Selection process of a new Managing Director for the IMF and external representation of the euro (debate) 
President
The next item is the Commission statement on the selection process of a new Managing Director for the IMF and external representation of the euro.
Olli Rehn
Member of the Commission. - Madam President, honourable Members, many thanks for your very pertinent questions. The Commission welcomes the decision of the Executive Board of the IMF on 20 May this year, which clarifies the selection process for the next Managing Director of the IMF.
The Commission agrees that the selection process has to be open, transparent and merit-based. This will enable candidates from all IMF member countries to compete on the basis of their merits, taking into account all relevant aspects.
The EU Member States have agreed that they will back the best qualified candidate who is able to meet the high standards required to fulfil the responsibilities attached to this very important position. Such a candidate will, in particular, need to have demonstrated strong capabilities, a commitment to multilateral coordination, and a great knowledge of international economic, financial and monetary affairs. The Commission supports this agreement.
The Commission fully supports the candidacy of Minister Christine Lagarde. She is a competent and experienced candidate, who has gained the respect of our partners in the international community. She not only has a very good knowledge of the European economy and EU decision making, which is a merit in these times, but also very strong experience in global economic governance - through her successful management of the G20 Presidency, for instance.
Let me also add that last year, an agreement was reached at the G20 summit in Seoul in Korea to reduce European representation in relative terms on the IMF Board by two seats, so as to increase the voice and representation of emerging market economies.
The issue of the external representation of the euro area, while related to the general reform of the International Monetary Fund, is not directly linked to the selection of the Managing Director of the IMF. The Commission is of the view that it is in the common interest of Europe, the Union and its Member States, to move progressively towards a single seat for the European Union, or at least the euro area, in the IMF. Gradually and progressively.
Mr President, honourable Members, as you know, I am fully committed to the reform and reinforcement of EU economic governance, both internally and externally. In achieving this, I prefer to apply the tested method of Jean Monnet: Europe is built through concrete progress in real life, one step at a time, taking larger and smaller steps.
Therefore, let us first conclude the reform of our internal governance, which is urgently needed and which will be a huge step forward once implemented. Then let us tackle the challenge of external representation which will be another major step forward once agreed and implemented. One big step at a time.
Corien Wortmann-Kool
Madam President, when the former Managing Director of the International Monetary Fund (IMF) came into office, there were major question marks against the relevance and effectiveness of the IMF. We now know better, after finding out the hard way during the crisis just how interlinked we are internationally. It is precisely in such times of crisis that you also learn to better seek each other out, and we experienced just how crucial the role and the expertise of the IMF are, even for us here in Europe. It is thus also important that, in the coming years, the IMF should play a key role in terms of global governance and better financial and monetary stability in the world.
Sadly, in this euro crisis, we have learned from experience in a very painful way. You can tell where I am going with this. Today, we are discussing the new candidate for the future position of Managing Director of the IMF. You quite rightly say that this must be an open process, but we do not need to hide under a bushel the fact that we, Europe, have an outstanding candidate. I am happy that we, in Parliament, are also able, through this debate, to give our express support to that candidate.
In a time of crisis, it is important to have an outstandingly qualified woman in this top role as, in a crisis, female qualities could provide real added value, topped off with quality. Mrs Lagarde also has experience on both sides of the Atlantic and in multilateral governance. Viewed from this angle, too, she is an outstanding candidate. I hope that, with this backing, we are able to give you a little extra push to put forward Mrs Lagarde's case as the next occupant of the role of Managing Director of the IMF.
Pervenche Berès
Madam President, Commissioner, basically, I am wondering why you wanted to make that statement. Indeed, you ended your speech by saying: 'All our time is essentially taken up today by the reform of economic governance; the issue of the external representation of the euro area will be discussed at a later date'.
Please forgive me if I disagree with your approach, because one of the main problems in the European Union today is the issue of the external representation of the euro area. It is clear today how the currency war could easily destroy all the efforts that citizens in the euro area are being asked to make in the name of austerity and of an improved sovereign debt situation. Therefore, Europeans cannot be completely demanding internally and, at the same time, fail to show any interest in how their currency, tossed about as it is by the markets on the international stage, is faring externally. There will be no internal protection without external protection.
Please forgive me, then, if I disagree with your approach on this point. I know that the task is a difficult one, but the European Parliament has, for several years now, supported the idea of moving towards an external representation of the euro area, especially within the International Monetary Fund (IMF).
We must admit that, when Dominique Strauss-Kahn was appointed as the Managing Director of the IMF, the situation was very different: there was talk of people taking it in turns to manage the organisation. Mr Strauss-Kahn himself said that he may be the last European to head the IMF. Since then, however, the situation has changed considerably. The region in which IMF intervention is crucial today is Europe. We can see that, behind the IMF's intervention, the intervention of the large US investment banks has a significant role to play. We can also see that, sooner or later, the issue of the US economic situation could be raised and could legitimately be debated within the IMF.
All that paints a much more complex picture than simply deciding whether this person or that person should preside over the future of the IMF. Of course Europeans should be represented - they should rightly play a part in what is one of the major institutions - but, more fundamentally, what I want to know from you is: what kind of policy do we want to conduct on the international stage? What kind of mandate should a European carry out on the international stage, given the efforts we are making internally, given the influence of the markets outside the European Union and the impact they have on investment, speculation and employment in Europe?
We also think that whoever manages the IMF in the future will face a huge task: he or she must not destroy the progress made by Dominique Strauss-Kahn when he shifted ever so slightly the boundaries of what was the Washington Consensus. We can already see a hardening of attitudes today within the institution; we think that this is the wrong approach.
Finally, the issue of the IMF's place within the United Nations system will also have to be raised, and if the Europeans do put forward a candidate, they must ensure that the mandate that they give to that person is structured in such a way as to enable him or her to push for a form of global governance that rises to the post-crisis challenges that we face.
Olle Schmidt
Madam President, thank you for your response, Mr Rehn. By the end of June, we are expecting a new Managing Director to have been appointed for the International Monetary Fund (IMF) to succeed Dominique Strauss-Kahn, who has, as we all know, been accused of a very serious crime that, unfortunately, has probably also damaged the reputation of the IMF. Now, in these turbulent times, a new competent Managing Director must therefore be appointed for an important global institution such as this and the process must be open.
Like my fellow Members, I welcome the candidacy of France's finance minister, Christine Lagarde. I believe we have all found her to be a very competent person. She also has the support of several Member States and the European Commission. However, why have we not been able to agree on a common nomination procedure? It would have increased Europe's influence. That is something that we lack. If we had had a common procedure and if the Commission had taken overall responsibility, it would also have strengthened the reputation of the EU, the euro and Europe.
Article 138 of the Treaty of Lisbon states that the euro's place in the international monetary system must be strengthened. Why, therefore, has this opportunity not been taken? The Commissioner spoke of taking one step at a time, but sometimes we may have to make a little leap forward in order to strengthen our position, particularly in turbulent times. I also think it is important to point out that the IMF is in need of extensive reform, something that Mrs Berès also makes clear in her report. The work on this reform has begun. However, the EU's representation in the IMF also needs to be discussed and strengthened.
We need a stronger IMF that operates as a global lender. To summarise: we need a stronger and more representative IMF in our new global world and we need a stronger EU with a clearer voice. Finally, Mr Rehn, sometimes we need to make a leap forward.
Kay Swinburne
on behalf of the ECR Group. - Madam President, in today's uncertain economic climate, it is more important than ever that the global institutions set up to ensure financial and economic stability, which many countries around the world are dependent upon, are not used to make symbolic political statements.
The IMF is not a symbol but a working institution that needs someone at the head of it who has a strong understanding of the financial markets, the necessary skills gained from managing a large economy and the ability to communicate tough decisions to the general public. The strength of Christine Lagarde's candidacy is not that she is a European, but that she is a hugely competent individual who has shown remarkable leadership qualities throughout the financial crisis. As the primary role of the IMF is to work on conditional structural reform packages to accompany the distribution of funds to members when they are in dire straits, I believe that Ms Lagarde has shown that she is well able to broker complex agreements on controversial issues, successfully bringing together disparate parties to reach a beneficial solution.
We must not get caught up in the prism of today's eurozone crisis but look to what problems the IMF may face in the future. I believe that Ms Lagarde has the necessary skills and track record to lead the IMF during this period of economic turbulence and to steer a path of reform at the IMF to ensure its continued relevance for generations to come.
Turning to the matter of eurozone representation on international bodies, as financial markets do not respect national boundaries, it is hugely important that global institutions work effectively to coordinate national policy. While I am in favour of more coordination, efficiency and the linking up of policies to avoid regulatory gaps, I believe that the EU must not lose its diverse set of voices in international institutions. The crisis has shown the huge differences between the economies of the EU even within the eurozone, let alone the differences between non-eurozone countries as well. All of our countries have been affected in different ways in the current crisis and we have different experiences. A single voice is not as strong as a multitude of voices singing in harmony.
Philippe Lamberts
Madam President, Commissioner, ladies and gentlemen, I have four comments that I should like to make. Firstly, I should like to come back to Mr Schmidt's speech so as to discuss the process again. Given that a role as important as the Managing Director of the International Monetary Fund is at stake, I think that, compared to the energy that is at times put into recruiting third-level managers in companies, the way in which this process is being handled shows a lack of professionalism.
Instead of a relatively open, transparent and criteria-based process, what do we have? A series of caucuses bringing together Heads of State or Government who say to each other, 'I would definitely put forward such and such a person'. That does nothing to enhance the European Union's credibility. The fact is, after the Dominique Strauss-Kahn episode, Europe cannot afford to cut corners when deciding who its candidate is going to be.
This is a missed opportunity as far as I am concerned. I do not hold you responsible for this - you are not the one calling the shots on this issue - but we would most certainly benefit from taking a much more organised, concerted and professional approach.
Secondly, I should like to respond to Mrs Swinburne. It is time to respond frankly to those who, like you, Mrs Swinburne, and you, Mr Farage, continue to peddle the mistaken idea that we Europeans will be able to influence world affairs - which affect us too - by speaking with a multitude of voices.
Mrs Swinburne, it is all well and good talking about voices singing in harmony, but you know very well that it does not work like that. If, at some point, we have something other than a democratic federation, the voices will not sing in harmony, because everyone will look after the interests of his or her electorate. That is how it works.
Furthermore, if you think, Mr Farage and Mrs Swinburne, that you are going to defend the so-called sovereignty of the United Kingdom - and that applies to all the Member States, be they small States like my own, or large States such as Germany, France and the United Kingdom - if you think that, alone, you will still be able to exert some influence in the world, then I think you are sadly mistaken.
My third comment concerns the IMF's attitude during the crisis, when compared to that of the European Union. On this issue, Commissioner, I do hold you responsible. After all, we recall that, in all the discussions held by the Troikas travelling to the various Member States that we are trying to help, ultimately, it is the IMF - and it almost pains me to say this after everything that we Greens said about the IMF in the 1980s and 1990s - that is the most reasonable today, while the Commission and the Central Bank are the ones setting the toughest conditions.
We cannot permit this state of affairs as Europeans. I cannot understand why you are trying to act like a bigger Catholic than the Pope - I am not sure whether I can say that to a Finn but, there, I have said it anyway!
Jürgen Klute
Madam President, ladies and gentlemen, this is not so much about individual people; it is, first and foremost, about a selection process. Surprisingly, anyone who searches for information on the selection process for the Managing Director of the International Monetary Fund (IMF) on the Internet will essentially only discover that the United States and Europe share the two leading positions. That means that the economically strongest nations, as a minority, share control of the global economy among themselves, so to speak.
That is feudalism and has nothing to do with democracy, and that is why we cannot accept this. In our view, Dominique Strauss-Kahn stepping down presents a major opportunity to make fundamental changes at this point to the nomination and selection process and to make it an open, transparent and, above all, merit- and qualification-based selection process, as some NGOs have been calling for recently.
This should also include a combination of majority votes from the members of the IMF and a majority of voting shares in the IMF. Up to now, only the voting shares in the IMF have been taken into account, which ensures a structural majority for the economically strong nations. This sort of reform and change to the selection process would correspond to the reform of the IMF, which would also correspond to the changes in global economic relations and would give the developing countries a chance to bring their experience with the IMF to bear in the further development of the IMF.
In closing, I would just like to say that the IMF must be placed under an obligation to work in the interests of reducing global imbalances and poverty.
Nigel Farage
on behalf of the EFD Group. - Madam President, I would like to say to Commissioner Rehn that I have been looking at the IMF Charter. There is nothing here that will surprise you; it is there to promote balance, growth, exchange rate stability, to lessen disequilibrium and to help countries that are in trouble. The classic method uses is to shore up the finances and organise a competitive devaluation.
Nowhere in here does it say that the IMF is there to support political experiments and, in so many ways, that is what Dominique Strauss-Kahn did. He used the IMF to help bail out the failing euro project and, as such, he was a very poor choice of candidate. Now you want to compound that by approving Christine Lagarde - another member of the European political elite, another euro fanatic, somebody else who believes in propping up this euro project - and I would have thought that, as she has got a vested interest, she is, in fact, a highly unsuitable candidate.
It is as if the EU has hijacked the IMF, that it is now there as part of the support mechanism for the euro, so that it is not just the taxpayers of the eurozone and the non-eurozone EU members, but the whole world that now has to help prop up the euro as the Greek problem compounds by the day.
Well, I suppose in some ways, you may well need Mrs Lagarde because not only is Greece going bust, not only are we heading for the fourth bail-out, but as I have warned before in this Assembly, the validity of the European Central Bank itself will very shortly be called into question. I have warned that you cannot go on buying your own bad debt, but we have reached the point where, within weeks, we may well see that the ECB itself is not solvent, so perhaps your friend Mrs Lagarde can help bail that out as well.
I would have thought this is a very poor choice. The international community at some point will tell you where to get off - perhaps not just quite yet.
Jean-Paul Gauzès
(FR) Madam President, Commissioner, ladies and gentlemen, I rise on behalf of Mrs Lulling and Mr Langen, too; they had their own speaking time, but I assure you that I will not use it all up.
I would just like to point out, as every one of you has done here, that the process of selecting a new Managing Director of the IMF has begun.
It is important for the European Union to express a unanimous and strong position that is conveyed not only by the various Member States, but also by the Commission, and you have pledged to do that, Commissioner.
Many of us in this House, with the exception of Mr Farage, are very keen to see the balance - a popular one until now - between the United States and Europe maintained during the process of appointing the Managing Director of the IMF and the President of the World Bank.
We fully understand that emerging countries - particularly the largest ones - would like more of a say in the IMF's decision making. It is important, therefore, to continue the reforms under way regarding the governance of that international institution, and particularly the ones that you also mentioned, Commissioner. However, it is definitely too soon for any radical changes to the balance achieved as a result of the Member States' respective financial contributions to the Fund.
Only one European candidate has launched a proper campaign by making contact with the various Member States. That candidate - who, by the way, is a woman - has the qualities required. Her skills, political experience, moral authority and perfect command of English, coupled with her experience of working across the globe, make her the ideal candidate for the post of Managing Director of the IMF.
As has been said, the Managing Director must be someone who seeks consensus and is effective at a time when the institution has a vital role to play in helping to redress the economic and financial balance with a great sense of purpose. Our Union must therefore do whatever it takes to secure Christine Lagarde's appointment.
Pervenche Berès
(FR) Madam President, I believe there is, nonetheless, a great paradox in this debate. Basically, it is vital that nothing changes between the World Bank and the IMF. We Europeans are the ones who stand to gain from multilateralism working, but multilateralism will not work if emerging countries are involved only to a limited extent, at the G20 or elsewhere. We really must approach this issue dynamically and with a sense of perspective. Furthermore, I find it rather paradoxical that, now that we are launching an urgent campaign to see a European appointed as the head of the IMF, we are not setting an example as Europeans by saying, Commissioner, that this is a step in the direction of the external representation of the euro area.
What explains your great impatience and determination to see a European appointed if not your desire to take this step, which you tell us is not urgent and can keep for another day? If we want to make a go of multilateralism, then we ourselves need to set an example, be consistent and show how well it can work in the future, because the IMF has an absolutely crucial role to play in the field of global governance, a role that transcends the issue of European debt and of the sovereign debt situations of the European countries that are struggling. This is a crucial task, but the IMF's role, beyond stabilising the markets, is also to help correct the global imbalances that caused this crisis.
It is clear today that you are not taking this absolutely crucial governance issue into account in the way in which you promote, or otherwise, a given candidate. Yet this is what interests us socialists: seeing the IMF play a part in global governance so as to correct the imbalances that caused this crisis.
Patrick Le Hyaric
(FR) Madam President, Commissioner, like everyone else in this House, I am not disregarding the method used to select the future Managing Director of the International Monetary Fund, but what matters most to the people is knowing what new role that international institution plans to carry out in order to help end today's serious economic, financial, budgetary and monetary crises.
The International Monetary Fund needs to become much more democratic and focused on human development, education and employment. The United States' blocking minority should, in my view, be lifted. The voting rights of emerging countries should be significantly increased.
The IMF should be a tool against speculation, which is suffocating populations today, an effective tool for stabilising agricultural and commodities markets, in order to combat the tax havens that people often talk about. Instead of a currency war, the IMF should launch a major new project: that of a common world currency for cooperation instead of a war of economics and competition.
That is what we should be discussing as a matter of priority, so that people's quality of life improves and bankers stop enriching themselves by plundering nations.
Róża Gräfin von Thun und Hohenstein
(PL) Madam President, it is unfortunate that the IMF has recently been discussed only in the context of the affair concerning its former head, Dominique Strauss-Kahn. It is not only the prestige of this important position and the whole institution which has suffered, but also the prestige of a European politician occupying such an important position. I think that if, as a result of this, we finally stop tolerating behaviour which everyone knew about and which is far too widely accepted, this would be the one positive thing to come out of the whole terrible affair. However, now we have to fight to rebuild the reputation of this position and the institution of the IMF. For this to happen, we need to propose a competent person for this position who will be able to maintain calm on the markets, in the media and in general public opinion in what is, today, a very difficult situation. It is important that the candidate should be credible, and Christine Lagarde has been acknowledged by the Financial Times as being the best Minister for Finance in the euro area in 2009. The Commissioner has already mentioned how well she led the presidency at the G20. She is a person whose credibility cannot be called into question. We cannot underestimate the role of the IMF, particularly now when there is a financial and economic crisis which is affecting many countries in Europe. European thinking should therefore be present in this institution. We need someone in this position who understands the significance of the present crisis. While dealing with global finances at the IMF and using the skills and international experience she gained in the European Union, I know that Christine Lagarde will not lose sight of European interests. She said herself that if she were to be chosen for the post, she would bring all her experience as a lawyer, managing director, minister and woman to the Fund. Let us pay particular attention to the final element, which is very important in this situation.
João Ferreira
(PT) Madam President, the process of replacing the Managing Director of the International Monetary Fund (IMF) is inseparable from the difficulties and contradictions which the capitalist system is facing today in the light of its worsening crisis. The ongoing change to one of the institutions at the system's apex is inextricably linked to the disputes between the various factions of big capital, where conflicts are emerging between the major powers. It is also inseparable from the unresolved issue of reforming the monetary system and, with it, the currency war over the dollar's hegemony at global level. This is a war whose consequences are dumped onto the backs of the workers and peoples of the periphery, as we can see in the European Union.
Without hiding for one moment the enormous extent to which the centre left and its longstanding ties with neoliberalism are responsible for this process, it is also inseparable from the conflict between those who have been accepting the need to restructure debts within the euro area and those who are pushing to rush blindly on ahead towards new means of institutionalised and openly colonial intervention.
In any case, both seem committed to taking the exploitation and oppression of the workers and peoples to new levels.
Niki Tzavela
(EL) Madam President, Commissioner, it would appear that the 21st century will be remembered for the war between political power and the power of the financial institutions. There are countries on the planet which are literally governed by anonymous financial institutions and the citizens of those countries are led hither and thither and their fate is determined by what the markets are doing.
I believe that Mrs Lagarde will be a worthy and able representative of the European Union; she is well qualified for the job thanks to the experience which she acquired during this stormy period of economic crisis and I believe that she will be a worthy representative of the European economy within the framework of global economic governance.
Paul Rübig
(DE) Madam President, I think it is important that Mrs Lagarde is appointed to this leading role. In France, she has proven that she understands the economy, that she also promotes small and medium-sized enterprises, in particular, and that she has regard for those who actually work and make a contribution. It is surely also a principle of the International Monetary Fund to work to improve people's standard of living. Redistribution is only possible if there is actually something produced to be redistributed.
Therefore, the reform of the International Monetary Fund and the World Bank is an absolutely priority. We must ensure that those countries with financial problems receive the necessary instruction and that the appropriate knowledge is passed on with regard to the way that we are trying hard to solve these problems in the European Union.
Ilda Figueiredo
(PT) Madam President, the debate we are having here is ducking the most important issues. In other words, it is not tackling the serious problem posed by international capitalism: the problem of the financial markets that are controlling our economies; that are trying to impose their rules on countries themselves; that are continuing to exacerbate inequality, discrimination, and attacks on workers' rights and essential public services; and that are contributing to an increase in poverty and social exclusion, not only internationally, in less developed countries, but also here in the European Union and in many of our Member States.
Therefore, what was needed was for the Commission to adopt a strong position in order to change the situation; to bring an end to tax havens; to control the financial markets; and to prevent the exacerbation of inequality and exploitation.
Olli Rehn
Member of the Commission. - Madam President, honourable Members, let me first thank you for a very substantive debate. I believe that there is a broad consensus in this House - not a full but a broad consensus - on the selection process of the next Managing Director of the IMF. It has to be open, transparent and merit-based.
I also sense that there is broad support - maybe not full but broad support - for Mrs Lagarde, who has already been endorsed by the EU Member States and by the Commission as their candidate for Managing Director of the IMF.
I want to make three points to respond to some of the views expressed in the course of the debate. First, the IMF has played a key role, in cooperation with the European Union, in overcoming the sovereign debt crisis in Europe, for which Dominique Strauss-Kahn made a major contribution as the Managing Director of the International Monetary Fund.
While we still face considerable turbulence in some segments of the sovereign debt markets of certain countries, we have been able to contain the sovereign debt crisis and protect the ongoing economic recovery in Europe. Of course the work has to go on, and we still have difficult decisions ahead of us, not least in the coming weeks in June. But let us recall that there has been no Lehman Brothers catastrophe on European soil, and we have to make sure that there will not be. That would be detrimental to economic growth and improving employment in Europe.
Secondly, we have had very good cooperation between the Commission, the ECB and the IMF, which was not self-evident when we started about a year and a half ago in terms of fire-fighting the financial turmoil. Each of these three institutions has its own rules, its own philosophy and its own independence, and it was not self-evident that they could work together in order to overcome these challenges. However, I dare to say that a pragmatic sense of crisis-awareness has prevailed and helped us to cooperate in order to contain the sovereign debt crisis and protect economic recovery.
Thirdly, I do agree that we need to reform our external representation. As I said in my opening remarks, we now have a huge task, firstly to conclude the internal economic governance reform. We are just about to do this, and I count on you to enable us to do it in the course of June, before the summer break. This is extremely important for the credibility of the European Union in these times of crisis. So let us all do our best in order to ensure that we will complete this indispensable reform of EU economic governance.
In the long term, our goal is a single seat, at least for the euro area. In the short term, we need better practical and pragmatic policy coordination among the EU Member States that are represented in the G20 or G7 or in the IMF. I must say that I have seen plenty of concrete improvement in that regard, so that the EU Member States that are represented in the G20, or in the IMF or in the G7, mostly share common goals and are mostly working together as an orchestra and not with different voices.
Yes, we have plenty of room for improvement and we have to discuss this thoroughly. But, as I said, let us first conclude the internal governance reform and then we can come back to the issue of how to improve our external representation. The rights of the emerging economies mean that it is in the fundamental interest of the European Union, its citizens and its Member States for us to be more united and thus more effective in advancing our causes and our interests on the global scene.
President
The debate is closed.
Written statements (Rule 149)
Edward Scicluna
in writing. - Whoever the next Managing Director of the IMF is, he or she will have a huge task. The coming years are likely to be dominated by major international financial and economic governance reforms. There are many excellent candidates, and I hope the selection is based on merit, not politics. The reality is that the EU punches below its weight at global level, be it at the G20, IMF or WTO. It does not speak with one coherent voice, but with many voices. This is a serious shortcoming that particularly affects smaller Member States, who lack the diplomatic muscle of the larger nations. Provided policy positions were agreed transparently and democratically, we would benefit from the EU playing a more active role in reshaping the international monetary and financial system. The Committee on Economic Affairs is currently working on a report on global economic governance, which I hope will lead to Commission proposals on improvements to the EU's external representation in this field. The EU is an economic bloc representing over 450 million people, with a currency that is the world's second international reserve currency. But if we do not take it seriously, neither will the rest of the world.
