With Dominique Strauss-Kahn, known as DSK, undertaking scientific and forensic tests to
determine if he sexually assaulted a hotel maid, the International Monetary Fund will be run by its No. 2 official, John Lipsky. A former banker, Lipsky was appointed “first” deputy
managing director in 2006, and was expected to step down later in the year.
But the change at the top will bring the former Permanent Secretary of the Department for International Development, Minouche Shafik, into the limelight. She recently left London to take up a post as deputy managing director at the IMF; she will now take Strauss-Kahn’s place at a meeting with Europe’s finance ministers in Brussels today to consider further aid to Greece and work through details of an IMF-backed bailout of Portugal.
Meanwhile, the task of picking a new IMF head will likely gather pace. By tradition, the post goes to a European when an American heads the World Bank. German central bank boss Axel Weber, who has just stepped down, may be an obvious choice – though Germany held the IMF post before DSK. If Nicolas Sarkozy insists on keeping a Frenchman on the job, perhaps outgoing ECB chairman Jean-Claude Trichet might be ideal. His term expires in October, though it may not be smart to move him out of the ECB right now. Another French option might be finance minister, Christine Lagarde. But she is one of France’s most popular right-wing politicians, probably crucial to President Sarkozy’s bid for re-election.
In addition, both BRIC and developing countries have complained about this unofficial division of the spoils between the US and Europe. Brazilian Finance Minister Guido Mantega told the IMF’s board in April: “It is high time that we make a political breakthrough in departing from the out-dated practice.” Prime Minister David Cameron has himself previously said an Indian or Chinese could be the next IMF chief. One such BRIC candidate could be former Turkish finance minister Kemal Dervis, whose name has been circulated in recent months.
But could Dr Shafik, who holds US, UK and Egyptian nationality, be the ideal permanent replacement, someone who can represent the old powers and the emerging ones? Having blocked Gordon Brown’s bid to run the IMF earlier in the year, it would be a nice coup for David Cameron to land a Briton in the top job. And her appointment would make her the first female head of the institution.
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