U.S. Treasury Secretary Timothy F. Geithner said the International Monetary Fund needs to formally name an interim leader after Dominique Strauss-Kahn’s jailing, as pressure rose on the fund’s managing director to resign.
Geithner says Dominique Strauss-Kahn "is obviously not in a position to run" the International Monetary Fund after his arrest on charges of attempted rape.
“It’s important that the board of the IMF formally put in place for an interim period somebody to act as managing director,” Geithner said at an event in New York yesterday.
The Treasury chief, who previously worked at the IMF, also said that John Lipsky, the IMF’s acting managing director who had been the No. 2 official, is competent and capable.
Austrian Finance Minister Maria Fekter said earlier that Strauss-Kahn “risks damaging the IMF” and her Spanish counterpart said he should “use his best judgment.”
Any resignation by Strauss-Kahn, who has been jailed on charges of sexual assault that he denies, is likely to spark calls by emerging market nations for an end to Europe’s tradition of naming the IMF chief. Bank of Korea Governor Kim Choong Soo said today that he hopes a candidate from an emerging economy will take the post.
“There’s been a gradual shift of economic power and representation to emerging markets but institutions like the IMF and the World Bank are still centered heavily in the West,” said Joseph Tan, Singapore-based chief economist for Asia at Credit Suisse Private Bank. At the same time, “this episode may not be enough to shift that balance of power to emerging markets,” he said.
Brazilian Finance Minister Guido Mantega said that while Brazil would like to see a merit-based system used to select the IMF chief, Strauss-Kahn has been an ally of Brazil and other emerging markets seeking greater representation at the Washington-based lender.
“I am rooting so that this situation resolves itself in a positive way for him,” Mantega said in an interview yesterday on Globo television.
Strauss-Kahn, 62, is accused of attacking a housekeeper at a midtown Manhattan hotel and forcing her to perform sex acts. He denies the charges. Strauss-Kahn was arrested May 14 and ordered held without bail by Manhattan Criminal Court Judge Melissa Jackson this week, after prosecutors said he was a flight risk. The next court date is May 20.
Fekter said “he must consider what needs to be done,” speaking to reporters in Brussels yesterday.
“There’s a lot going on in the world,” especially in Europe, and “you want the IMF to have the capacity to be helpful in that context,” Geithner said. Strauss-Kahn currently is “obviously not in a position” to run the organization, he said.
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