Leadership of the Bretton Woods' institutions should stop being the preserve of Anglo-Saxon men and open itself to a field of qualified candidates from all nationalities, say policy-makers from developing countries.
"The selection of the IMF's managing director and World Bank's president should be based on an open and transparent process to attract the best candidates, regardless of nationality," Nor Mohamed Yakcop, Malaysia's second finance minister told Emerging Markets. Obviously, these candidates must be qualified, "competent and understand the goals of the institutions," he adds.
Sensitivities about how leaders at the Bretton Woods' institutions are selected will flare again next year when the second term of World Bank President James Wolfensohn expires. Wolfensohn still demurs on whether or not he will run for a third term. Questions about the leadership selection process of the Bank and the Fund have already been aired following Horst Kohler's departure as managing director of the IMF to become president of Germany. Developing nations and experts in international financial issues demanded at that time that the tradition of naming a European to direct the IMF and an American to head the World Bank be left behind.
Convention was preserved with the selection of Rodrigo Rato, a Spaniard, to lead the Fund. However, in an unprecedented move, a second candidate was considered - Mohamed El-Erian, an Egyptian-French national who was formerly an IMF deputy director. El-Erian cites an IMF paper from 2001 saying the managing director selection procedure should be transparent, inclusive and comprehensive. "My involvement [as a candidate for the job] was part of establishing a process," El-Erian tells Emerging Markets.
In order for the leadership selection to be opened up, executive directors from the member nations must nominate candidates. Pressure for opening the field of candidates and expanding participation of developing nations in the institutions is mounting - and leaders from a wide range of emerging market countries stand prepared to advance this cause.
"Having people in leadership positions from diverse backgrounds can enrich the understanding of developing country challenges, bringing more innovative ideas to solve the many problems," says Trevor Manuel, South African finance minister in an interview with Emerging Markets.
The central bank governor of India, YV Reddy also supports a more open selection process, especially because the Bretton Woods institutions are multilateral. "This time [for the IMF] there was a significant change in the process, candidates from several non-traditional countries were considered, and we hope that this will be the way forward," he told Emerging Markets.
Not all member nations agree, however, that candidates should be drawn from all countries. Ivan Miklos, finance minister of Slovakia, believes that the leadership should not be opened up to all nationalities "if you want to have these two institutions working as actively and effectively as they have to date." In his view, G7 dominance of the institutions "is a necessary reflection of the real influence of these developed economies, their contributions and their vote. I am not saying that I am happy with the status quo, but I respect the reality."
Despite growing disquiet with the closed method of selecting Bretton Woods leaders, the existing system is likely to remain in place for some time. "Privately, no insiders expect this arrangement to go away soon," says Moises Naim, a former Venezuelan trade minister and former IMF executive director. But the system remains "indefensible" in his view. "The arrangement is blatantly undemocratic, reeks of colonialism and openly discriminates against some of the world's best candidates simply because they do not have the 'correct' nationality," he says.