Archive for May, 2011

Kahn he Remain?

Sunday, May 22nd, 2011

Dominique Strauss-Kahn, Managing Director at the IMF, was considered by many to succeed French President Nicolas Sarkozy in next year’s presidential elections. Kahn enjoyed popular support at home as well as his seeming aura of invincibility as a sagacious leader of the IMF.

Though Kahn helped the global economy stay afloat during his tenure at the IMF, his own reputation is now reeling from the accusations of assault that have been leveled against him. With the 2011 G8/G20 Summit just weeks ahead, the French are finding themselves in a terrible public relations strait.

Few doubt that Kahn did a superb role as Managing Director of the Fund—even the Nobel-Prize winning economist Joseph Stiglitz, long known for his scathing criticism of the “Washington Consensus”—the now-notorious term coined by John Williamson in describing the Fund’s oft-ill-boding structural reform policies, has heaped praise for Strauss-Kahn’s recognition of the link between inequality and instability. Thanks to Strauss-Kahn, Stiglitz notes, the IMF was finally making headway—albeit slowly—towards reform for the better.

But whatever credibility and prestige Strauss-Kahn had amalgamated over the years has cracked due to the latest allegations of his misconduct. It doesn’t help for Strauss-Kahn that this is not the first time his ethical decision-making has been put under question.

While untimely for France, this may be a window of opportunity for under-represented nations at the IMF to rally for more “chairs and shares,” a term used to describe their egregious lack of representation at the Fund. The IMF has long maintained its custom of appointing a European as head of the Fund, and the United States remains the sole member-state who wields de facto veto power. Although Europe has ceded two seats of the Fund’s Executive Board to developing countries, real reform in governance has still not been made.

Ironically, perhaps Strauss-Kahn’s greatest reform lay in the public’s scrutiny of his alleged misconduct. Consciously or unconsciously, Strauss-Kahn has certainly triggered a serious look at who really deserves to be the chief of the IMF.