Stephen King: The IMF should be looking further than the eurozone for its new head

Economic Outlook: Europe should be able to solve its crisis itself. After all, the creditors and debtors are all EU members

To the British – and citizens of most nations – Dominique Strauss-Kahn was the head of the IMF. To the French, he was bigger than that. A successful finance minister, he hoped to become the next French president. While his alleged activities have made headlines all over the world, the Great Seducer's fall from grace has been an extraordinary shock for the people of France.

I know this for a fact. At the beginning of last week in Paris, I discovered that DSK – as he's known to the French – was the subject of every news bulletin and every conversation. His presence was so ubiquitous that I caught him staring at me as I answered a call of nature. Alongside other famous clientele, his photograph adorns the bathroom wall of Les Gourmets des Ternes, a restaurant in the 8th arrondissement.

Having now resigned from the IMF, the big question for DSK is whether he can prove his innocence. For the French – many of whom think he has been set up – the key issue is next year's election. Will Nicolas Sarkozy, a man deeply unpopular according to recent opinion polls, now be able to stage a remarkable recovery?

For us the question is whether the IMF will ever be the same. What needs to be done to re-establish its credibility? Even before DSK ended up on Rikers Island, the IMF had already been through a bit of a rough time. It lost a lot of credibility in Asia in the late 1990s. A staunch defender of free markets, the IMF appeared to step to one side as countries throughout Asia saw capital heading for the exit, a process that prompted a violent economic meltdown.

More recently, the IMF was slow to spot the enormity of the global financial crisis, partly because it couldn't cope with the idea of systemic financial failure (to be fair, DSK did open the IMF's eyes to the failures of free markets).

The IMF's biggest problem, however, is its leadership. Every managing director since it was established in 1945 has been a European man. To be more specific, there have been four Frenchmen, two Swedes, and one each from Germany, Spain, the Netherlands and mighty Belgium.

This unwritten rule has surely damaged the institution. Over the past seven decades, the world economic order has changed. The new economic superpowers include China, India and Brazil, but not Belgium. Yet, according to precedent, a Belgian has a better chance than an Indian of becoming the IMF's next head.

Even more remarkable is that the world's biggest international financial imbalances exist between a "big six": the US is the world's biggest borrower while the world's biggest lenders include China, Russia, Saudi Arabia, Germany and Japan. Yet only a German apparently has any chance of becoming the next IMF head.

European nations won't let go of their privileged position at the IMF without a fight. But it's a bit rich for the German Chancellor, Angela Merkel, to state that "...in the current situation, with serious problems with the euro and the IMF strongly involved, there is a lot in favour of a European candidate being put forward". While I can see her point, the argument doesn't hold water. Did Helmut Kohl demand that an Asian should lead the IMF during the 1997-98 crisis? Did Gerhard Schröder demand the services of a Latin American IMF managing director as the crisis spread to Brazil and Argentina? Of course not. The eurozone has problems but that is not a good enough reason to suggest that the next head of the IMF should be a European.

Given that all the talk in Europe at the moment is of default, restructuring and burden sharing, an IMF head with emerging market experience might be ideal. Europeans aren't familiar with sovereign crises but Latin Americans, Russians and Asians are. Who better to ask for advice than those who have been there, done that?

There's also the simple point that, while the eurozone crisis may be hitting the headlines on a daily basis, European policymakers really ought to be able to resolve the problem themselves. After all, the important creditors and debtors in this crisis are all members of the European Union and they are, collectively, rich enough not to require a bailout from the IMF or any other external institution. If anything, the IMF's involvement simply reveals that Europe's institutional arrangements are too weak to allow an effective resolution to be reached: the answer lies not with asking for IMF help but with the eurozone partners creating a stronger "act of union".

Maybe Christine Lagarde, the French finance minister and now the hot favourite to head off to Washington to replace DSK, will tell Europe to do exactly that. She might not be from the emerging world but at least her appointment would offer one welcome change: she is, after all, a woman.

Start your day with The Independent, sign up for daily news emails
News
The guide, since withdrawn, used illustrations and text to help people understand the court process (Getty)
newsMinistry of Justice gets law 'terribly wrong' in its guide to courts
News
Bobbi Kristina Brown with her mother Whitney Houston in 2011
people
News
Starting the day with a three-egg omelette could make people more charitable, according to new research
scienceFeed someone a big omelette, and they may give twice as much, thanks to a compound in the eggs
News
Top Gun actor Val Kilmer lost his small claims court battle in Van Nuys with the landlord of his Malibu mansion to get back his deposit after wallpapering over the kitchen cabinets
people
PROMOTED VIDEO
News
The actress Geraldine McEwan was perhaps best known for playing Agatha Christie's detective, Miss Marple (Rex)
peopleShe won a Bafta in 1991 for her role in Oranges Are Not The Only Fruit
News
newsPatrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
News
Robert Fraser, aka Groovy Bob
peopleA new show honours Robert Fraser, one of the era's forgotten players
Life and Style
Torsten Sherwood's Noook is a simple construction toy for creating mini-architecture
tech
Sport
David Silva celebrates with Sergio Aguero after equalising against Chelsea
footballChelsea 1 Manchester City 1
News
i100
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links