Sunday 18 August 2019

Dutch seek backing to send Dijsselbloem to IMF

Jeroen Dijsselbloem. Photo: AP Photo/Geert Vanden Wijngaert
Jeroen Dijsselbloem. Photo: AP Photo/Geert Vanden Wijngaert

John Hermse and Viktoria Dendrinou

The Dutch government is campaigning for former finance minister Jeroen Dijsselbloem to be the next managing director of the International Monetary Fund, according to a person familiar with the matter. His appointment would put a senior euro-area crisis veteran at the top of the Washington-based lender at a time when the global economy is the weakest in a decade and increasingly threatened by trade tensions.

Mr Dijsselbloem is one of a handful of names being floated at the moment, including Bank of England governor Mark Carney, while several possible candidates are already calling key finance ministries to drum up support, according to a senior EU official. IMF managing director Christine Lagarde of France will step down on September 12 to become president of the European Central Bank once Mario Draghi leaves on October 31. The IMF's last 11 managing directors came from Europe.

Mr Dijsselbloem, 53, who served as Dutch finance minister between 2012 and 2017, gained prominence in 2013 after he became president of the Eurogroup, the powerful gathering of euro-area finance ministers. From that post, he spearheaded the bloc's efforts to navigate the sovereign debt crisis, including striking bailout agreements for Cyprus and Greece. In 2015, he led testy negotiations with Athens, which included the IMF, that nearly saw the country leave the euro. He also oversaw difficult talks on creating a euro-area banking union, including common supervision and resolution frameworks for the bloc's largest banks.

His tenure at the helm of the currency bloc was not always smooth, especially in his early days in the job when a decision for a levy on Cypriot depositors, including insured ones, was heavily criticised, and eventually changed. He also drew ire over remarks linking the euro-area crisis to southern European spending on "women and drinks".

But over the years, his handling of the euro area's subsequent crises and his ability to strike delicate compromises earned him the respect of his fellow finance ministers, and of top officials at other key institutions such as the ECB.

Many of his counterparts considered him a fair and skilled moderator with a knack for bridging often very diverging positions. He did not take any other high-profile public office posts after his Eurogroup term ended in January 2018, partly because his Labour party performed poorly in the Dutch elections and was left out of the governing coalition. In May, he became chairman of the Dutch Safety Board.

European Union finance ministers have expressed a desire for the bloc to unite behind a single candidate and other highly qualified choices could still get the nod. The Bank of England's Mr Carney is seen as a highly qualified candidate, though officials have questioned whether he is "European enough" to get the bloc's support.

Other names being floated include Spanish finance minister Nadia Calvino and Bank of Finland governor Olli Rehn. That is if Europe gets to keep the job. Emerging market countries have made a pitch before, only to split over who to support and then lose out.

Ultimately though, that is because the US backed the European candidate as part of the unspoken pact that leaves the World Bank presidency in American hands. Former US treasury official David Malpass recently took the helm of that institution, as European governments assented to president Donald Trump's nominee.

Bloomberg

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