Woods Project, Oxfam and the Third World Network, with the latter of the three stating:
‘It is time for the European and US governments to finally end the sordid tacit deal between the two regions that has maintained a de facto Northern leadership at both the Fund and the Bank.’
The resignation of the MD has opened up old debates about the anarchistic and unfair selection process, whereby a gentleman’s agreement between Europe and the US has always ensured that the IMF MD is always a European while the President is always a US citizen. They tend to let that one slip by.
So how does IMF voting work? Well, 24 Directors are involved in the day to day decision process, who are each elected by their member country, or a group of member countries. Some countries, such as the US, Japan, Germany, France and the UK, have their own Director, while other countries share – one group includes 22 countries, all sharing the same Director. The voting power reflects the countries distribution of power: nothing else. This is why the US has a veto.
Aside from blatant unfairness, the major issue is that the countries who suffer the most through this skewed democracy is, once again, the developing countries: Despite the fact that developing and transition countries have almost 80% of the World’s population, provide 75% of IMF income and are subject to 100% of IMF programmes, they have only 36% of the votes on the IMF board. In effect, the poor pay for an institution they have little say in controlling.
Although we live in a world in which people are still fighting for the right to democracy in some countries, we should not have to fight for the same thing in developed countries for an International Financial Institution (IFI) like the IMF. The IMF should be leading the way, and we will soon see if they step up to the plate and create a more fair and democratic voting system in order to do so.