HONG KONG — On Feb. 26, International Monetary Fund managing director Dominique Strauss-Kahn put forward a bold-sketch map for what he called “an IMF for the 21st century,” but in the very same week he and two key members of the fund, China and Japan, flunked the most important test for the future of the IMF — good and open governance.

At the start of that week, Takatoshi Kato, a former vice minister of finance for international affairs of Japan, retired as IMF deputy managing director, to be succeeded this month by Naoyuki Shinohara, a former vice minister of finance for international affairs of Japan, in what was a clear and blatant case of a job for the “old boys” of Japan’s Finance Ministry. Kato had taken over in 2004 from a former top Japanese finance official.

Then on Feb. 24, Strauss-Kahn announced that he was appointing Zhu Min, deputy governor of the People’s Bank of China, as his special adviser.

Both appointments fly in the face of the promises of the IMF and the international community for a more open system based broadly on a competitive process for the leading positions in the top international financial institution.

Simon Johnson, a former chief economist at the IMF and now an economics professor at the Massachusetts Institute of Technology, said of the IMF: “At the first opportunity, they blew it.”

He added that “In April the Group of 20 had promised that the management positions, which includes the top dog and the second tier dogs, should all be open to a competitive process.”

There are three deputy managing directors (MD) under Strauss-Kahn. The senior deputy MD, currently John Lipsky, has always been an American. One of the junior deputies has been a Japanese since 1997 while the other is someone from a developing country, currently Brazil’s Murilo Portugal.

The second-tier jobs are crucial to the way the IMF works and to its reform. If there is no reform at the second level, what chance is there of getting reform at the top? The crucial questions are who runs the fund — which means the managing director and his deputies and leading advisers, and the shareholdings, since the IMF is owned by its member governments.

Ever since the IMF was created more than 60 years ago, its MD has been a European in a cozy postwar deal in which Europeans got the top job at the IMF and Washington chose the president of the World Bank. For half of the time the IMF managing director has been a Frenchman.

The United States alone has veto power in the IMF, with 16.77 percent of the votes, more than sufficient to block any important issue on which an 85 percent super-majority is required. No other country comes close. Japan is second with 6.02 percent and Germany third with 5.88 percent, followed by France and the United Kingdom with 4.86 percent each. China, thanks to recent boosts in its shareholding, holds 3.66 percent. India is far down with 1.89 percent, below Italy (3.2 percent) and even below the Netherlands (2.34) and Belgium (2.09).

The leading countries, including China and Saudi Arabia, but not India, have their own executive directors among the 24 Washington-based board members who oversee the fund’s operations. Other groups of countries share an executive director.

Appointments of Shinohara and Zhu are disappointing not because of any problems of the qualities of the two men but because they demonstrate that national governments continue to use the IMF as a political football.

Strauss-Kahn should appreciate this more than anyone since France’s President Nicolas Sarkozy backed him all the way to Washington because he did not want Strauss-Kahn around as a powerful political rival. Now that Strauss-Kahn has made his reputation in Washington and internationally, Sarkozy has been careful to keep the IMF out of attempts to aid Greece because he does not want Strauss-Kahn to have a triumph to use against him at France’s next presidential election in 2012.

It may be naive to hope that Strauss-Kahn would prefer to run the world’s top international financial body to running for president of a country within the European Union. After all, in Washington he is head of a few thousand bureaucrats, whereas in France he would have a country of 62 million people and a whole army of colorful flunkies sounding fanfares at his arrival — “and the food’s better in France,” say IMF officials.

Nevertheless, if the IMF is to be the efficient and watchful watchdog of the financial system, it has to be professional and international without being constantly subject to national political games. The Japanese deputy managing directors have contributed constructively across a wide range of international issues — but that does not vitiate the argument that the best person should be chosen, not the best retiree for whom Japan wants to find a job.

(It is ironic that Prime Minister Yukio Hatoyama has vowed to clamp down on amakudari at home, but permitted it abroad, though he would probably claim that the decision on Shinohara’s appointment was cleared when the Liberal Democratic Party was in power.)

The other essential is that the deputy managing director must become an IMF man, not his country’s representative in the decision-making system. (The shareholder governments are represented by the IMF executive directors) Yet the financial press is already referring to Zhu as “China’s man in the IMF management.” Strauss-Kahn and the IMF believe that China’s currency is substantially undervalued, but Zhu was China’s principal spokesman in Davos and beyond telling the rest of the world to keep their hands off the yuan. The fear is that Beijing sees the top international jobs not as a way to contribute internationally but to promote its own national agenda.

This would make Strauss-Kahn’s vision for the 21st-century IMF more difficult to achieve. His seminal vision suggested three main points: improving crisis prevention, to include new multilateral surveillance and “tracing how risk percolates through the system”; bolstering crisis response so that the IMF can move with greater speed and coverage, including short-term, multicountry credit lines; and strengthening the international monetary system with the IMF as a key provider of liquidity.

The constant theme of all Strauss-Kahn’s ideas is the importance of a multilateral vision and an institution that can think and act across national borders — exactly the opposite of his appointments. Give him and China and Japan a resounding “F.”

Kevin Rafferty is a former managing editor of publications for the World Bank.

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