David Cameron should make it clear that he supports a proper recruitment procedure, to be independently monitored
Consider the following scenario. A multinational corporation that has a war chest worth hundreds of billions of dollars may be about to have a vacancy at the top. Nearly everyone agrees that it needs a top-to-bottom overhaul, from the key personnel to the way it does business. But rather than having an open competition for the vacancy, a clique of insiders squabble over the top job. Some make it clear that certain names haven't a hope, whatever their qualifications. Other good candidates don't have a heavyweight patron, so don't get a look-in. The result is that leadership of one of the biggest and most important institutions in the world does not go to the best man or woman for the job, but to a compromise candidate.
The above may sound like fiction, but the sad reality is that it is how the boss of the IMF has been selected for most of the past 60 years. Much of the time it goes unremarked – a French socialist or Spanish conservative is levered into the top spot and life goes on as normal. But this week it became big news in Britain, after David Cameron declared Gordon Brown "not the most appropriate person" to run the IMF. Take out the names and the enmity that gave this story its particular piquancy, and the episode illustrates another point: an early-morning interview question sprung on Mr Cameron about the man he spent years battling is simply not the most appropriate way to choose who runs the Fund. It does not reflect the changing nature of the world economy, where power is slowly diffusing from a handful of nations in the west to a much larger group of countries in the south. And it is no help in steering the global economy through one of the most turbulent periods since the second world war.
It took a mere 54 years for the IMF to agree that it should "adopt an open, merit-based and transparent process for the selection" of top management. That decision was made in 2009, following nearly a decade of working groups, position papers and reports. It also followed decades of a gentlemen's agreement between Europe and America that Washington would choose the head of the World Bank, while the continent could select the IMF's leader. During that time, membership of the Fund has gone from 29 countries to 187. Big economies such as China and India have become vastly more prosperous, while the eurozone has lurched into an existential crisis. Nowadays a rich country – Iceland, Ireland, Greece – is as likely to tap up the IMF for a loan as a poor one: the first time since the 70s and Callaghan that that has been the case. Meanwhile, poor and middle-income countries are complaining again that their economies are being knocked off course by policies adopted by the west, as a tidal wave of hot money hits their markets. And as if all that was not enough, much of the Fund's economic orthodoxy has been shaken by the global financial crisis. IMF researchers now concede that poor countries may be helped, not hindered, by turning away foreign speculators. They talk about how a big wealth gap can prevent nations from enjoying sustainable growth. Chinks are opening up in the old dogma.
The job of running the IMF should never have been treated as a bauble to be handed around rich European countries. That always looked ridiculous; amid this crisis it now appears dangerous. The irony is that one of the few people who has consistently pushed for reform of the IMF is none other than Gordon Brown. Ever since he was chancellor, Mr Brown has been an articulate expositor of ideas for a new global financial architecture. The notion that Mr Cameron would allow his former adversary a bully pulpit in Washington to criticise the coalition's economic policies was always a non-starter. But the prime minister should make it clear that he supports a proper recruitment procedure, to be independently monitored. That is no more than one would expect for such a big job at such an important organisation.