Strauss-Kahn resigns – but who will replace him?

The <em>New Statesman</em> runs through a list of the IMF chief’s potential successors.

Dominique Strauss-Kahn has succumbed to the inevitable and resigned. Here is his letter to the IMF:

It is with infinite sadness that I feel compelled today to present to the Executive Board my resignation from my post of Managing Director of the IMF.

I think at this time first of my wife – whom I love more than anything – of my children, of my family, of my friends.

I think also of my colleagues at the Fund; together we have accomplished such great things over the last three years and more.

To all, I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me.

I want to protect this institution which I have served with honour and devotion, and especially – especially – I want to devote all my strength, all my time, and all my energy to proving my innocence.

The extremely serious allegations against him made the decision a foregone conclusion. Now, the race to succeed him begins.

Usually the position of head of the IMF has gone to a European, while the head of the World Bank has been an American. But with the rise of the Brics countries (Brazil, Russia, India and China) and the increasing power of emerging countries such as Mexico, Indonesia and South Africa, some have called for a non-westerner to be appointed head.

This looks unlikely to happen, however. The IMF is in the middle of dealing with the European sovereign debt crisis. For the next few years at least, its leader will be dealing with European problems and knocking the heads of European politicians and central bankers together. Below, Harry Key runs through a list of likely candidates for successor to DSK.

Runners and riders

Christine Lagarde

First woman to be finance minister in a G7 nation

After winning widespread support and praise for her policies responding to the financial crisis in France, she is seen by many economists as Europe's leading candidate for the post. She may be hurt by her French nationality, while her questionable links to the businessman Bernard Tapie will cause unease among those who want a scandal-free IMF chie.

Axel Weber

Former president of the German Central Bank

Weber is a leading candidate and is rumoured to be the favoured candidate of the German chancellor, Angela Merkel. However, some see his hawkish policy as too hardline for the IMF's current position on Europe's financial problems, particularly after the generous terms offered to European countries by the fund under Strauss-Kahn.

Kermal Dervis

Vice-president and director of the global economy and development programme, Brookings Institution

Dervis was credited with saving Turkey from bankruptcy in the early 2000s and was honoured by the Japanese government for his work as former head of the UN Development Programme. His solid contacts and personal relationships in Europe make him a strong candidate.

Gordon Brown

Former prime minister of the UK

Although James Wolfensohn, a former World Bank chairman, has claimed that there "is no one better" for the position, the absence of any support from the British government makes it unlikely that Brown will achieve his dream of leading the IMF.

Photo: Getty
Show Hide image

Donald Trump's inauguration signals the start of a new and more unstable era

A century in which the world's hegemonic power was a rational actor is about to give way to a more terrifying reality. 

For close to a century, the United States of America has been the world’s paramount superpower, one motivated by, for good and for bad, a rational and predictable series of motivations around its interests and a commitment to a rules-based global order, albeit one caveated by an awareness of the limits of enforcing that against other world powers.

We are now entering a period in which the world’s paramount superpower is neither led by a rational or predictable actor, has no commitment to a rules-based order, and to an extent it has any guiding principle, they are those set forward in Donald Trump’s inaugural: “we will follow two simple rules: hire American and buy American”, “from this day forth, it’s going to be America first, only America first”.

That means that the jousting between Trump and China will only intensify now that he is in office.  The possibility not only of a trade war, but of a hot war, between the two should not be ruled out.

We also have another signal – if it were needed – that he intends to turn a blind eye to the actions of autocrats around the world.

What does that mean for Brexit? It confirms that those who greeted the news that an US-UK trade deal is a “priority” for the incoming administration, including Theresa May, who described Britain as “front of the queue” for a deal with Trump’s America, should prepare themselves for disappointment.

For Europe in general, it confirms what should already been apparent: the nations of Europe are going to have be much, much more self-reliant in terms of their own security. That increases Britain’s leverage as far as the Brexit talks are concerned, in that Britain’s outsized defence spending will allow it acquire goodwill and trade favours in exchange for its role protecting the European Union’s Eastern border.

That might allow May a better deal out of Brexit than she might have got under Hillary Clinton. But there’s a reason why Trump has increased Britain’s heft as far as security and defence are concerned: it’s because his presidency ushers in an era in which we are all much, much less secure. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.