Prospective Chief of IMF Promises More Openness

The International Monetary Fund took a first, cautious step into an era of potentially sweeping change Friday, as its prospective managing director declared that the fund should take greater care to prevent the sorts of financial crises that swept much of the globe in 1997 and 1998.

“I’m fully committed to open dialogue and discussion with the U.S. Congress” about various IMF controversies, said Horst Koehler, 57, a German national and veteran financial policymaker expected to succeed Michel Camdessus in the IMF’s top post as early as next week.

Koehler, wearing a pink laminated “visitors” badge on his gray suit, said at a news conference that he is prepared to meet with IMF critics on Capitol Hill and believes they could “sort out the differences” that have led to sharp criticism in Congress of IMF policies.

The news conference, at IMF headquarters in Washington, followed a crucial endorsement from the White House this week in Koehler’s quest to lead the highly influential lending institution.

But while expressing his support for further openness at the traditionally closed IMF and a receptiveness to other reforms, Koehler on Friday chose his words with great caution.

The German financial leader will assume the helm of one of the world’s most important financial institutions at a time when its mission is in dispute, with critics debating the appropriate role in a changing global economy, and anti-globalization protesters threatening to close down the IMF’s spring meeting next month in Washington.

“It is now more important for me to listen carefully before making any specific statements on the role of the fund, listen to IMF shareholders, to its staff but also to outside experts,” Koehler said, obviously trying to avoid a misstep that could block an otherwise clear path to the managing director’s chair.

He said the IMF should “focus even more on crisis prevention, and we should make the best use of the strength of this institution” through expert economic advice to emerging nations.

The organization bails out entire nations that are in financial straits and provided many billions of dollars to struggling countries during the Asian financial crisis.

Koehler runs the London-based European Bank of Reconstruction and Development, and previously advised former German Chancellor Helmut Kohl on such financial policies as introducing the euro currency.

Friday’s news conference served as Koehler’s introduction to the U.S. public after an awkward transAtlantic tiff over leadership of the IMF. The spat was sparked by Germany’s forceful advocacy of its own deputy finance minister, Caio Koch-Weser, for the job. After U.S. officials dismissed Koch-Weser as lacking in stature, Germany quickly came back with Koehler, and the Clinton administration, while less than overwhelmed, chose not to resist.

In a tradition dating back half a century, a European heads the IMF and an American heads the World Bank.

Koehler said that more effective “surveillance” of debtor nations was a key to preventing further crises. Such surveillance, he said, would entail closer monitoring of their economic policies.

Trying to avoid antagonizing anyone, Koehler said that “my intention is to have more open dialogue with the public and NGOs [nongovernmental organizations], and I do think it’s our obligation to explain IMF policy and activities better than we have in the past.”

At the same time, he expressed wariness about giving too much influence to outside advocates, noting that official governmental institutions have “elected responsibility . . . and this should not be weakened.”

Asked about charges that Russian officials have squandered aid from the IMF and other institutions, he responded that “what happened in Russia . . . reveals the need to be more careful” in future lending.

The final obstacles to Koehler’s candidacy were removed this week when both Stanley Fischer, the IMF’s interim leader, and Eisuke Sakakibara, Japan’s former vice finance minister, took their names out of the running for managing director.

Koehler said Friday that he had asked the well-respected Fischer to stay on at the IMF, and that Fischer had indicated he may.

U.S. officials took steps this week to patch up the bruised relationship with Germany. President Clinton informed German Chancellor Gerhard Schroeder on Monday that the United States would support Koehler for the job, virtually ensuring that he will get it.

U.S. Treasury Secretary Lawrence Summers met with Koehler on Thursday and later told reporters, “We had a very warm meeting and a good discussion. . . . I said at the end that I expected it to be the first of many, and I look forward to our subsequent meetings.”

Koehler said he sensed “broad support” for his candidacy from the IMF’s member nations, and predicted that the 24-member board of directors would install him formally next week.

Nonetheless, the messy succession process has undermined the stature of his new job, and Koehler conceded that the process “was really not the best” and needs improvement.