On November 9, Michel Camdessus, Managing Director of the International Monetary Fund (IMF), announced that he will step down in February 2000.

Michel Camdessus (photo: IMF website)

The announcement followed several weeks of hints in interviews that he was contemplating resigning. In his statement of resignation, Camdessus said that "we have advanced in many fields: we have just established a demanding but exciting work program, and the World Economic Outlook allows us to anticipate favorable trends for the world economy. So I see it as my duty now to suggest that you take advantage of these favorable circumstances to select my replacement, and to use these few months to help my successor become familiar with this superb but complex institution."

Recent controversies over the IMF's handling of the East Asian financial crises – which saw it take the lead in bailout packages totaling over $110 billion for South Korea, Indonesia, and Thailand – and over its policies in Russia had led many to speculate that Camdessus would relinquish his post once there was a lull in the pressures on the institution.

 Although he did not, of course, accept responsibility for the IMF's reign of destruction and terror through structural adjustment policies in over 80 countries around the world, Camdessus‚ resignation does satisfy one of the demands made in the anti-IMF campaign letter drafted in October in Taegu, South Korea and published elsewhere in this issue of Economic Justice News. The IMF‚s changes to its Enhanced Structural Adjustment Program (ESAF), including the change of its name to the Poverty Reduction & Growth Fund, represent an implicit acknowledgment of its failures in the South, though hardly a positive response to that recognition.

Camdessus has been an effective leader of the IMF. He has managed to keep money flowing to the institution from the world‚s taxpayers even as it stockpiles millions of dollars in accounts never likely to be used. His mixture of charm and arrogance has allowed him to remain impervious to the frequent charges that he and the institution he has led for 13 years are responsible for the preventable deaths of tens of thousands of people and the immiseration of hundreds of millions more. Camdessus has characterized IMF staffers, a great many of whom earn six-figure salaries tax-free, as "charity workers" because they labor for the benefit of the world's poor (by "stabilizing" economies) and could be making far more in the private sector. He will perhaps be best remembered, however, for his acknowledgment that structural adjustment policies may require that we "sacrifice a generation," and for his assertion that doing so would be worthwhile to realize the benefits of the neo-liberal macroeconomic model. His capacity for Macchiavellian calculation – and his arrogant charm – were perhaps most evident at last April's spring meetings of the World Bank and IMF, in his comments on calls for debt relief, when he managed to twist a seeming celebration of such calls into a call for more structural adjustment, an opportunity afforded him by the recognition that the Heavily Indebted Poor Countries (HIPC) Initiative mandates that countries receiving debt relief adhere to six more years of structural adjustment:

"There is and I am delighted to tell you this˜great interest now in the world, and widespread support, for more debt relief for the poorest countries. [∑] Should we [∑] try to have a deeper alleviation of the debt in the countries already identified in our list for debt relief˜23, more or less, at this very moment? Or should we utilize the resources in broadening the list of the countries which could benefit from it? My personal inclination, I tell you very frankly, would be for broadening the list. Having in mind that debt alleviation can be a powerful incentive to economic reform and economic progress, then the more countries going for economic reform and progress and benefiting from debt alleviation, the better for the global community. I insist on that. If we have learned one thing about debt relief, it is not so much that the amount of debt reduction matters – of course, it matters a lot. But what matters even more is the quality and duration of the economic effort that must support the debt relief and create change for the better. This, of course, carries a message about the way in which money should be spent on debt relief. It must be in a way that creates incentives for countries to continue to persevere with adjustment and reform. And we must be inventive for that. Debt relief must give reform added chances, and then you will achieve more for the poorest people in the world."

Activists in the South are likely to feel little sorrow upon Camdessus's departure. But they, and we, also must be asking how the next Managing Director will be selected and whether a different leader will make for a different institution.

Who will be the next IMF chief?

  Speculation over who will succeed Camdessus began even before his formal announcement. The post of IMF Managing Director has always been occupied by a Western European; in fact it has been generally accepted that, although there is no such rule, the post is reserved for a European, as the Presidency of the World Bank has customarily been reserved for a U.S. citizen. Candidates from both Germany and the U.K. – Caio Koch-Weser, the German Deputy Finance Minister; Kenneth Clarke, former UK Chancellor of the Exchequer (Finance Minister), and Gordon Brown, the current Chancellor of the Exchequer – had infiltrated their names into news reports as rumors of Camdessus‚ departure circulated. Further candidates from those countries put their names forward after Camdessus‚ announcement, including Andrew Crockett, the British head of the Bank for International Settlements in Bern, Switzerland; Mervyn King, the Deputy Governor of the Bank of England; and Horst Köhler, a German who heads the European Bank for Reconstruction and Development. Other Europeans mentioned were the head of Italy's Treasury, Mario Draghi, and the head of the Bank of France, Jean-Claude Trichet. The post, however, has been held by Frenchmen for 31 of the last 36 years, making Trichet‚s chances look remote.

  A surprisingly strong call for beginning to democratize the institution through this important selection process has come from the New York Times, the Financial Times and from leading economist and IMF critic Jeffrey Sachs of the Harvard Center for International Development. They and others have called for the process to consider people from around the world, and to do so in a more open way than is usually done for this position or the presidency of the World Bank.

  The Japanese government, the second-largest contributor to the IMF after the U.S., has sent out hints that the selection should not be restricted to European candidates, and has let it be known that it supports the aspirations of its former vice finance minister, Eisuke Sakakibara ("Mr. Yen"). Philippine President Joseph Estrada announced at a Manila summit of the Association of Southeast Asian Nations (ASEAN) that the group would support Sakakibara's candidacy.

Can there be an Open Process for Choosing the Successor?

  Sachs published an op-ed in the Financial Times on November 15 in which he attacked the assumption that a European would be chosen, saying that "the developing world - 85 per cent of the world‚s population and nearly 100 per cent of the receiving end of IMF policies - is expected to stand by and wait for the result. This is no way for a global institution that preaches transparency, good governance and democracy to function" – particularly when hundreds of millions, or even billions "often depend more on IMF leadership than on their own political leaders, so intrusive has the IMF become in the weak and vulnerable nations of the world." The IMF has been notorious for criticizing a lack of transparency or accountability in Southern governments while completely overlooking its own failings. Noting the recent blows the IMF has endured, Sachs adds "there is little chance of regaining global legitimacy if the developing countries have no role in the selection of a new managing director, including the real possibility of a successful candidate from a developing country."

  The process Sachs suggests is a much more open one than the back-room dealing that is expected to prevail. He would have the IMF Board call for nominations from around the world, then submit those to a panel of experts which would determine simply which among them was professionally qualified for the position. He suggests the candidates be required to make public their positions on issues such as debt and regulation of capital flows and to meet with civil society groups. The Board would then take a public vote, giving reasons for their decisions.

  Such a process is unlikely to occur, of course. But the fact that someone of Sachs‚ visibility suggested it in a public forum within a week of Camdessus's announcement gives us a valuable benchmark by which to measure the institution‚s performance in this process. As of mid-December, there has been little indication of how the IMF Board intends to proceed in making this decision.

Could a New Managing Director Mean a Less Dangerous IMF?

  How important is this decision? Would it make a difference to have an IMF Managing Director from the South? Would it make a difference to have someone with relatively liberal leanings like current UK Chancellor of the Exchequer Gordon Brown, who has on occasion been receptive to the demands of the Jubilee 2000 campaign? Or would anyone who occupies the position simply become the mouthpiece for the treachery that the IMF has always delivered to the South? And if that person comes from the South, would (s)he be a tool for legitimizing the destruction of structural adjustment?

  It might be important to look at the example of the World Bank, where James Wolfensohn took over the presidency in 1995 with the intention of reforming the institution, and where his views were known to be unpopular among upper management. His success in changing the Bank has been limited at best, and he has publicly commented on the institutional bureaucracy‚s "glass wall" that inhibits real change. Of course Wolfensohn himself was an investment banker, hardly someone with a fundamental disagreement with

the policies of structural adjustment. Likewise, it is probable that neither Brown nor any of the candidates from the South likely to be judged "qualified" would be inclined to challenge the orthodoxy of structural adjustment.

  One 50 Years Is Enough activist has suggested a campaign in support of Nobel laureate economist Amartya Sen. Sen, a native of India and a professor at Cambridge University, has done pioneering work on the cause of famines, and is one of the few well-known economists to look at the discipline from the perspective of the impoverished. Although it is unlikely that Professor Sen would want to take on the leadership of such an institution, it is probably only someone of his stature and integrity who could start to transform the IMF from the top. Failing a change of that magnitude in IMF leadership, the most promising strategy probably remains to deprive the IMF of support from its member countries and to challenge it with facts and mobilization "from below."

  As IMF staff often tell critics, they are just carrying out the wishes of their "shareholder" governments – a phrase used to refer to the dominant powers in the Fund, namely the G-7 countries. This is a powerful argument, for it is true that if the leaders of the U.S., Europe, and Japan wanted an end to structural adjustment, it would end immediately, and until they want it, it will almost certainly continue. This means that while we advocate change at the IMF, we must always keep pressure on the wealthy governments. And it means that neither the process for choosing the next Managing Director nor the individual chosen will be sufficient to change the policies and practices of the institution. But as we have always done, we keep looking for openings to amplify the voices of the people suffering under IMF policies heard, to make the case to the public, to the bureaucrats, and to government officials that a fundamental transformation is necessary. And the selection of a new head of the IMF is a key moment.