Horst Koehler's departure as Managing Director of the IMF to seek election as President of Germany provides an occasion for a moment of reflection, both about the Fund and the state of economics.
On the eve of Koehler's arrival as Managing Director, the world had experienced a period of financial turbulence not seen since the 1930's. Confidence in the IMF was at an all time low. It had badly mismanaged the East Asian crisis, the Russian crisis, and the Brazilian crisis. A cloud hung over his predecessor. Kohler's election was itself clouded in controversy.
Surely, in choosing its leader, an international public institution should look for the most qualified person, and the choice should be made in as open and transparent manner as possible. Principles of democratic accountability, about which the IMF spoke forcefully in the developing world, demanded this. Yet in the end, an agreement between America and Europe dictated that the leader of the IMF should be a European.
The Europeans then agreed that Germany had not had its fair turn at the leadership of a major international organization, and so the choice was a simple one: a German acceptable to America would get the job. Experience in developing countries, where virtually all of the crises with which the IMF has had to deal occur, was not even thought to be a pre-requisite!