Why U.S. Blocked German Choice for IMF Chief

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It looks as though it's back to the drawing board for Gerhard Schroeder. The German chancellor, who has long sought to have a German installed at the helm of the one of the world's ruling bodies, thought he had a lock on the top job at the International Monetary Fund — after all, since its inception after World War II, Europe has traditionally picked the IMF's leader (America got to choose the head of the World Bank). And on Monday, following months of lobbying, Schroeder convinced the 14 other European Union member nations to throw their support behind Caio Koch-Weser, a German technocrat who speaks five languages and has worked at the World Bank for a quarter of a century. But the Clinton administration wasted no time slapping down the E.U. choice, asserting that Koch-Weser is a lightweight who lacks the leadership skills to run an organization that acts as the world's financial fire brigade. E.U. leaders call it an another attempt by the U.S. to control the global economy — American Stanley Fischer, the IMF's interim chief, is Koch-Weser's primary competitor for the post. But America is not the only Fischer fan — an unusual alliance of Arab and African countries has thrown its weight behind Fischer's candidacy.

Another concern for Clinton is that Germany might be tempted to use the IMF chairmanship to deal with some of its own financial woes. "Germany is the central bank for the Euro, which has just dropped below the dollar," notes TIME international affairs correspondent William Dowell, referring to the E.U. currency, which was introduced in 1998 with a value greater than $1. "There's concern in Washington that a German-run IMF will put pressure on the U.S. economy to help build up the Euro. So a lot of people in the E.U. say this is an attempt to make sure that doesn't happen"

Still, it's in Washington's interest not to look too power-hungry. "The U.S. has got so much on its plate right now," says TIME Brussels bureau chief James Graff. "There are so many areas where the U.S. looks as though it's trying to assert unilateral power. It doesn't need another one." While Secretary of State Madeleine Albright has asked the E.U. not to take the Koch-Weser rebuke as an attempt to keep Fischer in power, it appears Schroeder will have to resign himself to the fact that the next IMF chief will not be a German. "There's always the chance with a situation like this," notes Graff, "that if they can't decide on a candidate from a major country, they'll just give the post to some genius from from a small, obscure country such as Luxembourg."