The wrong way to choose new IMF head

By David DeRosa

NEW CANAAN, Connecticut (Bloomberg): How the International Monetary Fund (IMF) chooses its managing director is dumber than dumb.

Three candidates have been mentioned so far. The Europeans have put forth Caio Koch-Weser, Germany's deputy finance minister. The Japanese want Eisuke Sakakibara, former vice finance minister for international affairs, while 20 African nations have nominated Stanley Fischer, the current acting managing director.

You might have thought the search would concentrate on finding the best candidate. The responsibilities are awesome so the need is to find someone who knows economics and international finance inside and out. A good working knowledge of geo-politics -- who's who and who can do what to whom -- is essential.

Well forget about that. National pride is what this is all about. The Europeans think they have the right to put one of their own in the job because the United States has James Wolfensohn, an American, at the helm of the World Bank. And the Japanese feel slighted that an Asian has never held the top IMF post. This makes as much sense as having a horse race where speed doesn't count. Have your horse come from the right stable and you are automatically in the winner's circle.

These goings on never looked so ridiculous as today when the German government expressed surprise at Fischer's nomination. Fisher, who has been the number two man at the Fund since 1994, was born in Zambia and is now a U.S. citizen. He was nominated for the top position by Jose Pedro de Morais, an executive director of the IMF who represents 20 African nations.

Since it was founded after World War II, the IMF has had seven managing directors, all Europeans. There have been three from France, two from Sweden, and one each from Belgium and the Netherlands. It looks like Germany figured its number had come up. Today the German Finance Ministry said Fischer's candidacy had "never been an issue until now." Did they mean an issue or did they mean an obstacle?

Torsten Albig, a ministry spokesman, laid it out cold: "We're still convinced that there will be sufficient votes (for a European candidate)," according to Agence France Presse. Notice there is no mention of the candidates' name in this statement. All that matters is that he comes from a European country.

Practically speaking, it is unlikely Sakakibara, who has been teaching at Keio University since his retirement from the ministry, has a realistic chance to become the next boss at the IMF. His name doesn't matter any more than Koch-Weser's or anyone else from Japan or another Asian nation would have done.

That brings us to Stanley Fischer. Fischer is brilliant. Practically speaking, I don't believe the other contenders can match either his superb intellect nor the immense experience he has accumulated over six years as deputy to Michel Camdessus, who resigned last week.

There are some people want to see a radical reorganization of the IMF. Others want it to be disbanded entirely. Many people are deeply resentful of the job the IMF did in Southeast Asia when it demanded excessive social and economic restructuring as conditions for emergency aid. And there are others still who believe Camdessus and Fischer have given excellent service.

Fischer should only be given or denied the big job based on his record at the IMF and how he would change its mission.

But for crying out loud, let's not ding the guy because he holds the wrong passport for some people's myopic hemispheric ambitions!

The writer is president of DeRosa Research and Trading and manages an investment fund. He is also an adjunct finance professor at Yale School of Management. His opinions don't represent the judgment of Bloomberg News.