PRINCETON – How the mighty International Monetary Fund has fallen. More than a decade ago, the French magazine Paris Match carried a picture of the Fund’s then Managing Director, Michel Camdessus, with the title: “The Most Powerful Frenchman in the World.” Today, his successor, Dominique Strauss-Kahn (DSK), handcuffed and grave in ubiquitous front-page photos, is the most humiliated Frenchman in the world.
One unanticipated result of the lurid New York sex scandal involving DSK is that the question of his successor is attracting an unprecedented level of public interest and concern. Indeed, the scandal has exposed some fundamental problems about the IMF’s governance, and even about its existence.
DSK tried to remake the IMF into a doctor of global finance, rather than a policeman. In mitigating or even preventing financial crises, however, sometimes policemen are needed. At the moment, the combination of excesses still evident in the financial sector and in public finance in many countries calls for some fairly tough police action.
Any organization is always much more than simply the person who happens to lead it, but a weak or politicized figure at its head can do great damage. Unfortunately, about half of the IMF’s past managing directors have been either weak or overly political – or both.