From the very inception of the Bretton Woods duo — the International Bank for Reconstruction and Development (IBRD), or World Bank, for short, and the International Monetary Fund (IMF) — more than 60 years ago, the Western countries had managed to appropriate for themselves the prerogative and prescriptive right to appoint their nationals as the heads of those institutions. More specifically, the post of the Managing Director of the IMF is taken to be earmarked for a European, while that of the President of the World Bank is invariably reserved for an American. The origins of the practice can be traced to the time when the developed countries had dominated the world order with the power equations and financial clout in their favour.

These countries saw to it that their shareholdings (quotas), determining their voting rights, were also fixed so as to give them an unassailable weightage in the process of decision-making by the two institutions. The overwhelming share of the quotas are being held by developed countries with the US having 17 per cent of the total; Japan, Germany, France and the UK 22 per cent; and Canada, the Netherlands, Italy and Belgium 11 per cent in the IMF. They have thus effectively marginalised the developing countries, each having a minuscule share.

Iniquitous custom

In the years since, and especially with the formerly economically and financially backward countries stealing a march over the developed countries in respect of technology, trade, income and growth, the original arrangement has become totally indefensible.

So has the practice of Western countries keeping within their iron grip the top slots of the IBRD and the IMF, ignoring the sea-change that has occurred in the world economic order.

Intriguingly, developing countries are yet to organise themselves in putting an end to the continued perpetration of an iniquitous custom. Their protest has so far been muted, confined to bringing out occasional papers and interviews by their spokespersons, calling for an open process of selection of the heads of the IBRD and the IMF based on merit.

Actually, NGOs, think-tanks and the media in Western countries have been forthright in their criticism of the prevailing custom. A White Paper brought out in 2000 in Britain on globalisation demanded that the British Government should commit itself to an open, merit-based and competitive process of appointment to the top positions of international institutions, which would be open to all nationalities, and subject to a clear and transparent set of selection criteria.

In an editorial headlined “The IMF should not be a European fief: Time to end the carve-up of top Fund and World Bank jobs”, the Financial Times of London bluntly said that “It is time to end the 55-year-old traditional horse-trading that allots the head of the IMF to a European and the World Bank to an American and to institute a global executive search for candidates based on merit, rather than nationality.”

Strauss-Kahn Shocker

The New York Times was even more hard-hitting, characterising the perpetuation of the custom as “offensive” and wanting the jobs opened up to highly qualified applicants worldwide. It even blamed “the deeply flawed selection process” for “the Paul Wolfowitz debacle” at the World Bank some years ago. In my opinion, it is equally to be blamed for the Dominique Strauss-Kahn shocker as well.

India should take the lead in mounting a powerful campaign to ensure that the selection of the MD of the IMF to succeed Mr Strauss-Kahn is made on the principle of the best person for the job, by putting up persons of undisputed credentials from developing countries.

It is in a pre-eminent position to do so, not only because of its stature but also because in respect of its shareholdings and voting rights (2.85 per cent) it is on a par with Canada, China, Italy, Russian Federation and Saudi Arabia, and well ahead of Australia, Belgium, Denmark, Ireland, the Netherlands, Norway, Spain, Sweden and Switzerland.

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