Europe is now losing its last authority at IMF

She made it, Kristalina Georgieva. The director of the International Monetary Fund (IMF) has been allowed to stay on after it was revealed that the calculations in the World Bank’s ‘Doing Business’ report had been tampered with under her leadership while she was still at the top. The aim was to prevent China from falling eight places in the ranking – just when Beijing had to be satisfied with a new capital round for the World Bank.

An investigation by the law firm WilmerHale, which was called in to find out what had happened, reads at times like a Danish Netflix crimi. Crucial scene: Georgieva driving to the house of the responsible official to check herself, in the driveway, whether China has indeed been given the right place in the final printed version. The position of Saudi Arabia has also been tampered with in other ‘Doing Business’ editions. That had paid for tailored World Bank advice (a commercial sideline of the World Bank) to best appear in the report. Read it yourself.

But Georgieva can stay. In fact, the board has every confidence in her. And that while the Financial Times over the weekend reported that both the US and Japan would rather see her go. Europe lined up behind her. That is not crazy. Since the foundation of the World Bank and the IMF in 1944, it has cherished the unspoken deal that Europe provides the director of the IMF, and the US the president of the World Bank. That privilege has been under pressure for some time. The world has changed, and other continents also want a chance to deliver someone.

How did the recent IMF directors – all Europeans – actually do it? Take Horst Köhler (2000-2004): he left his post a year early because he wanted to become president of Germany. Spaniard Rodrigo de Rato (2004-2007) left two years early, was convicted of fraud and embezzlement after his term, and is still serving a 4.5-year prison term. Frenchman Dominique Strauss-Kahn (2007-2011) was accused of rape by a chambermaid in New York, followed by a series of other charges. He cleared the field, after which France hastily pushed Finance Minister Christine Lagarde (2011-2019) forward. She was convicted without penalty by a French court during her IMF term in a political bribery scandal. Lagarde is now president of the European Central Bank.

Truly a list to be proud of as a European.

Many questions from journalists this week were about the integrity of the investigation and data at the IMF, with Georgieva holding sway there. Because her case tarnishes not only the World Bank, but also the IMF itself.

So why does the IMF director stay on? The possibility is that the US, the IMF’s largest shareholder with a blocking minority of 16.5 percent, has not dared to send her away.

Europe has already been kicked twice in the sore leg by the Biden administration this year. First with the abrupt American exodus from Afghanistan. Then with AUKUS, the US’s new anti-Chinese alliance with the UK and Australia, which overnight cost France tens of billions of euros worth of submarine supplies to Australia.

Georgieva’s hump would have been too much of an affront, and would have completely ruined European-American relations. So everything stays as it is. But with Europe’s moral claim to the position, if the next director is to be sought, it will be over by now.

Maarten Schinkel writes about economics and financial markets.

Europe is now losing its last authority at IMF
Source link Europe is now losing its last authority at IMF

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