EU partners try to slow Sarkozy push for IMF nominee

BRUSSELS, July 9 (Reuters) France's European partners sought today to put the brakes on its drive to nominate former Finance Minister Dominique Strauss-Kahn as next head of the International Monetary Fund.

President Nicolas Sarkozy announced in a newspaper interview published yesterday that he wanted the respected, multilingual former Socialist finance chief to be the European candidate to succeed Spain's Rodrigo Rato, who is stepping down in October.

Sarkozy said he had already put forward Strauss-Kahn's name to US President George W Bush and the leaders of Spain, Italy and Britain in what some diplomats saw as a bid to seize the initiative before rival European contenders emerged.

The position traditionally goes to a European, although this time around developing nations are challenging the carve-up where Europeans head the IMF with US support and an American leads the World Bank with Europe's blessing.

A source in the Portuguese European Union presidency said EU finance ministers would discuss the IMF succession over lunch tomorrow but were unlikely to pick a candidate. ''I expect to have a broad exchange of views between the ministers on the head of the IMF. There have been a number of informal contacts and I expect these to continue,'' the Portuguese presidency source said.

''I do not expect to have a name coming out from the meeting tomorrow but we will see,'' he said.

German Finance Minister Peer Steinbrueck's spokesman Torsten Albig said on Saturday the minister was informed in advance and Germany held Strauss-Kahn in high regard as a ''good European candidate''. But he added the cabinet would discuss the proposal before Berlin gave a formal endorsement.

OTHER CANDIDATES Steinbrueck's deputy, Thomas Mirow, today said that while Strauss-Kahn's competence was not in doubt, there were other candidates.

''The credentials of Strauss-Kahn cannot be disputed. As regards the political process, we have just started,'' Mirow told reporters at an insurance industry seminar in Berlin.

He said he was aware of a Dutch candidate, whom he did not identify. Diplomats said former Dutch Finance Minister Gerrit Zalm was a potential runner.

But a spokesman for the Dutch Finance Ministry said: ''Obviously Mr Zalm would make an excellent candidate for the post but unfortunately he has said that he is not available.'' Austrian Finance Minister Wilhelm Molterer told Reuters no common European position on the IMF leadership had been agreed. He declined comment on the French bid.

Diplomats say Italy is also interested in the position. Italian names mentioned include Bank of Italy Governor Mario Draghi, former European Competition Commissioner Mario Monti and Finance Minister Tommaso Padoa-Schioppa.

Draghi reiterated today he did not want the job, telling reporters in Milan: ''I am not interested.'' Padoa-Schioppa has said the only IMF role he seeks is chairman of the policy-setting interim committee of finance ministers.

A European finance official said Britain, one of the European members of the Group of Seven major industrialised nations, believed it was too soon for Europe to put forward a candidate this month.

Critics have suggested that Sarkozy, who won power in May, wants to place Strauss-Kahn in the prestigious post partly for domestic reasons, to deprive the opposition Socialists of one of their most popular and effective figures.

The IMF board is to meet next week in Washington, officials there said, at the prompting of developing nations.

They want a rethink on the US-European duopoly which has existed since the IMF and World Bank were created after World War Two, but which no longer reflects the true balance of economic power since the rise of China and other giants that were economic minnows half a century ago.

Sarkozy was to attend a meeting of euro zone finance ministers this evening to defend his plans to introduce tax cuts, which will weigh on the French deficit, and was expected to use his presence to promote Strauss-Kahn's candidacy.

Strauss-Kahn speaks fluent English and German and is a strong advocate of the concept of a mixed economy, coupling free-market reform with the defence of a state role in industry.

REUTERS SV BD1722