Why we shouldn’t be too eager to push a Brown candidacy for the IMF

The Duncan Weldon Economics Matters Column

Following speculation in recent days that Dominique Strauss-Kahn (DSK) is about to step down from his role as Managing Director of the International Monetary Fund (IMF) and contest next year’s French elections, there has been increasing talk of Gordon Brown being the ‘favourite’ to succeed him.

On this morning’s Today programme Cameron came out against this pretty strongly saying Brown might ‘not be the appropriate person‘. Ed Miliband has (rightly) defended Brown’s credentials and the Guardian is currently running an online poll as to whether Brown should get the job, possibly the first time the leadership of an international financial institution has been put out to an X Factor style public vote.

DSK has been a very good head of the IMF and whilst the institution is far from perfect it has certainly had a better crisis than it did in the late 1990s in Asia. Under his leadership, ably supported by Chief Economist Oliver Blanchard, the Fund has been much more open to new ideas and new ways of thinking. As Paul Krugman recently commented “the IMF has been doing terrific research work, and has been a breath of fresh air in policy debates”.

There’s little doubt that Brown would be a good choice to head the institution. He is well respected on the international stage, his role in pulling the G20 together towards a co-ordinated fiscal stimulus in 2009 will surely be praised by the economic historians of the future and his and Darling’s approach of recapitalising banks in late 2008 was later widely followed. His more recent calls for a multilateral rebalancing of the world economy are exactly the type of debate the IMF should be leading.

Of course a Brown appointment would be disaster for Cameron – it would be hard to stick to the ‘it’s all Labour’s fault’ line if Brown were appointed to an important global economic leadership role with widespread international support.

But none of this means that we should be too eager to push a Brown candidacy. Since being founded at the Bretton Woods Conference, the IMF has traditionally been headed by a European and the World Bank by an American. Whilst this arrangement made some sense in the mid 1940s it is becoming harder and harder to justify. With the rise of the developing countries (which are now 49% of world GDP and set to be 60% by 2030) the time has finally come for Europe to step back from its historical claim and allow a candidate from the developing world to take the role.

Sri Mulyani Indrawati, the widely respected former Indonesian Finance Minister and current Managing Director of the World Bank Group, would be one such candidate. India’s Montek Singh Ahluwalia, a former head of the IMF’s Internal Evaluation Office, would be another.