Deciding the IMF's Future

Many in the West believe that Russia pursues power in the international arena to restore the status once held by the Soviet Union. From their perspective, all steps initiated by Moscow are tactical moves to enhance the strength of the state. When the Kremlin pursues its own narrow interests, it is often interpreted in the West as sinister.

This mindframe can be seen in the reactions in various Western capitals after Russia nominated last week Josef Tosovsky, the former Czech central banker and prime minister, as its candidate to become managing director of the International Monetary Fund. We heard that Russia's choice was part of a broader anti-Western campaign in the context of the Shanghai Cooperation Organization. We also heard that it is an insidious attempt by the Kremlin to distort international institutions for its own devious purposes.

The Russian nomination, coming days before the Aug. 31 deadline, would pit Tosovsky against the European Union's choice of Dominique Strauss-Kahn, a former French finance minister. It creates an open and unexpected contest between two Europeans, admittedly from different parts of Europe.

Why is it that few seem prepared to accept the simplest explanation offered by Alexei Mozhin, Russia's long-serving and highly respected representative on the IMF's executive board? As Mozhin was quoted in the Financial Times, "There is nothing in Mr. Strauss-Kahn's curriculum vitae which could make it clear he has the necessary technical skills to do the job."


This position was backed by Finance Minister Alexei Kudrin, whose ministry noted in a statement that Tosovsky possesses "serious practical experience in the sphere of international economic cooperation and is an acknowledged specialist in financial stability issues. He is a perfect candidate for the post of the IMF managing director."

What is at stake is no less than the future relevance and role of the IMF as the central institution of the international financial system.

The old traditional prerogative of the West Europeans to pick one of their own as the IMF managing director may have made sense when those countries, along with North America and Japan, were the center of global finance. But the center of financial gravity has clearly moved to the East and the South. This move has barely been reflected in individual country shares in the IMF: China has a quota less than Britain or France, and India's share is less than that of Belgium. A new managing director should have a mandate from the new centers of financial power for change to the voting structure of the IMF.

Moreover, perhaps the Europeans could be forgiven if they had provided better-quality managing directors in the past. Unfortunately, the last two have been a disappointment. Of course, their illustrious predecessors in the heyday of the IMF, Jacques de Larosiere and then Michel Camdessus, were hard acts to follow. They were also both French and superb technocrats.

I personally have great respect for Strauss-Kahn, and it could well be that, despite a lack of technocratic skills, he would be of similar caliber. Tosovsky, however, is clearly qualified, and this is why Moscow has supported his candidacy, even though he is not Russian.

What is Russia's interest? Contrary to the conspiracy theorists, its position in this case is well intended. The Finance Ministry and Mozhin want to see a stronger IMF that can deal with the financial problems of the 21st century. They believe that Tosovsky, who has successfully handled financial crises first-hand, including the tumultuous period after Czechoslovakia was divided into two countries, is the more appropriate candidate for the post. They could have proposed other highly qualified, non-Europeans such as the Brazilian Arminio Fraga or Egyptian-born Mohammed El-Erian.

In the end, is this Russian nomination of a Czech banker for the top job at the IMF just a quixotic gesture that will cost Moscow its prestige or even more?

It may be true that Tosovsky's chances of winning the votes are slim given that the West Europeans still dominate in the voting. Much will depend upon the United States.

Whatever happens, Moscow will have demonstrated genuine leadership in supporting Tosovsky. Instead of being denigrated for their initiative, it should be applauded and encouraged. This, after all, is the Russia that we should all like to see -- one that is actively engaged in global affairs.

Martin Gilman, a former senior representative of the IMF in Russia, is a professor at the Higher School of Economics in Moscow.