World shaker emerges at IMF: Michel Camdessus aims to achieve a stronger role for the bank in helping to rebuild economies in the East, writes Bailey Morris

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The Independent Online
FOR MUCH of his first term, Michel Camdessus was seen but not heard. Like most managing directors of the International Monetary Fund, he played by the rules, speaking in elliptical phrases that hinted at much but promised nothing. That was before the fall of the Berlin Wall and the disintegration of Western policy's centre of gravity.

Suddenly, in his second term, Camdessus has found his voice and a clear agenda. He has surfaced from the grey zone of civil servitude, from years of rigid training as a French minister and central banker, to become an aggressive force in international policy making. As head of the lead agency managing the West's dollars 43bn ( pounds 28bn) Russian rescue programme, he has been placed in a hot spot and has accepted the challenge.

Even the IMF's biggest donor countries - the US, Japan, Germany, France, Britain and others - have not escaped ringing exhortations to get their own economic houses in order. One is tempted to adapt a phrase from former president Richard Nixon and say they won't try to kick Camdessus around any more.

Camdessus clearly sees a stronger role for the IMF in the new world order. Last week, as the world's finance ministers met in Washington for the spring sessions of the IMF's Interim Committee, he took time out to discuss the new global economic agenda and the IMF's role in shaping it.

From the start, the IMF has taken the lead on Eastern Europe and Russian reform, carving out a place for itself that critics contend it was not designed to fill. Camdessus bristles at criticism that the 2,300- staff agency buckled under the load of Russia's problems by failing to facilitate disbursement of the dollars 24bn promised in last year's rescue programme, and by failing to put staff on the ground to provide vital technical assistance.

Disbursements were made. There will be more than 828 IMF staff visits to the former Soviet Union in 1993 alone. In response to Russia's institutional crisis and the threat of hyperinflation that had blocked financing, the IMF recently created a new facility that will allow it to dispense billions in funds even before its strict macro-economic conditions are met. Camdessus does not intend to be blamed for derailing Russia's move toward capitalism as a result of IMF inflexibility.

Despite his new-found aggression, Camdessus walks a difficult line with the Group of Seven industrialised countries. He sees the G7 increasingly taking on the role of the world's steering committee, to resolve global problems ranging from the Gulf war to exchange rate crises.

Within this context, he also sees a more important role for the IMF, not only as the G7's executor, but also as a prod to encourage rich countries to do the right thing. There is another dimension as well. 'The G7 has a big weakness - a tremendous problem in finding the financing to meet what it sees as its responsibilities,' Camdessus said.

He would like to be a link connecting the rich countries to others, so that burdens and decisions are shared. 'They have to broaden the membership so that those who might also pay have their say toward issues.'

This may require rethinking the role of the G7 and how it operates. Camdessus made a big push last week to establish the IMF's Interim Committee as the one place where 'the entire world sits together and can decide on a common co-ordinated approach to sustained economic growth'.

It is the fate of IMF managing directors to walk a fine line, balancing the wishes of their biggest donors with their responsibilities to the rest of the world. The latter has become a heavier load. Since Camdessus assumed office in 1987 for his first five-year term, 39 new countries have joined the IMF, all with 'immense' economic problems. In the three years he has left, he hopes to steer most of them down the road to sustained economic growth.

He also wants to bolster the IMF's surveillance activities, so that crises such as last September's exchange rate collapse can be avoided. The danger is that he will try to take on too much, fuelling criticism that the IMF has overstepped its bounds and should be either reshaped or merged with the World Bank.

But Camdessus insists that it was never meant to be just a short-term balance of payments facility and that it is not overstretched. Looking back over his accomplishments so far as the IMF's seventh managing director, he shrugged and said: 'Only history can judge them, and I hope that it will be kind.'

(Photograph omitted)