Where the IMF's next managing director will come down on this issue—and on whether fiscal salvation is to be achieved through austerity, with costs borne by ordinary citizens, even as bankers get only a mild slap on the wrist—is critically important, but hard to predict. Despite the failure of the IMF's strategy in East Asia, Latin America, and elsewhere, it still has adherents, even within the emerging markets.
The leadership contest has turned out differently from what many had expected. Some of the most qualified candidates (in both developed and developing countries) have not received the support of their own governments that the political process seems to require. Other qualified people from emerging markets have been reluctant to put their hats into the ring. IMF managing director is a brutal job, with a travel schedule that requires physical stamina to match wisdom and experience.
Much as I would like to see someone from the emerging markets and the developing world head the IMF, the first priority is to choose a leader with the requisite skills, commitments, and understandings in an open and transparent process, someone who will continue along the reform path on which the fund has embarked.
Realpolitik might mean that there will be senior people from both China and the U.S. in the top management team, but the presumption that the No. 2 position should be filled by an American also has to go.
Whatever the outcome, the IMF, the World Bank, and the international community need to reaffirm their commitment to an open and transparent process—and ask how that process can be improved. For example, rather than nominations from governments, which often are reluctant to support excellent candidates from opposition parties, an international nominating committee could put forward names. Similarly, changes in voting procedures (public voting by countries, rather than through constituencies, or a requirement that candidates win the support of a majority of developing and emerging countries) could persuade more emerging-market officials to put their names forward.
What we are seeing now—open campaigning, as opposed to selection behind closed doors—seems to be a move in the right direction. But one hopes that campaign promises won't tie the new leader's hands, as so often happens in electoral politics. Simplistic ideologies got the world into the mess in which it now finds itself, and simplistic prescriptions (even of the "tough-love austerity" form) will only compound the problems.
One of the leading candidates to be the IMF's next managing director has turned out to be a Frenchwoman, Christine Lagarde, who, as France's finance minister, helped lead her country through the Great Recession. She has been an outspoken advocate of financial-sector reforms, and has won the respect of all of those with whom she has worked.