We need to have a clear understanding about what is happening with the International Monetary Fund. Do not for a minute believe the current scandal is just one of those more or less happening things. It may not be the total end of the world for the IMF, but if the world’s largest money-granting bureaucracy doesn’t straighten its act out soon, the beginning of the end of its primacy may be at hand.

The current reassessment comes about in the wake of the embarrassed resignation amid sordid sex-assault scandal of Dominique Strauss-Kahn, the once-Olympian IMF director, and the consequent scramble to anoint a successor to the powerful position of global bailout banker-in-chief.

Although not that widely known, the IMF plays a key part in world affairs and is easily in the same league of importance as the United Nations. Much of the time the IMF worries about un-thinkables — such as world financial catastrophe. Most normal people, we would agree, do not fret much about global financial stability. They assume they will always be able to make a visit to an ATM and emerge liquid; send out personal checks that do not bounce; and get institutions to add cash to their businesses with long-term loans.

Normal people do not live in a world in which one could imagine that the long-term economic outlook was so volatile that long-term loans would be unimaginably scarce and almost everything would be up for grabs — though we did have a bitter taste of exactly that with the 2008 recession.

But IMF staffers are not normal people and they live in just such a world of fear. Their worst-case scenarios prudently make the assumption that the world may come to chaos and ruination at any time, presumably triggered by a country or countries whose finances are so bad that its only next logical step is default on its overwhelming sovereign debt. The theory being that one country’s default will lead to another’s and before you know it the world is staring at a cascade of fallen dominos. This is called financial contagion.

So we do need the IMF, with its many banked billions at the ready to bail out some troubled country from defaulting and threatening to push other sectors of the global financial system off the cliff. Stability is what the IMF’s balancing-acts are all about.

But in this regard the sometimes-effective IMF has also proven a sometimes-nightmare to deal with. Just ask Asia. During the frightening Asian Financial Crisis in the late 1990s, the IMF seemed the proverbial wicked witch, cackling with glee as it effectively blackmailed governments into adopting budgets and reforms that were political suicide as well as obvious formulas for short-term economic convulsion. The rare Asian leader who said “no” to the IMF, such as Malaysia’s Mahathir Mohamad, became an overnight living legend.

That is the rueful memory of the IMF among many millions of good people in Thailand, Indonesia and South Korea. To them the European-U.S. dominated bailout bureaucracy exhibited neo-colonial behavior in its arrogant response to the Asian crisis. Its Draconian reforms, required as conditions for the billion-dollar loans, led to unnecessary pain, from social disorder, unemployment, and even outbreaks of suicides. In its own candid post-mortem, the IMF admitted its programmatic inflexibility had added to the severity of that crisis. That was to understate the matter.

Since then, however, how the times have changed! Asia has emerged from those dark days stronger than ever and potentially in the driver’s seat of the world economy for decades to come. Taken all together it already accounts for well more than half of the world’s population and economy.

But Asia still doesn’t get much respect from Washington, where the IMF has its headquarters. Driven by the resurrection of China from its near-death experience of Mao, and a rising India, Asia is now demanding to be permitted to sit at the head table, not on the IMF back porch begging for scraps from the rich white boys’ club.

But here is the problem: As the IMF power elite proceeds apace to select a successor to risque-business Strauss-Kahn, who was recently accused of a sex assault on a New York hotel employee, there is almost no chance at all the job will go to an Asian. Basically the boys want to keep it within the Euro-American club. Outsiders need not apply.

But it is in that field of outsiders, especially from Asia, that one finds some of the very best successor prospects.

Consider that Asia offers genuine brainiacs such as Montek Singh Ahluwalia and Palaniappan Chidambaram from India; Andrew Sheng and Zhou Xiaochuan from China; and, last but not least, Sri Mulyani Indrawati from Indonesia. These are serious players to whom attention must be paid.

Another significant prospect, Tharman Shanmugaratnam — from the small Asian economic power, Singapore — has just been named the country’s deputy prime minister and is thus viewed as now unavailable. But the very respected Tharman, who is also the IMF’s chair of the International Monetary and Financial Committee, had wise words for the IMF power elite this weekend.

He urged that the selection process be “open, transparent and merit-based, so as to ensure the selection of a highly capable candidate, with the qualities needed to engage with a broad group of stakeholders internationally, and sustain the IMF’s active and effective role in global economic management.”

Translation: Think imaginatively, Selection Committee. You have got to get this one right. And that would be a towering understatement.

Professor Tom Plate, the distinguished scholar of Asian and Pacific Studies at Loyola Marymount University, is currently writing “Conversations with Thaksin,” the third installment in the “Giants of Asia” series. © 2011 Pacific Perspectives Media Center, Beverly Hills, California.

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