Financial news

Kristalina Georgieva selected by EU for IMF top job

By  | 


Kristalina Georgieva, the Bulgarian chief executive of the World Bank, has been picked as Europe’s choice to lead the IMF after a divisive 14-hour round of voting that split EU capitals and descended into fierce recriminations. 

After frantic phone call diplomacy in Berlin, Paris, The Hague and Madrid on Friday, Ms Georgieva narrowly won a head-to-head run-off against Jeroen Dijsselbloem, the Dutch former chair of the eurogroup of eurozone finance ministers. 

Finance ministries in Sweden and the Netherlands initially contested the result because Ms Georgieva failed to meet the complex thresholds set out under EU weighted-voting rules. 

Ms Georgieva won the support of 56 per cent of the bloc’s 28 member states, representing 57 per cent of the population of the EU. Mr Dijsselbloem commanded the support of 44 and 43 per cent, respectively.

But Ms Georgieva failed to meet the 65 per cent population criterion, leading to challenges from Stockholm and The Hague. But, after two hours of debate over a conference call between ministers on Friday evening, Mr Dijsselbloem conceded defeat. 

“I congratulate Kristalina Georgieva with the outcome of today’s European votes. I wish her the utmost success”, Mr Dijsselbloem tweeted on Friday night.

Ms Georgieva said she would take a leave of absence from the World Bank during the IMF nomination process which is set to conclude in early October.

She tweeted: “It is an honor to be nominated as a candidate for the role of Managing Director of the #IMF. After consulting with the Chief Ethics Officer, I have requested administrative leave and will relinquish my responsibilities as @WorldBank CEO for the nomination period.”

The result is another victory for Emmanuel Macron after France succeeded in winning the presidency of the European Central Bank for Christine Lagarde and securing a Belgian to head the European Council last month. Paris was one of Ms Georgieva’s biggest backers, a stance that divided France from its eurozone allies in Berlin and The Hague.

READ ALSO  Trump to ‘strongly consider’ testifying in impeachment probe

Bruno Le Maire, France’s economy minister who led negotiations for the EU, welcomed the “excellent news”.

“Since every candidate was highly qualified,” he said, “it was clear that the selection process had to be pursued in greater depth. Kristalina Georgieva is now the candidate of the European countries, and we will support her fully. Ms Georgieva has all the skills needed as well as the experience and international credibility to succeed to Christine Lagarde and to lead the IMF successfully.”

The choice to have a secret vote, carried out by finance ministries using email, was a controversial and highly unusual way to decide on Europe’s IMF choice. It was designed to end weeks of acrimonious talks between European capitals. 

The UK, which did not put forward a nominee and objected to the process, abstained altogether.

Under a convention with the US, a European usually leads the IMF and an American national heads the World Bank. 

Ms Georgieva, a former EU commissioner for Bulgaria, is a highly respected economist who won plaudits during her time at the World Bank. Should she be appointed in October, she would become the first eastern European national to take charge of the Fund. 

Kristalina Georgieva

© Bloomberg

Currently: chief executive of the World Bank

Ms Georgieva has been CEO of the World Bank since the beginning of 2017 and served as interim president after Jim Yong Kim unexpectedly resigned in January. She was passed over for the permanent posting in favour of the US candidate David Malpass.

The Bulgarian national has a long history of working at multilaterals, serving at the European Commission and the UN. She first joined the World Bank in 1993 as an environmental economist and has worked for the organisation across Asia and in Russia.

READ ALSO  SE: How T-Mobile CEO John Legere Changed the Industry

But her path to the job faces further obstacles even following her triumph over Mr Dijsselbloem. Her successful nomination would require a change to the IMF’s bylaws which bar a sitting managing director from being more than 65 years old. Ms Georgieva turned 65 this year. The IMF board of directors did not reach a consensus on whether to change the rule when it met in Washington last month.

France and other countries in support of Ms Georgieva say the age change can be quickly agreed and has backing from the US. 

Following the result, French officials had insisted that Ms Georgieva was a clear victor, arguing that the EU weightings were a “benchmark” rather than a set threshold that either candidate had to pass.

“The results of the second round are very clear on both criteria. They put Georgieva clearly in the lead”, said an EU diplomat. “All countries accepted the principle of a vote. The results of that vote should now be accepted”. 

During a testy conference call between ministries on Friday night, Sweden had demanded that the vote be recounted using IMF weighting rules in which older members, such as Germany and the Netherlands, carry more weight than eastern European economies. Under this system, Mr Dijsselbloem would have emerged the winner. 

Jeroen Dijsselbloem conceded defeat on Friday night © Anna Gordon/FT

Mário Centeno, current eurogroup chief who was considered a candidate but withdrew, tweeted: “Congratulations @KGeorgieva for being selected as European candidate to lead the IMF. In the face on rising global tensions, it is imperative to uphold the IMF as symbol of #multilateralism.”

The formal deadline for nominations to succeed Ms Lagarde closes on September 6 but European negotiators have rushed to find a consensus to avoid emerging economies rallying around an alternative candidate. 

READ ALSO  US carbon credit prices hit record highs

The British government complained that it did not approve of the process and abstained in Friday’s votes, according to senior EU officials. British officials argue that there is no immediate rush to choose a name before the September deadline. 

The vote comes a month after European leaders agonised over how to appoint the EU’s new leadership. Officials said that finding a consensus had become elusive because EU governments split along geographic and party political lines.

Southern capitals such as Madrid had initially resisted Mr Dijsselbloem, a Dutch social democrat who made offensive comments about crisis-hit countries wasting money on “alcohol and women”. 

But Olaf Scholz, Berlin’s centre-left finance minister, made a last-ditch attempt to rally Madrid, Lisbon and other social democrat capitals to back Mr Dijsselbloem and redress a balance where the socialists missed out on top jobs in the EU Commission and Council.

Boris Johnson, UK prime minister, is considering putting forward George Osborne, the ex-chancellor, who is seen in London as a potential compromise candidate. 

Although Mark Carney, outgoing Bank of England governor, has been deemed by some EU capitals “not European enough”, despite holding both British and Irish passports, the Canadian ministry of finance gave him strong backing on Friday evening. However, it skirted overtly confirming that it would nominate him. 

A spokesperson said: “From a Canadian standpoint, we want someone at the IMF who has a deep understanding of the international financial system, who has the personal attributes that would enable them to be effective in negotiating agreements with countries in challenging times,” he said.

@mehreenkhn

Additional reporting by Chris Giles





Via Financial Times

Print Friendly, PDF & Email

Hold dit netværk orienteret