Big shoes for the IMF to fill

Finding someone to replace a man as instrumental to the eurozone rescue as Dominque Strauss-Kahn will be no easy task.

This is not the most fashionable argument one could make so soon after the events in New York this weekend. But let me say it flat out: I believe the case for a European successor to Dominique Strauss-Kahn is overwhelming.

To be clear: I am not supporting the principle that the managing director of the International Monetary Fund should, by default, be a European. On the contrary, I believe the job should always go the most capable candidate. I just believe that, considering the IMF's current priorities, one should not be quick to rule out a European candidate.

The IMF's most important programs are currently European. The eurozone's contagious financial crisis constitutes the biggest threat to global financial stability. The IMF is a partner in the multilateral loan program for Greece, and a structural partner in the eurozone's financial rescue mechanism. The size of these dwarfs whatever else the IMF is doing at present.

What is less appreciated outside the eurozone is the IMF's political role in keeping the rescue strategy on track. Strauss-Kahn was respected by both Angela Merkel, German chancellor, and George Papandreou, Greek prime minister. He supported the view, also held by the European Central Bank, that a eurozone member should not rush into default. The eurozone clearly needed the IMF's technical competences in dealing with its crises – a set of skills largely absent in the European institutions. It also needed the IMF's co-financing. But the IMF's most important influence has been political. In a situation marked by a lack of political leadership, it filled a vacuum.

So I wonder to what extent a highly competent Mexican central banker, for example, would fulfil this role? The various candidates mentioned as potential successors are technically skilled, but in assessing their merits we should take into account that the new IMF chief will deal with largely European issues for most of their first term. He or she will have to bang heads together in meetings of European finance ministers, and converse effectively with some notoriously difficult heads of government.

Whoever is appointed should, in principle, also be able to have the German chancellor's ear. Strauss-Kahn did. His visit ahead of the announcement of the first Greek loan program a year ago was a critical step in preventing a calamity. A PhD in economics and extensive experience in dealing with financial instability may be desirable qualities. However, at a time like this, they are not sufficient. The game has changed.

That the game has become more political is partly due to decisions taken by the IMF's board under Strauss-Kahn's leadership. These changes will affect the profile of the job of managing director for good. Whoever emerges needs to combine both economic analysis and political thinking. Specifically, he or she needs a clear understanding of the nature of a European monetary union, which is neither a country nor a club. Put more simply, one cannot treat Greece in the same way as an ordinary IMF member with an independent currency.

The Europeans have monopolised the position of IMF managing director. That must stop, and it will stop. But now, and probably for the first time, we need a European managing director – or at least a director with knowledge and experience of European affairs. The Europeans would be foolish to let go of this position at a time like this. There are plenty of excellent candidates, including Christine Lagarde, the French finance minister. The reason is not an attempt to cling on to power. The reason is to ensure that the crucial job of rescuing Europe gets done.