Seanad Éireann debate -
Thursday, 2 Mar 2000

Vol. 162 No. 12

Adjournment Matters. - International Monetary Fund.

Mr. Quinn

I welcome the Minister of State. This motion has nothing to do with personalities, but principles. I have no interest in who becomes the next managing director of the International Monetary Fund but I am concerned about how the appointment will be made and the part Ireland will play in it.

There is currently a vacancy for the top job of managing director of the IMF which was held by a Frenchman, Monsieur Camdessus, who retired recently. It is one of the most important jobs in the world and affects the economies of both rich and poor countries. As such it is not too extreme or unreasonable to ask that it be awarded on merit but in the 50 years since the formation of the IMF and its sister organisation, the World Bank, there has been a cosy little arrangement between the United States and Europe to divvy up the top jobs between them. The top job in one will be filled by an American and in the other by a European. Everyone in the Euro-American cartel has therefore decided that the next managing director of the IMF will be a European.

Being part of Europe we have a small say in this but I am sorry to say that we are doing precisely the wrong thing. What we should be saying is that the day of cosy arrangements such as these is gone. Such arrangements are neo-colonistic and imperialistic in nature and have no place in the world we wish to create in the 21st century. The Americans and the Europeans have been carving up the top jobs in bodies such as the IMF and the World Bank between them. This is not on any more. So far as the IMF and the World Bank are concerned, donor and receiving countries are part of the one world. That is not to say however that the head of the IMF should not be a European or an American but he or she should only get the job on merit, not because they are a European or an American. More to the point, someone should not be disqualified from the job because they are not of a particular nationality.

We can and should say this because this is a republic which does not have a colonial past. We should be leading our European partners on an issue such as this instead of rushing in to support a corrupt and outmoded principle of selection. We should be totally against the principle of jobs for the boys and totally in favour of appointing on merit alone. There is a need to appoint on merit here, in Europe and in world organisations. To collude is institutionalised corruption in which Ireland should have no hand, act or part.

For his own reasons the German Chancellor decided to use this appointment as a way of flexing his muscles against the Americans. The French and the British seem to be fairly cute because they were a little cool and could see what was going on. They ranged from being cool to lukewarm, even when their arms were twisted at the ECOFIN Council earlier this week.

Mr. Cullen

They had their own agendas.

Mr. Quinn

Perhaps they had but Ireland did not need to have its little arm twisted. What did we do? We supported the German candidate from the start, although it had been clear for weeks that it would not be an easy run. It was clear to the dogs in the street that the particular candidate would not be accepted by the Americans and that there would be a row about it. No doubt we did this to curry favour with the Germans and, if so, I condemn it.

This is not the way international appointments should be made. We should adopt a principled position. Our driving principle should always be "appoint on merit". I have nothing against the unfortunate and, according to the newspapers this morning, doomed German candidate but Ireland's support was not based on a considered judgment that he was the best person in the world for the job, rather it was based on a narrow, unprincipled mistaken view of Ireland's self-interest.

Matters of this kind are far from trivial. A good example would be the collapse of the Seattle trade talks. In the case of the WTO a row continued for four crucial months as to who the new boss should be. Eventually an agreement was reached whereby the post was twinned. This bickering among the international community caused havoc at the WTO at which I am certain there will be problems. It did not help. Quality leadership at the IMF is critically important to the world economy and especially the developing world in which we claim to be so interested.

We can, should and must rise above the petty self-interested international bickering that seems to surround appointments such as these. Surely we are in a position to lead our colleagues and partners to a better way of doing things. That should be Ireland's role in matters such as this. I was impressed by a quote I read in today's edition of the New York Times. It reads:

If there is a single lesson from the search it is that the current process whereby interested countries nominate their own citizens for crucial posts and then use their diplomatic influence to support them needs fixing.

I wish it was Ireland saying this but we are not. What we have been doing is jumping in and supporting the old outmoded system of selection which is based not on selecting the best person for the job but on divvying up the jobs for the different nationalities.

Minister of State at the Department of Finance (Mr. Cullen)

I agree with the Senator that in an institution as important as the IMF it is essential that we have the best person available as managing director. There are various ways in which this can be accomplished. Where there have been traditional understandings between shareholders regarding the post of managing director, where the environment in which the institution is operating is rapidly changing, where the institution is called on to make major changes and where the post has had a single occupant for the last 14 years, there will inevitably be some uncertainty as to how the process of choosing a successor is to be managed.

Before giving some background on the current situation I wish to clarify that it is not accurate to say that there has been a failed attempt by the European Union to impose a candidate for the post of managing director of the IMF nor it is true that the candidate put forward by the European Union is unacceptable to the international community. The tradition has been that the position has been filled by a European. Since the establishment of the Bretton Woods institutions there has been an understanding that the president of the World Bank would be an American and the managing director of the IMF would come from Europe. This is not surprising when one considers that America and Europe constituted the major shareholders in the institutions, and between them they still account for about half the shareholding.

Following the announcement by the previous managing director, Mr. Camdessus, of his intention to retire, Germany proposed Mr. Caio Koch-Weser to be an agreed EU candidate. At last Monday's ECOFIN meeting, Mr. Koch-Weser was endorsed as an agreed EU candidate and the next stage will be for soundings to be taken at the IMF board to determine the extent of his support. There are currently two other candidates. The US has declared its opposition to Mr. Koch-Weser, but it has indicated its readiness to support a European candidate more to its liking, should one be presented.

There is a wide spectrum of views on the future role of the IMF. These vary from a very restricted role in crisis resolution, through crisis prevention, to a wider view where the IMF is increasingly sensitised to the needs of the developing world. Ireland has consistently argued that the IMF should be more responsive to these needs and that it should work more closely with the World Bank and other international financial institutions to this end.

Mr. Koch-Weser has experience over a wide range of areas which are current not only in the context of the World Bank but also the IMF and the international economic and financial scene generally. He has proven ability to effectively lead and manage both national and international institutions.

I suppose the question is what is the current position. This is the start of a process, and the tradition and requirement of the institution are that the successful candidate should emerge by consensus so that he or she may have the full support of the membership in the difficult and challenging task facing the institution.

There is no reason Europe should disqualify itself from presenting a candidate, providing that candidate is suitably qualified. It is up to others to agree or propose alternatives. The important thing is the final result and that we get a managing director who will have the backing of all the stakeholders. That is what we will work towards and I hope we will not have to wait much longer for the appointment of a managing director for the fund.

The motion asks us to give leadership towards a situation where nominations for such posts, more generally, are made on merit and not on the national or regional origin of the candidate. As I said at the outset, I support having the best person for the job. Within that guiding principle, it is inevitable that, in the event, some regard will inevitably be had to regional or national backgrounds in the interest of a geographic spread of responsibility, particularly where the institution concerned is composed of member states and regional groupings. There will be subjective views of what is relevant experience, and it will be difficult to consider such posts in isolation from one another. This is the reality. Having said that, I welcome the emergence and increasing importance of new groupings, such as in the developing world, whose views are increasingly heard and heeded and who are also significant stakeholders in the international institutions.

Mr. Quinn

I thank the Minister of State, Deputy Cullen, for his reply. I understand the point he is making. I recognise that, as he stated, these appointments are usually reached by consensus, but it does not suit a candidate to be appointed on the basis of a vote.

There is a need to take a different attitude rather than assuming that this is a prize to be won by one country rather than another. If two Americans are the best people for the two top jobs, what harm is there in their being appointed? It was known for months that this man was unlikely to be acceptable and, therefore, it seemed wrong to automatically support his candidacy.

The Seanad adjourned at 4.5 p.m. until 2.30 p.m. on Wednesday, 8 March 2000.