‘Obsolete unwritten convention’ – this is how the executive directors of the BRICS nations at the International Monetary Fund (IMF) board formulated the selection process of the head of one of the premier international bodies.The current crisis has particularly emerged after the resignation of Dominique Strauss-Kahn as its head. In a joint statement issued on 25 May 2011, the executive directors of the five countries Brazil, Russia, India, China and South Africa, minced no words in showing disdain at the current conventional method adopted for selecting a person from Europe to be the Managing Director of the global financial body. The convention is that both the Bretton Woods structures – the IMF and the World Bank – created in the 1944 are headed by the leaders from the West. While the World Bank is headed by the US, the IMF is headed by a person from Europe.  Since its inception, the IMF has been headed by ten managing directors from Europe.

The rise of BRIC in the post-cold war era has shifted the global power of balance from west to east, envisaged in a Goldman Sachs report of 1993 that predicted eventually the BRIC nations will surpass the developed countries of the West within a span three decades or so. The joining of South Africa to the grouping provided further ballast to the multilateral and global nature of this body. The emergence of BRIC as a formal body in the Russian city of Yekaterinburg in 2008 gave a thrust to this emerging trend in global politics, as the emerging body was established to promote a fair and egalitarian world order. BRIC united ‘the major economic growth centers with more than half of the world’s population’ and marked a major turning point in a world undergoing profound change with broken paradigms and failing multilateral institutions as the financial crisis of the recent past revealed. The growing sentiment was well reflected by the Russian President, Dmitry Medvedev, who on the occasion of the 2009 BRIC summit, stated, “All the decisions important for the international community — economic, security and political — should be taken on fairer basis…this fairness is the key word for our interaction. BRIC should create conditions for a fairer world order.” The summit further stressed that the leadership of the global bodies particularly the IMF and the World Bank “should be appointed through an open, transparent and merit-based selection process,” rather than on the basis of convention followed more than six decades.

   The recent crisis that emerged after the departure of Strauss-Kahn, a French national, on the charges of sexual assault, has galvanized the emerging nations to demand fairer selection of the head on the basis of competence, rather than on the basis of nationality. While the incumbent French Finance Minister, Christine Lagarde has vigorously started her campaign to fill up the post for the top job at IMF, the BRICS nations have expressed their reservation. In the recent G-20 (of which France currently holds the chairmanship) meeting at Hanoi, Lagarde played an active role and hoped to impress upon the members for her bid for the top job at IMF. On the other hand, the executive directors of these nations at IMF have argued, “If the Fund (IMF) is to have credibility and legitimacy, its MD should be selected after broad consultation. It should result in the most competent person being appointed as Managing Director, regardless of his or her nationality.” They urged for “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe.” Prime Minister Manmohan Singh of India called upon the developing countries ‘to fight along together’ to bring about this change. While admitting the complexity of international politics, in which “those who wield power do not wish to yield ground so early,” however, he asserts that it becomes difficult to undermine the changing realities of the world order in which BRICS has emerged stronger. The current focus, as these countries emphasized, should be to select irrespective of nationality a person who is committed to change and to reform the institution to adapt to the new realities of the world economy. 

An argument is making round that a European will do justice to the job at this particular juncture, when some of the countries in Europe are passing through debt problem. As German Ambassador to India, Thomas Matussek argued, “we also believe that it would be good if the head of the IMF came from an emerging economy but for the time being we believe as Europeans that one of the major task of the IMF is to help avert the danger emanating from the European state debt crisis,” and for which it is necessary to have a European as head of the multilateral financial agency. The global financial system is linked internationally and as the recent financial crisis displayed that it was more due to imprudent policies and actions in the West. In fact, the logic of global financial developments shows that it is not imperative that one must be a European to know the European debt problem. Lagarde’s colleague, French Defence Minister, Gerard Longuet who is on a two-day visit to India from 27 May 2011 argued, “It is not important that she is European but that she is competent.” The argument can also be made otherwise that there are many competent persons from emerging economies who can lead the financial body. There is another argument in circulation, which appears facile, that there is no consensus among emerging economies on a likely successor to Strauss-Kahn, who can ensure global monetary stability, low inflation and free flow of international trade.

With support from the US and Europe, Christine Lagarde will likely succeed to adorn the post of MD at IMF. But the crucial issue of representation of emerging economies and fair play will remain, or be more prominent in coming days. In fact the recent financial crisis has underscored the importance of reforming international financial institutions to reflect the emerging realities, rather than to perpetuate the old conventional system.