A Good Start.

• Author: ENGELEN, KLAUS C.
• Position: Horst Kohler managing director of International Monetary Fund

New IMF chief Horst Kohler is on the move, but landmines are everywhere.

What a difference half a year makes. While observing Horst Kohler, the new managing director of the International Monetary Fund (IMF) since taking office on May 1st of this year, an interesting question comes to mind: Did U.S. Treasury Secretary Larry Summers -- who was successful in blocking Caio Koch-Weser, the first-ever German candidate to head the IMF -- eventually get what he deserved? Namely, a strong, independent-minded, highly qualified, new managing director of the Fund from Germany, who will probably stand his ground against even the almighty U.S. Treasury. The new "MD" is also showing, in his first months in office, that he has "the stature, expertise, ability to command global support, and commitment to a process of ongoing reform."

That was the benchmark for the successor to Michel Camdessus, who stepped down on February 14th of this year, after nearly thirteen years of leading the most important multilateral institution. Summers listed these qualifications when he outlined his reform plan for the IMF in mid-December of last year in London. Only a central bank governor or a finance minister, so he said, would have the necessary qualifications to overhaul the International Monetary Fund.

It may be indicative that, after three months on the job and after sounding out part of the vast global IMF membership in Latin America, Asia, and Africa, Kohler talks for an hour about the new role of the Fund without mentioning either Larry Summers or Alan Meltzer, the Carnegie Mellon professor who coordinated the recent U.S. Congressional report that for a time dominated the discussion about the reform of the Bretton-Woods institutions.

Treasury Secretary Summers played a crucial role in blocking Caio Koch-Weser, who spent twenty-five years at the World Bank before assuming his post as Germany's Deputy Finance Minister last year -- a position that Kohler held under the former Kohl-government during the hectic years of German unification. The failed candidacy of the Brazilian-born Koch-Weser, who eventually got the support of all EU-member countries, looked at the time like a modern-day German Waterloo in the field of financial diplomacy. Most Germans felt that their candidate to head the IMF had gotten a bum rap from the Clinton administration. Some saw the Anglo-Saxon press practicing the art of professional destruction against a German candidate who may lack experience in central banking, but more than makes up for that with experience as a top manager and global development banker (see "Koch-Weser Gang Bang, The International Economy, March/April 2000).

Naming the 57-year old President of the European Bank for Reconstruction (EBRD) as Germany's and Europe's second choice to lead the IMF -- this seems to be a consensus developing in many capitals around the world -- may turn out to be a blessing in disguise. After being asked by German chancellor Gerhard Schroeder to take the important job, in lieu of Koch-Weser, Kohler was able to mobilize broad international support and, since assuming office, has made the right moves and said the right things.

"Kohler seems unfazed by the indignities surrounding his appointment, or by the maelstrom of controversy surrounding the IMF, "notes The Economist, a leading British authority on the international system. The Economist also lauds Kohler's "combination of candor, confidence, and pragmatism" that "is welcome in the corridors of international economic policy."

The new man at the top of the IMF is able to stand his ground, even against a major U.S. Treasury-led initiative of the Group of Seven. The leading industrial nations found this out when Kohler addressed the National Press Club on August 8th, in his first major public event in Washington since taking office. Commenting on the IMF Board's rejection of a G7 proposal to increase the cost of borrowing from the Fund by poor and emerging member countries, the new IMF managing director...