Kristalina Georgieva Selected by EU for IMF Top Job (FT)
Last Modified: 04:06 PM, Fri Aug 02, 2019

Mehreen Khan in Brussels 02 August 2019

Jeroen Dijsselbloem concedes defeat after losing vote by narrow margin

Kristalina Georgieva, the Bulgarian chief executive of the World Bank, has been picked as Europe's choice to lead the IMF after a divisive 14-hour round of voting that split EU capitals and descended into fierce recriminations. 

After frantic phone call diplomacy in Berlin, Paris, The Hague and Madrid on Friday, Ms Georgieva narrowly won a head-to-head run-off against Jeroen Dijsselbloem, the Dutch former chair of the eurogroup of eurozone finance ministers. 

Finance ministries in Sweden and the Netherlands initially contested the result as Ms Georgieva failed to meet the complex thresholds set out under EU-weighted voting rules. 

Ms Georgieva won the support of 56 per cent of the bloc’s 28 member states, representing 57 per cent of the population of the EU. Mr Dijsselbloem commanded the support of 44 and 43 per cent, respectively.

But Ms Georgieva failed to meet the 65 per cent population criterion, leading to challenges from Stockholm and The Hague. But after two hours of debate over a conference call between ministers on Friday evening, Mr Dijsselbloem conceded defeat. 

“I congratulate Kristalina Georgieva with the outcome of today’s European votes. I wish her the utmost success”, Mr Dijsselbloem tweeted on Friday night.

The result is another victory for Emmanuel Macron after France succeeded in winning the presidency of the European Central Bank for Christine Lagarde and securing a Belgian to head the European Council last month.

Paris was one of Ms Georgieva’s biggest backers, a stance that divided France from and its eurozone allies in Berlin and The Hague. 

The choice to have a secret  vote, carried out by finance ministries using email, was a controversial and highly unusual way to decide on Europe’s IMF choice and designed to put an end to weeks of acrimonious negotiations between European capitals. 

The UK, which did not put forward a nominee and objected to the process, abstained altogether.

Under a convention with the US, a European usually leads the IMF and an American national heads the World Bank. 

Ms Georgieva, a former EU commissioner for Bulgaria, is a highly respected international economist who won plaudits during her time at the World Bank. Should she be appointed in October, she would become the first eastern European national to take the charge of the fund. 

Kristalina Georgieva

Currently: chief executive of the World Bank

Ms Georgieva has been CEO of the World Bank since the beginning of 2017 and served as interim president after Jim Yong Kim unexpectedly resigned in January. She was passed over for the permanent posting in favour of the US candidate David Malpass.

The Bulgarian national has a long history of working at multilaterals, serving in key roles at the European Commission and the United Nations. She first joined the World Bank in 1993 as an environmental economist and has worked for the organisation across Asia and in Russia.

But her path to the job faces further obstacles even following her triumph over Mr Dijsselbloem. Her successful nomination would require a change to the IMF’s bylaws which bars a sitting managing director from being more than 65 years old. Ms Georgieva turned 65 this year. The IMF board of directors did not reach a consensus on whether to change the rule when it met in Washington last month.

France and other countries in support of Ms Georgieva say the age change can be quickly agreed and has backing from the US. 

Following the result, French officials had insisted that Ms Georgieva was a clear victor, arguing that the EU weightings were a “benchmark” rather than a set threshold that either candidate had to pass.

“The results of the second round are very clear on both criteria. They put Georgieva clearly in the lead”, said an EU diplomat. “All countries accepted the principle of a vote. The results of that vote should now be accepted”. 

During a testy conference call between ministries on Friday night, Sweden had demanded that the vote be recounted using IMF weighting rules in which older members, such as Germany and the Netherlands, carry more weight than eastern European economies. Under this system, Mr Dijsselbloem would have emerged the winner. 

Mário Centeno, current eurogroup chief who was considered a candidate but withdrew from the vote, tweeted: “Congratulations @KGeorgieva  for being selected as European candidate to lead the IMF. In the face on rising global tensions, it is imperative to uphold the IMF as symbol of #multilateralism”. 

The formal deadline for nominations to succeed Ms Lagarde closes on September 6 but European negotiators have rushed to find a consensus to avoid emerging economies rallying around an alternative candidate. 

The British government complained that it did not approve of the process and abstained in Friday’s votes, according to senior EU officials. British officials argue that there is no immediate rush to choose a name before the deadline in September. 

The vote comes a month after European leaders agonised over how to appoint the EU’s new leadership. Officials said that finding a consensus had become elusive as EU governments split along geographic and party political lines.

Southern capitals like Madrid had initially resisted Mr Dijsselbloem, a Dutch social democrat who made offensive comments about crisis-hit countries wasting money on “alcohol and women”. 

But Berlin’s centre-left finance minister Olaf Scholz made a last-ditch attempt to rally Madrid, Lisbon and other social democrat capitals to get behind Mr Dijsselbloem to redress a balance where the socialists missed out on top jobs in the European Commission and EU Council.

Boris Johnson, UK prime minister, is considering putting forward  George Osborne, the former chancellor. Mr Osborne is seen in London as a potential compromise candidate who could be acceptable to both Paris and Berlin. 

With the European process to pick an agreed nominee under strain, other countries have spotted an opportunity to seek a genuine “open, merit-based” selection as the IMF rules state. 

Although Mark Carney, the outgoing governor of the Bank of England, has been deemed by some EU capitals “not European enough”, despite holding both British and Irish passports, the Canadian ministry of finance gave him strong backing on Friday evening. However, it skirted overtly confirming that it would nominate him. 

A spokesperson said: “Mark Carney has a considerable amount of experience and has shown exceptional leadership in the world of global finance. 

“From a Canadian standpoint, we want someone at the IMF who has a deep understanding of the international financial system, who has the personal attributes that would enable them to be effective in negotiating agreements with countries in challenging times,” he said.


Additional reporting by Chris Giles

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Article Info
Organization: International Monetary Fund, United Nations, European Union, European Commission, International Monetary Fund
Location: Europe, Spain, Finland, UK
People: Jeroen Dijsselbloem, Mark Carney, George Osborne, Kristalina Georgieva, Mehreen Khan
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Global Economy, Economy, World