The last word's for Uncle Sam

(story to be published in tomorrow’s issue, March 16)

When he agreed to the candidacy of Horst Koehler, now president of the European Bank for Reconstruction and Development, Bill Clinton put an end on Monday night to the West’s stalemate in searching for a new director at the International Monetary Fund. Starting seven months ago, when former director Michel Camdessus, who has led the IMF for the last 13 years, discretely announced plans to withdraw, European leaders have been looking at names in all offices, but reached no consensus. The French pulled out former Finance minister Dominique Strauss-Kahn, then Bank of France governor Jean Claude Trichet, but the Germans said “now it’s our turn” and put up, in November 1999, their Finance minister Caio Koch Weser. Since Trichet was to take up, in the second part of the mandate, the European Central Bank, Weser was left in the cards, but was rejected by the Americans. This brought the solution of the EBRD president, whom Germany’s chancellor Gerhard Shroeder proposed in spite of the fact that he had been the finance advisor of his predecessor, Helmut Kohl. The United States’ accord did not come without emotions on the part of the Europeans, and the Americans insisted, even after chancellor Shroeder pulled the ace out of his sleeve proposing EBRD’s boss, that they want a candidate “with an international statute,” known and renowned on world financial markets. But how did the European Union end up stammering in front of the Americans? Especially when complete integration is on its way, with the single European currency being adopted by countries in the Union, which asserts its will to be represented as a unique entity within the Fund and the World Bank. Of course, what mattered was the difficulty of this function. In the last ten years, although international private capital flows have far outweighed public ones, the IMF acquired an increasingly important geopolitical role. The financial crisis in Mexico in 1995, the next one in Asia in 1997, which tamed the “tigers,” then those in Russia and Brazil, forced the IMF to come out and act by a rapid resource allocation. Additionally, the Fund has extended the prescription of its macroeconomic recipes to a global scope, to become a sort of “universal doctor” feared by the governments of all transition and developing countries. Then there is the young age of the Economic and Monetary Union, whose members have a long way to go until they sing in unison at the Brussels concert. The euro was launched last year, and the attempt to counter-balance the American dollar, a long-standing king of the world financial markets, has been daring. Add to this the fact that negotiations for the top position at the Fund came over those for the presidency of the European Central Bank, and we see an almost known picture, of a European-scale algorithm, which of course has flaws in operation. These flaws are mercilessly exploited by Uncle Sam, who has firmly turned down the first official European candidate, Germany’s deputy Finance minister, Caio-Koch Weser, backed by chancellor Shroeder despite the mere 43% he got from the Fund’s executive directors. “Germans’ blindness,” as the French daily Le Monde said, could have had a disastrous political effect for the German chancellor had the Americans not okayed Koehler. Fortunately, if this turmoil over the European candidate for the IMF had not existed, which indicates structural weaknesses in the European Union’s decision making process, the Koehler solution seems very good. Even the Japanese, who had a candidate of their own for the IMF director, announced their support for Koehler. Additionally, Koehler has a reputation at the helm of the EBRD, which he led in only one year from losses to profit and from the statute of a development bank to that of an investments bank, strongly involved in the private sector of countries in Central and Eastern Europe. Although with a happy ending, this entire saga clearly reveals that the United States retains a strong position on the world’s economic-financial stage, and Europe’s attempt to break away from Uncle Sam’s domination by uniting its own forces faces too many obstacles ahead.