Trevor Manuel a good bet to be next IMF boss

2011-05-21 00:00

FOR once, share prices and economic data dropped off the business-lunch circuit this week. Talk, instead, focused on DSK — Dominique Strauss-Kahn — the 62-year-old Frenchman whose spectacular fall is matched only by the salacious tale which caused it.

For those who’ve been in the bushveld, DSK spent most of the past week in New York’s Rikers Island prison. He stands accused of forcing himself on a hotel chambermaid young enough to be his fifth daughter. Bail was granted on Thursday, at the second attempt, with conditions consistent with those imposed on serial sex offenders.

Until last week, DSK was best known as managing director of the International Monetary Fund, the body which monitors the world’s economic risks, and those of its 187 member countries. Within a month he was expected to announce his candidature for the French presidential election, where he was likely to defeat the unpopular Nicolas Sarkozy.

DSK’s accuser is a 32-year-old single mother who says she thought the $3 000 a night suite at the New York Sofitel had been vacated. She says that she started cleaning when the naked grandfather pounced on her from the bathroom. Adding to the tabloid drama are reports that later that afternoon, United States police hoisted DSK out of his first-class Air France seat only minutes before its takeoff for Paris.

Conspiracy theories have been quick to surface. London’s Telegraph newspaper reported that news of the scandal first appeared on a right-wing blog (DSK is a socialist), suggesting that there is more to this than a poor immigrant from Guinea being abused by a powerful rogue. According to a French poll, 60% of DSK’s country people believe that he has been set up by political opponents. The man himself says that the sex was consensual.

The transparent U.S. court process promises to make this a media event rivalling the OJ Simpson trial. But whatever the verdict, DSK’s career is on the scrap heap. The re-emergence of all-but-forgotten allegations of sexual abuse by two other women has seen to that.

We might never really know whether DSK is the victim of a classic “honey trap”, or is a lecherous rapist. But apart from launching a 1 000 opinions, his troubles do provide a new focus for those watching global power shifts. For decades, the rich countries have followed a simple tradition on the twin Bretton Woods multilaterals — a European is managing director of the IMF and an American heads the World Bank. This is so entrenched that media pundits make French finance minister Christine Lagarde the favourite to succeed DSK.

The real succession discussions, though, should provide a reminder that leaders of developing countries are tired of such traditions. They have long grumbled about an old-boys’ club that forgets that half the world’s economic activity and 80% of its growth is now generated outside the rich north. That it comes from countries home to nine in every 10 people on Earth.

Last Wednesday, Finance Minister Pravin Gordhan issued a statement reminding us of an agreement that “a transparent and competitive process” would be used in future on appointments at the IMF and World Bank. He added: “There are several candidates from developing countries who are credible and are eminently suitable to run the IMF.”

That Gordhan’s former boss, Trevor Manuel, is one of those candidates hasn’t escaped anyone. Including online bookmakers who put his chance of succeeding DSK at six to one. His only serious emerging-market competitor, according to the bookies, is Turkish economist and former United Nations Development Programme head Kemal Dervis, at odds of three and a half to one.

Most of the cash, though, has been put on the tradition continuing.

Lagarde is even-money favourite to become DSK’s successor at the IMF with Italian central bank governor Mario Draghi, who is next favoured at two to one. The other European on the bookies’ shortlist is the Swiss Josef Ackermann, currently CEO of Deutsche Bank. His odds are four to one. For the adventurous, you can get 250 to one on Allan Greenspan making a spectacular return. But given the way global power is moving, I wouldn’t mind a little of that six to one on Manuel.

 — alechogg@gmail.com

• Alec Hogg is the founder and editor-in-chief of Moneyweb. He presents Market Update with Moneyweb on SAFM week nights at 6 pm.

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