FP Explainer

Why Is the IMF Chief Always a European?

Because Europeans choose him.

With International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn cooling his heels in Rikers Island after an arrest on sexual assault charges and a growing chorus of international voices -- including U.S. Treasury Secretary Timothy Geithner -- calling for him to resign, speculation is rampant as to who will be his replacement. Officials from Brazil and South Africa are calling for the next managing director to be from a developing country, but European governments counter that, in accordance with tradition, the next director should be European. (French Finance Minister Christine Lagarde has been floated as one possible candidate.) But when was it agreed that the IMF should always be run by a European?

It never really was. The policy is a long-standing "gentlemen's agreement" under which the IMF managing director is a European and the World Bank president is an American. There's no mention of the director's nationality in the IMF's Articles of Agreement, which state only that the director is appointed by the organization's executive board. The voting rules are set up so that countries with the highest "quotas" -- a measure of the size of their economy and economic viability -- are given preference for membership. In practice, for most of the IMF's history, this has meant that the United States and Western Europe have dominated the board.

The origins of the gentlemen's agreement date back to shortly after the Bretton Woods conference in 1944, which established both the IMF and World Bank. According to Miles Kahler's history, Leadership Selection in the Major Multilaterals, Bretton Woods architect John Maynard Keynes had assumed that his main collaborator at the conference, Treasury Department official Harry Dexter White, would run the IMF. U.S. President Harry Truman also supported White's choice. However, Treasury Secretary Frederick Vinson, with strong backing from Wall Street, argued that an American should run the World Bank -- Washington Post publisher Eugene Meyer got that job in 1946 -- and that it wouldn't be proper for the United States to run both of the world's major financial institutions. White's possible communist sympathies -- he's widely suspected today of having been a Soviet agent -- may also have played a role in the decision. In the end, Belgium's Camille Gutt was eventually appointed to run the IMF.

In 1946, there was little question that a non-American managing director meant a European one, but some have questioned whether this was ever actually agreed upon. An American World Bank president "made it inevitable that the Managing Director [of the IMF] would be a non-American. It was less inevitable that he should be a European," remembered Frank Southard, an early deputy managing director of the bank.

While the directors have all been European, the United States has continued to exercise control over their selection. Under another informal agreement, the deputy managing director is appointed by the U.S. Treasury. And Washington has, on occasion, effectively vetoed nominations for the position, such as in 1999, when then U.S. Treasury Secretary Lawrence Summers voiced U.S. opposition to a German nominee, veteran World Bank official Caio Koch-Weser, believing him incapable of reforming the IMF following a decade of bad publicity.

As the IMF's membership has expanded from 44 countries in 1946 to 187 today, developing countries have also played an increasingly prominent role in the selection process. In 1973, a group of developing countries led by Indonesia and Iran blocked the nomination of the Dutch Emile van Lennep -- presumably because as former secretary-general of the OECD, he was seen as too closely associated with wealthy countries.

The days of the gentlemen's agreement may be numbered. An internal review by the IMF in 2008 acknowledged that the convention "clearly reduces choice" and discussed -- without implicitly endorsing -- a proposal for ending the continental requirement. This shift has been mirrored by other international organizations: In 2010, the G-20 agreed to open up the membership of the executive board to more developing countries.

The question of nationality is sure to come up again if Strauss-Kahn steps down, but Europeans will not be eager to part with the position. Some, such as German government spokesman Christoph Steegmans, argue that owing to the IMF's critical role in stemming Europe's current financial crisis, the managing director should be someone who is familiar with "Europe's particularities, the currency questions and also the political circumstances here." Strangely, when the IMF was primarily giving loans to countries in Africa and Latin America, local knowledge didn't seem to be quite as much of a factor.

Thanks to Miles Kahler, Rohr professor of Pacific international relations at the University of California, San Diego, and author of Leadership Selection in the Major Multilaterals.


FP Explainer

Obama's Definitely American, But Could He Become President of Some Other Country?


After weeks of grandstanding by a certain orange-haired reality show star, the White House has released copies of President Barack Obama's long-form birth certificate. While Obama had already released his legally binding "certificate of live birth" during his campaign for president, the hope is that the full certificate will finally put to rest the suspicions of 1 in 5 Americans that the president was not born in the United States. But this does raise another question: If Obama is definitely, positively, absolutely, beyond-a-shadow-of-a-doubt, a natural-born citizen of the United States, does that put him out of the running to be president of any other country?

Not necessarily. Article II of the U.S. Constitution specifies that "No Person except a natural born Citizen" is eligible to be elected president. But not every country is quite so specific. Let's take Kenya, for example, the country where Obama's father was born, and where many "birthers," despite overwhelming evidence to the contrary, believe the president himself was too. The Kenyan constitution specifies that the president must be a "citizen of Kenya," have "attained the age of thirty-five years," and be "registered in some constituency as a voter in elections to the National Assembly." Obviously, only one of those applies to Obama, but as the son of a Kenyan father, he is entitled to citizenship, so if he were willing to establish residency in the country, he could theoretically make a go of it. (Look out, Mwai Kibaki. Obama has a 95 percent approval rating in Kenya.)

On the other hand, if Obama decided he wanted to be president of his boyhood home, Indonesia, he'd be out of luck. According to article six of the constitution, the president must be a "native-born Indonesian."

In many countries, particularly those with large diaspora communities, foreign-born leaders are not unusual. Ireland's most famous 20th-century president, Eamon de Valera, was a New Yorker by birth. In Israel, President Shimon Peres was born in Poland, and Deputy Prime Minister Avigdor Lieberman -- who would take Prime Minister Benjamin Netanyahu's job if he were to become incapacitated -- was born in Moldova. Lebanese Prime Minister Saad Hariri was not only born in Riyadh but maintains Saudi citizenship.

In the countries of the Commonwealth, the technical head of state -- the queen of England -- is by definition the citizen of another country. Canada's former Governor-General Michaëlle Jean -- the queen's representative to the government and acting head of state -- is not only an immigrant from Haiti but was a dual French citizen until she took the job. 

In Germany, any citizen over 40 is eligible to be elected president. France's constitution doesn't specify that the president be born in the country. "Any citizen over 50 years" can be president of Italy.

Many Latin American countries -- like their neighbor to the north -- do specify that the president be native-born. Mexico's president, for instance, has to be a citizen by birth with at least one Mexican parent and 12 years' residency. Brazil's president must also be born in the country.

Peru has even had its own birther controversy, thanks to media reports that former president Alberto Fujimori was born in Japan. The president produced his Peruvian birth certificate for analysis in 1997, but some doubts persist.

Iran's president not only has to be of "Iranian origin," he must exhibit "trustworthiness and piety." Presumably, being a secret Christian would be a disqualification from that office.

It's theoretically possible for someone who wasn't born in Britain, or even a citizen, to be elected prime minister. The prime minister is a member of a parliament who is chosen by members of his or her party. According to British law, an MP must be "18 years of age, and a British citizen, or citizen of a Commonwealth country or the Republic of Ireland." It would probably be pretty tough for someone from Ireland or the Bahamas to get the job, but there's nothing legally stopping them. To date, only one British prime minister -- Bonar Law, originally of New Brunswick -- has been born outside the British Isles.

In any event, if Obama decides he's sick of being president of a country where 20 percent of the people don't believe he's a citizen, and he's willing to go through the trouble of becoming a citizen and resident somewhere else, he does have a few options.

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