Dominique Strauss-Kahn, a success for the IMF

The idea here is not to judge what is widely discussed everywhere. An investigation is running and will probably be the reflection of what really happened.

We have no knowledge of the facts so we will only focus ourselves on what Mr Strauss-Kahn did when he was the head of the IMF.

1/ The achievements

The reform of the voting rights:

Six months were necessary for DSK to make members reach an agreement. The voting rights have been recalculated and now give more power to emerging countries. The IMF reached a consensus on the new distribution of votes that is much closer to what the world’s economy is like today.

The improvement of the finances:

The accounts of the IMF were in such a bad shape in 2007 that it was necessary for DSK to make them sell some of their gold reserves. Budget cuts were also established and a lot of executives were fired. The organization has never been as rich as it is today! For that reason, members decided in April 2009 to triple IMF’s resources and in November 2010 to double their own contribution to the capital of the organization.

Interest-free loans for poor countries:

It is under Strauss-Kahn that, for the first time in its history, the IMF decided in July 2009 to cancel the interests of the poorest countries for a period of two and a half years; period that can be extended.

The modernization of the loans’ instruments and surveillance:

Facing the world economic crisis, the IMF looked for ways to protect countries that were not necessarily in a desperate situation. He invented in 2009 a "flexible" credit line for the countries that are well managed. A report will also be issued by the IMF this summer and will study the cross-border repercussions of the different “big savings” policies that have been put in place in China, United States, Great Britain, Japan and in the Euro zone.

2/ What he was still working on

The reform of the international monetary system:

Few member states are satisfied how the system works and DSK wanted to place the IMF at the top of the upcoming reform. He resigned after having only drawing the directions to follow.

The restoration of the image of the IMF in countries facing difficulties:

Strauss-Kahn was often delighted to notice that thanks to his changes, the IMF was better considered now than before in countries where the institution had left a disastrous souvenir (South Korea, Indonesia,…). African countries, Brazil and India had always seen the IMF as being one of the tools of the developed nations against them but this image was also deeply changing. DSK wanted now to tackle the bad feeling countries where he had to intervene and impose draconian rigorous programs have towards the IMF. He will not have the time to and therefore the IMF will remain particularly unpopular in countries such as Romania, Greece, Portugal and Ireland.

The change of the institution’s world vision:

Dominique Strauss-Kahn, coming from the political world, has pronounced speeches on the disparities and the damages of the financial globalization that have been widely acclaimed. However, he didn’t have the time to transform his words into actions and the IMF remains an example of the domination of the western countries over the rest of the world.

No one needs to be pro Strauss-Kahn to notice that he has done a great job for the institution and that he followed perfectly what he had in mind. He has been appointed by Western countries and he has served them well. He even managed to “clean” the IMF by improving its finances and renew its image around the world.

Everybody knew he was one of the greatest economists of these times and he proved it everyday acting as one of the most influential person in the world.

Now, countries are fighting and are proposing their own candidates. We are talking a lot about having someone from an emerging country but it seems that Europe, Japan, US and Russia are particularly reluctant.

Mrs Lagarde will probably be the candidate of the countries of the G8 and we will see if, in the case she is appointed, she brings the same spirit and energy Mr Strauss-Kahn did.

Posted in: State Agency,World