Following Dominique Strauss-Kahn’s resignation, the International Monetary Fund needs a new head. There is much talk of the candidate’s nationality but much less about another vital issue: that the fund’s next leader should not be an active politician.
The case for a politician, especially a European politician, at first seems strong. Many of the fund’s largest programmes are in Europe. The new head must enjoy the confidence of European leaders if they are to have hope of forging consensus among them. He or she also needs to understand the nuances of European politics, to avoid pressing for genuinely infeasible actions. The most able candidates may even want the job as a path to political redemption, or a stepping stone towards higher office. Yet these are precisely the reasons why someone whose primary skill is political would be an unwise choice. The fund is designed to push tough policies to straighten out countries that have mismanaged finances, not win a popularity contest.
All this is not to say that the next IMF managing director should be someone without political antennas. But history suggests that charismatic technocrats, supported by strong economists, make the best leaders at the fund. Happily, there are many fine such technocrats around the world who have done an excellent job managing central banks or government ministries. For example Brazil’s Arminio Fraga, South Africa’s Trevor Manuel, India’s Montek Ahluwalia or Singapore’s Tharman Shanmugaratnam would all make fine candidates.
- Raghuram Rajan (former IMF chief economist)
The case for a politician, especially a European politician, at first seems strong. Many of the fund’s largest programmes are in Europe. The new head must enjoy the confidence of European leaders if they are to have hope of forging consensus among them. He or she also needs to understand the nuances of European politics, to avoid pressing for genuinely infeasible actions. The most able candidates may even want the job as a path to political redemption, or a stepping stone towards higher office. Yet these are precisely the reasons why someone whose primary skill is political would be an unwise choice. The fund is designed to push tough policies to straighten out countries that have mismanaged finances, not win a popularity contest.
All this is not to say that the next IMF managing director should be someone without political antennas. But history suggests that charismatic technocrats, supported by strong economists, make the best leaders at the fund. Happily, there are many fine such technocrats around the world who have done an excellent job managing central banks or government ministries. For example Brazil’s Arminio Fraga, South Africa’s Trevor Manuel, India’s Montek Ahluwalia or Singapore’s Tharman Shanmugaratnam would all make fine candidates.
- Raghuram Rajan (former IMF chief economist)
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