Political India: Engaging America

From The Hindu

The International Monetary Fund’s Executive Directors from the BRICS economies have openly revolted against the prospect of the Fund’s Managing Director role reverting to a European, deepening the woes of an organisation that was recently rocked to its very core by the resignation of former Dominique Strauss-Kahn following sexual assault allegations.

In an unprecedentedly explicit articulation of long-standing resentment over the convention of selecting the MD, “in practice, on the basis of nationality,” IMF Directors from India, China, Russia, Brazil and South Africa said in a public statement that this “undermines the legitimacy of the Fund.”

The BRICS group, including India representative Arvind Virmani, called for the abandonment of the “obsolete unwritten convention,” that required the head of the IMF necessarily to be from Europe. There has been no reaction yet from any other quarter within the IMF.

While the Fund regularly recommends painful reforms packages to crisis-ridden developing nations, the BRICS Directors’ comments are a stinging critique of the IMF’s failure to speed up its own internal restructuring process. Europe’s grip over the MD’s seat dates as far back as 1946 yet it has come under fire especially since 2005 when the G20 group of major economies called for far-reaching reform to improve the Bretton Woods institution’s “governance, strategy and operations.”

Bringing a hard-to-repudiate argument to the fore the Directors said that their common understanding was that the recent financial crisis had actually erupted in developed countries and its provenance “underscored the urgency of reforming international financial institutions so as to reflect the growing role of developing countries in the world economy.”

Pressing their main point on the altered landscape of economic power today, the BRICS Directors noted, “We also believe that adequate representation of emerging market and developing members in the Fund's management is critical to its legitimacy and effectiveness.”

Referring to several international agreements that had already outlined the need for a “transparent, merit-based and competitive process” for choosing an MD, the BRICS Directors said that a more credible and legitimate route would be require the MD to be selected “after broad consultation with the membership.” As it stands, the IMF announced last week that the nomination period would commence on May 23 and will close on June 10.

In a prescient statement that came before Wednesday’s announcement of candidacy for the influential IMF job by French Finance Minister Christine Lagarde, the Directors said, "We are concerned with public statements made recently by high-level European officials to the effect that the position of MD should continue to be occupied by a European."

Hitting back at such statements, they argued that such remarks contradicted public announcements made in 2007, “when Mr. Jean-Claude Junker, president of the Euro group, declared that “the next MD will certainly not be a European” and that “in the Euro group and among EU finance ministers, everyone is aware that Strauss-Kahn will probably be the last European to become director of the IMF in the foreseeable future.””

On the other side of the Atlantic U.S. officials including Treasury Secretary Timothy Geithner have consistently called for an “open process that leads to a prompt succession for the Fund's new MD,” yet Nancy Birdsall, a former top official at the World Bank and the Inter-American Development Bank said that the question now is “whether and how this commitment [by the G-20, to a merit-based process] will be honoured.”

In a clear signal that the shift in the global locus of power would continue to be a point of contention the BRICS Directors cautioned that in addition to the Fund’s next MD having solid technical background and political acumen, they should be "a person that is committed to continuing the process of change and reform of the institution so as to adapt it to the new realities of the world economy."

From The Hindu

Dominique Strauss-Kahn, Managing Director of the International Monetary Fund jailed over allegations of sexual assault on a New York hotel maid, has quit his official role four days after the incident.

The IMF said Mr. Strauss-Kahn had on Wednesday informed its Executive Board of his resignation. The Fund also announced John Lipsky as acting Managing Director.

In his letter of resignation to the Board, Mr. Strauss-Kahn said he wanted to “devote all my strength, all my time, and all my energy to proving my innocence”. He said it was with “infinite sadness” that he had decided to resign. His thoughts were with his family and colleagues at the Fund with whom he “accomplished such great things over the last three years and more”, he said.

Mr. Strauss-Kahn is being held in isolation at the notorious Rikers Island prison in New York and, according to an AP report, is on suicide watch.

Meanwhile, Jeffrey Shapiro, the lawyer of the maid who has alleged Mr. Strauss-Kahn assaulted her, said his client had been unable to resume her duties given the media attention. He also denied it had been consensual sex between Mr. Strauss-Kahn and his client, an argument Mr. Strauss-Kahn's lawyers were said to be considering. “There is no question this was not consensual — she was assaulted and she had to escape from him, which is why when she finally got out of the room, she reported it to security immediately,” said Mr. Shapiro.

The New York Times reported that Mr. Strauss-Kahn would on Thursday seek a renewed bail hearing and would be “willing to be confined to a location in Manhattan, wear an electronic ankle bracelet to monitor his movements and post $1 million bail in cash”.

From The Hindu

Following the arrest of its Managing Director Dominique Strauss-Kahn in New York on Saturday, the International Monetary Fund said “The IMF remains fully functioning and operational.”

The arrest has raised questions about whether the IMF's role in managing the ongoing debt crisis in Europe would continue unimpeded. The Fund issued a muted statement confirming Mr. Strauss-Kahn's arrest noting that all inquiries would be referred to his personal lawyer and to the local authorities.

Meanwhile, Mr. Strauss-Kahn was remanded to the infamous Rikers Island prison in New York City following the denial of bail over charges that he attempted to sexually assault a hotel maid on Saturday.

Mr. Strauss-Kahn, who appeared “haggard and unshaven” before a New York City district judge following a weekend in prison, was refused bail after state prosecutors argued that he would likely flee to France. “He would be living openly and notoriously in France, just like Roman Polanski,” Chief Assistant District Attorney Daniel Alonso told media

The top economist and potential presidential contender in French politics will wake up on Wednesday in an eleven-by-fourteen-foot cell in the same jail compound that housed Mark Chapman, musician John Lennon's killer. Given the high-profile nature, however, Mr. Strauss-Kahn will be held in protective custody in Rikers' West Facility, one of 10 prisons within the complex. Though it is the smallest facility, the West Facility was said to be “typically used to house prisoners with contagious diseases,” and was thought to be appropriate for Mr. Strauss-Kahn as he will not be permitted any contact with other prisoners “in case he is attacked by other inmates,” reports said.

In the bail hearing earlier on Monday, Mr. Strauss-Kahn's defence attorney Ben Brafman argued that the “battle has just begun,” and it was “quite likely he will be exonerated.” His defence team also confirmed that Mr. Strauss-Kahn had agreed to subject himself to forensic testing. Mr. Strauss-Kahn could face anywhere between five to 25 years in prison, said legal experts.

After Mr. Strauss-Kahn was arrested as he attempted to board a flight to Paris from New York's John F Kennedy airport, Judge Melissa Jackson had rejected his offer of $1 million as bail, along with his offer to wear an electronic tag. Mr. Brafman however suggested that his client might appeal the bail denial.