Calls for IMF to consider non-European to replace Rato

WASHINGTON, June 29 (Reuters) The surprise resignation of the head of the International Monetary Fund immediately prompted calls for the job search for his replacement to reach beyond Europe -- which has provided all the IMF's leaders.

The top IMF job has always gone to Europeans since the IMF's inception in 1945. Similarly, the World Bank is typically headed by an American, shutting out Japan and developing countries.

Rodrigo Rato's resignation comes just weeks after the same debate raged over the selection of the next president of the IMF's sister organisation, the World Bank, following the resignation of Paul Wolfowitz over his promotion of a companion.

Both organisations, whose biggest contributors are the United States and Europe, are under pressure to give more say to emerging countries in how they are run.

The IMF has started a reform process it hopes will do that, so opening up the selection of Rato's replacement to non Europeans will be critical, an IMF board official from a developing country said.

''It will be important for the credibility of that reform process that the selection process is opened up to candidates other than a European,'' the official told Reuters.

The ouster of Wolfowitz challenged the US leadership of the poverty-fighting World Bank.

But the board of member countries last week still chose to keep an American in the job, approving US former secretary of state, Robert Zoellick, who starts on July 1.

Rato, a former Spanish finance minister, has been IMF managing director since 2004. He said on Thursday he would leave after the institution's meetings in October.

Just hours after his announcement, IMF commentators and development groups said it was time to change the long tradition of a European heading the IMF.

''Rather than limiting the search to Europe, the governors of the IMF should open up the playing field and draw on the expertise of leaders in developing countries,'' said Bernice Romero, Oxfam International's advocacy and campaigns director.

''The World Bank failed to take the opportunity to show itself to be a modern, multilateral institution by having a closed selection process for its president. The IMF must not make the same mistake'', she added.

SPECULATION ON SUCCESSORS Kenneth Rogoff, a former IMF chief economist and now a visiting fellow at the Brookings Institution, said he was worried that the United States would not press for change in the IMF selection process because European allies had backed Washington's World Bank nominee Zoellick.

''If anything good came out of the whole Wolfowitz debacle, it was the recognition that the days when the Americans hand-picked the head of the World Bank and the Europeans hand-picked the head of the IMF had come to an end,'' Rogoff said.

''I'm worried that what's going to happen now is, the Europeans will say, 'When Wolfowitz left we didn't bug you, so why don't we just have a European (at the IMF) and defer the issue too'.

''They're just going to push it through before anyone can raise enough objections,'' he said, adding that those who might have questioned naming another European ''probably feel defeated'' after the Wolfowitz experience.

While Rato's announcement was a surprise, there was already a flurry of speculation about possible successors.

Among names cited were Bank of England Governor Mervyn King and France's Jean Lemierre who heads the European Bank for Reconstruction and Development.

''It would certainly be a shame if this was something that was done in the backroom as a political compromise and quality doesn't come into the equation,'' Rogoff added.

Rato and his predecessor Horst Koehler, now Germany's president, have said that the selection of the next IMF leaders should be opened up and based on candidates' qualifications.

Rato was selected as the IMF's chief three years ago despite a push by developing countries to open up the selection process by nominating a second candidate, Mohamed El Erian, for the job.

A straw vote by the IMF's 24-member executive board produced a majority in favor of the Spaniard, whose departure comes before he has completed his full five-year tenure.

REUTERS SLD BST1055