Karina Robinson reviews the main candidates for the top job at the IMF and finds that the front-runner is Rodrigo Rato, Spain’s former finance minister.
Had I been talking to the next head of the International Monetary Fund in the characterless offices of Spain’s Ministry of Economy in Madrid last November?
As The Banker went to press, Rodrigo Rato, Spain’s first-vice-president and finance minister until March 14, looked like the front-runner to take over from Horst Köhler, who was leaving his post as managing director of the IMF to run for the post of president of Germany.
Other top contenders were Jean Lemierre, president of the European Bank for Reconstruction and Development, Stanley Fischer, the old IMF hand who did not make it the last time, and UK chancellor Gordon Brown.
Looking for work
In Mr Rato’s favour are his nationality – the IMF head is historically European – and his current state of joblessness. He rather unexpectedly found himself out a job in March when the Popular Party was ousted from power after a surprise general election victory for the Socialist Party.
He has also rather cleverly managed to get a doctorate in economics from Madrid’s Complutense University last year, a sine qua non for the post – at least when it comes to being respected by IMF underlings.
When at his office in the finance ministry I suggested that he should be the next head of the IMF, Mr Rato laughed and said he hadn’t thought of it. However, he later went on to say: “I need a more manageable thing. The IMF job is one that is impossible to do well.’’
Mr Lemierre, on the other hand, who has done a good job at the EBRD, would obviously relish the role. In 2002 I trailed him around Romania. He was given a guided tour of former dictator Nicolae Ceausescu’s mega-kitsch marble palace. His normally affable look began to cloud over. A frown appeared. He was getting very, very cross. How could the EBRD hold its annual meeting in one of the largest buildings in the world and one built on the back of a downtrodden nation?
He was probably envisaging the press having a field day drawing parallels between the fuss caused by the expense of the bank’s marble headquarters in London under the first, ostentatious presidency of Jacques Attali and the venue for the 2002 meetings.
In contrast, later that day, as part of his trip to Bucharest, I witnessed what Mr Lemierre believes is the bank’s raison d’ętre.
“This is real life,’’ he said happily, as we toured an EBRD-financed bathing suit factory employing 15 dour-faced Romanian women sitting at sewing machines and paying scant attention to the assembled dignitaries, press and hangers-on.
A product of the usual French élite system (Ecole Nationale d’Admin-istration and later head of the treasury), he lacks the arrogance that goes with it. He actually listens – as was obvious from a debriefing session with colleagues at the Athénée Palace Hilton in Bucharest after a long day of meetings.
His wife, a French civil servant who works for the French embassy in London, and two children under the age of seven should not have a problem following him to Washington DC.
His nationality, though, will count against him. Firstly, the French have held the top role at the IMF for too many years. Secondly, in the general carve-up of international top posts that often governs these things, they already hold the presidency of the European Central Bank in the shape of Jean Claude Trichet.
Nationality woes
Stanley Fischer’s candidacy is also bedevilled by his nationality. Raised in Zambia, the IMF’s former deputy managing director holds an American passport. Ironically, the document that so many aspire to will probably stop his becoming head of the organisation.
The absurdity of the whole system of doling out jobs on the basis of nationality is most evident in James Wolfenshon. The Australian-born head of the World Bank would not have the post had he not become an American citizen beforehand. Still, perhaps common sense will prevail and Mr Fischer’s candidacy can be considered on its own merits.
He is currently president of Citigroup International but his love of development and a missionary zeal born of his upbringing in Africa have not left him.
His latest job, in fact, has given him an added perspective as he at least knows first hand what the private sector is interested in. As he himself says in The Banker (see page 132) when speaking about what stops investment in Africa:
“You’re not going to get investors in the main parts of the economy if you don’t have some assurance of stability of the overall framework for foreign investors. I knew that as a theoretical matter when I worked at the IMF and when I was at MIT. I now discuss it on a daily basis inside Citigroup.’’
Missing key support
UK chancellor Gordon Brown will be looking for an elegant exit from UK politics, as the possibility of him succeeding prime minister Tony Blair is looking ever less likely. However much Mr Blair’s popularity has eroded, Mr Brown lacks his boss’s wide-ranging appeal. His reputation among the public is of economic competence but also as the purveyor of “stealth taxes’’.
He has been on the IMF’s board of governors as the UK’s representative, so he will be very aware of the many pressures the managing director has to contend with. He is also interested in developing country issues and has come up with a number of initiatives on this front.
However, his tendency to lecture his EU colleagues on the dynamism of the UK economy and their short-comings has not made him popular.
Their support is crucial. As The Banker went to press, Mr Rato looked most likely to garner their support. Along with the former Popular Party government, he is credited with transforming the Spanish economy. It now boasts better economic ratios on a number of fronts (including GDP growth and government debt to GDP) than its much larger European neighbours, France and Germany.
Serious contender
A former Latin America head of state who has spent time with him says: “He has done a splendid job. The statistics for Spain don’t lie.’’ He also notes Mr Rato’s very serious appearance, but says: “He is very open and cordial in private.’’
He certainly is that, but then he probably has a weakness for journalists, as his current partner is one. Separated from his wife, he has three children ranging in age from six to 16. This may prevent him taking the job, as it would be difficult for him to see them.
Although 55-year old Mr Rato says there are important challenges for Spain in the next decade, it is doubtful that he will stay to see them through in any capacity. Rumours that he might be parachuted in to head Spanish banking behemoth BBVA (following on from Francisco Rodriguez, the current incumbent, who he placed in that role) look unlikely, as any chairman needs to have cordial relations with the government.
He admits he is a rotten golf player. Presumably the first, aborted venue for our meeting – the Moraleja Golf Club – was where he was practising his swing, as he says his hope is to have “a better golf handicap’’. Whether he takes the IMF job or another international job – perhaps something at the European Commission – the fact is that “Espana se le ha quedado pequena” (or, Spain has become too small for him).
Any one of the above candidates would make an excellent choice for the organisation. One of the toughest jobs in international finance demands a top contender.
