France faces losing grip on IMF ‘fiefdom’

Date: 18/11/1999

By Tim Jones

ITALY and Germany's treasury chiefs are emerging as the EU's leading candidates to succeed Frenchman Michel Camdessus as head of the International Monetary Fund in the absence of a big-hitting French candidate, according to senior monetary officials.

If Germany's Caio Koch-Weser or Italy's Mario Draghi clinch the job as the world's financial police chief, it would mark the loss of yet another French fiefdom.

However, officials do not expect Paris to surrender a post which has been held for the past 21 years by former French central bank governors without a fight.

The IMF succession, which is likely to be discussed when EU finance ministers next meet on 29 November and two weeks later at the Helsinki summit, has become muddled because current French national bank chief Jean-Claude Trichet is due to take over as president of the European Central Bank in three years time.

Officials believe the French may instead nominate ECB Vice-President Christian Noyer or the highly-respected Bank of France deputy governor Hervé Hannoun for the IMF post.

Hannoun's strength is that he has a long history of advising Socialists - Prime Ministers Pierre Mauroy and Pierre Bérégovoy and President François Mitterrand - on economic policy, and seven years experience as a famously inflation-dousing deputy governor.

However, neither Noyer nor Hannoun has the Washington exposure of Koch-Weser or Draghi. "It is increasingly important that this next IMF managing director is sellable to the Americans because Congress is very unhappy about a lot of the programmes carried out under Camdessus," said a former Washington-based official. Republican Congressmen believe the IMF's bail-outs in Asia and Russia have led to irresponsible financial practices in those countries.

The official added that new US Treasury Secretary Lawrence Summers would prefer a European candidate with extensive experience within the IMF or World Bank, preferably Koch-Weser or the serving British head of the Bank for International Settlements Andrew Crockett.

Crockett's cause has, however, been weakened by the decision to appoint former British Defence Minister George Robertson as secretary-general of NATO.

The Germans are under-represented at the head of international agencies, and Koch-Weser's candidacy is helped by the 25 years he spent at the World Bank.

Draghi's case is undermined by the presence of countryman Romano Prodi as president of the European Commission. But he too boasts a Washington background, impeccable English, and eight years as his country's top representative to the Group of Seven.

Possible dark-horse candidates include former IMF interim committee chairmen and ex-finance ministers of Spain and Belgium Carlos Solchaga and Philippe Maystadt.

Italy and Germany's treasury chiefs are emerging as the EU's leading candidates to succeed Frenchman Michel Camdessus as head of the International Monetary Fund in the absence of a big-hitting French candidate, according to senior monetary officials.