New IMF chief calls on Europe, Russia to give up clout
PARIS (AFP) — New IMF chief Dominique Strauss-Kahn said Monday that Europe and Russia will have to give up some of their clout at the Fund as part of a much-needed reform of the top lending institution.
Strauss-Kahn, 58, also said trimming costs at the International Monetary Fund was an issue "that is on the table for discussion," including selling off part of the IMF's gold reserves to help ease the Fund's financial situation.
The former French finance minister, who was appointed on Friday as IMF managing director, is to take over from Spaniard Rodrigo Rato on November 1 after pledging to bring change to the IMF.
"To allow some countries to be better represented, other countries will have to give up part of their share of voting rights," said Strauss-Kahn, refering to European countries and Russia.
He argued that it would be unrealistic to expect the United States, which is the largest single shareholder, to be the only country to give up voting rights.
"There will be no other way of finding a solution" unless Europe and Russia "transfer some of their voting rights to other countries," he said.
Strauss-Kahn also said the crisis in the US "subprime" loan sector should not have a dramatic impact on growth in the world economy.
"The bases of world growth today are solid bases," he told the news conference.
"I think the situation is now under control," he said, although he cautioned that the crisis was not yet "solved."
In an interview to Le Monde newspaper, Strauss-Kahn also attacked the longstanding arrangement that allows Washington to name the head of the World Bank and Europe to place its candidate at the top of the IMF.
"A candidate from any one of the 185 members states must be able to direct the Fund if he has the competency," he said.
Strauss-Kahn, known in France by his initials DSK, earlier met with President Nicolas Sarkozy who had backed the prominent left-winger's candidacy for the post.
The IMF, created in 1944, is seeking to redefine its role in a globalising world reshaped by the rising economic clout of developing countries like China, India and Brazil.
Strauss-Kahn has pledged to implement reforms of the institution, which bails out countries in crisis but faces its own crisis of relevancy and legitimacy in a world flush with cash and access to capital.
The new managing director however declined to give a timetable for his reforms, saying that he wanted to consult personnel and members of the board before unveiling any concrete plans.
He has proposed in the past that a handful of crucial decisions be taken with double majority voting to ensure they command unquestionable support from all members.
Under the current system, decisions are approved with a simple majority of votes, but this favours rich countries because of a quota system that awards votes based on the amount of money contributed to the IMF.
The economics professor who last year lost his bid to run for the French presidency as the Socialist Party's candidate declined to say whether he would try to make another run for the Elysee in 2012.
"My mandate (at the IMF) is for five years and that is all I have to say about that," he said.
