IMF critics denounce selection of Rato as new chief

WASHINGTON, DC - May 4 2004 - The 50 Years Is Enough
Network, a coalition of over 200 U.S. organizations dedicated to the fundamental transformation of the International Monetary Fund (IMF) and the World Bank, issued the following statement today in response to the IMF board’s expected naming of Rodrigo Rato as the institution’s new Managing Director:

Two months ago, when Horst Koehler resigned as head of the
IMF, the institution was presented with an opportunity to
demonstrate that it was serious about becoming
transparent, accountable, and open. With the culmination
of that process today, the IMF has failed on all counts.

Just as in the case of every previous Managing Director,
Rodrigo Rato is from Western Europe, and was chosen
through an opaque series of back-room negotiations among
that region’s IMF shareholder governments. Only a handful
of European officials were so bold as to defend the custom
of reserving the position for someone from their region,
but none took any tangible steps to change it. Dozens of
respected observers called for an opening of the process.
Koehler himself in the last few days has called for a
restructuring of the IMF. A large proportion of IMF staff
endorsed a statement calling for an open process.
Guideline for the selection process formulated by a joint
IMF/World Bank committee after objections were raised to
the manner in which Koehler was nominated were largely
ignored on the grounds that the board never officially
adopted them.

Indeed, we can only address today’s board meeting in
generalities, since neither the public nor the media will
be allowed to learn what was said or what positions
individual board members took - not because of the
sensitivity of the topic, but because that is the rule for
all IMF board meetings, where all policy decisions are
made and loans approved.

It is ironic that, according to the Financial Times,
reports from within the board suggest that the most
significant concern about Rato’s candidacy was his
contention that the IMF is more a "political" than a
technocratic institution. This obvious fact has long been
denied by the IMF in its quest to appear neutral and
scientifically objective. Surely the manner of Rato’s
selection is the best proof of his observation: hardly a
nod to any process designed to find the best candidate,
just the whim of the region with one-third of the votes at
the board.

Some at the IMF will point to the nomination of Mohammed
El-Erian, from Egypt, and his official interview with the
board as a sign of increased openness. The usefulness of
the precedent set, however, was put in perspective by an
IMF executive director quoted by the Financial Times: "It
was not a total success in that the decision as to who is
going to get the job has already been made."

Europe’s collective domination of the votes at the IMF was
augmented by the support of the United States government,
the largest single shareholder. Once Europe settled on
Rato as its candidate, the U.S. signalled its approval -
hardly a surprise, since it will want similar cooperation
when it comes time to exercise its customary prerogative
to unilaterally name the President of the World Bank next
year.

The reprise of the closed selection process for Managing
Director confirms our view of the IMF: it is a
multilateral institution in which control is tightly held
by a small number of governments, none of which are IMF
clients. The programs mandated by the IMF benefit
business and investor interests in that same small groups
of countries, but have done inestimable harm to literally
billions of people in the rest of the world over the last
25 years. No Managing Director chosen by the IMF board
would be likely to change the direction of the
institution. What is striking is how careful the reigning
powers are to make sure that their control remains
absolute. Today’s appointment of Rodrigo Rato is sad
confirmation that the IMF has no intention of becoming
more open, accountable, or transparent - least of all to
the people who suffer under its policies.

As the IMF marks its 60th anniversary, it is clear that
real change will not happen through internal processes,
but will require political pressure from people around the
world. The 50 Years Is Enough Network, together with its
partners and allies around the world, will redouble its
efforts to ensure that such pressure is applied.