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.

Getty Images.
Show Hide image

Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.