In financial capitals everywhere Monday, officials, analysts and journalists will be united by one question: who will replace Dominique Strauss-Kahn?
They will be asking this question Monday because they will have recovered from the shock of the news that hit like a thunderbolt on Saturday evening Toronto time: the managing director of the International Monetary Fund, known in his native France and around the IMF by his initials, DSK, was escorted off a Paris-bound flight in New York under suspicion of sexual assault. He was eventually charged by New York police in the wee hours Sunday.
The parlour game had begun well ahead of the charges, which Mr. Strauss-Kahn denied and will fight in court. The former French finance minister was widely expected to return home this summer to seek the Socialist nomination for next year's French presidential elections. But most in the chattering class assumed it would be several weeks, at least, before Mr. Strauss-Kahn made his announcement. Circumstances suggest the countries of the Group of 20 and the other nations with influence will have to decide on a new leader for the IMF sooner than they were expecting.
For a while, the talk was simply about which emerging official would be best suited for the job. The shifts in the global economic power structure seemed to prelude an end to the practice of giving the IMF's top job to a European. Under Mr. Strauss-Kahn, the IMF overhauled the way it allocates voting shares. China vaulted over nations such as Britain, Germany and France to become the third-biggest shareholder after the United States and Japan. The clout of former European powers such as Belgium was seriously curbed in favour of rising powers such as Brazil.
But something happened on the way to this new world order: the European debt crisis. The buzz at the spring meetings of the IMF in Washington last month was that the European powers were no longer keen to cut their special link to the fund, which is a key player in the rescues of Greece, Ireland and Portugal. With so much of the fund's current activity in Europe, the thinking was that a European should remain in charge.
Another wrinkle: the U.S. might not be willing to play along. While Europe gets to choose the head of the IMF, the U.S. gets to choose the No. 2 at the fund and the president of the World Bank. Economist Nouriel Roubini tweeted Sunday that the U.S. wants to keep the World Bank. Colin Bradford, a non-resident senior fellow at the Brookings Institution in Washington who studies international governance, says he's become less confident that the Obama administration is ready to give up its privilege of ensuring Americans serve in senior positions at the institutions. If the U.S. won't move, the Europeans might argue that they shouldn't either.
So that's the background. Here are the names. They represent three schools of thought: emerging markets will insist on their turn; Europe digs in its heels; and theoretical compromise candidates. At best, these are educated guesses, circulated by people removed from the decision making process.
The emerging-market candidate who is most consistently mentioned as a replacement is Kemal Dervis, a former Turkish finance minister and World Bank official. Simon Johnson, a professor at the Massachusetts Institute of Technology and a former chief economist at the IMF, told -- http the Financial Times that the Bank of Mexico's Agustin Carstens would make a good candidate. Another oft-sited name is Montek Singh Ahluwalia, deputy chairman of India's planning commission.
Europe's hope of retaining the maintaining the managing directorship lies with French Finance Minister Christine Lagarde, according to the gossip mongers. The former chairwoman of the international law firm Baker & McKenzie is extremely popular among her international peers. Those who make the case for her appointment hope her popularity and the novelty of selecting the first woman to lead the IMF would remove some of the bitterness of accepting another European as the fund's managing director.
In the third camp, some Canadian content: Bank of Canada Governor Mark Carney. Mr. Carney has made quite a name since taking the helm of the central bank in 2008, and is widely respected at the G20. If he was Asian, Latin American, Middle Eastern, African, or even Eastern European, he would be a front runner for the job. But he has one significant market against him: as a Canadian, he will be seen by many as too close to the United States.
The job of managing director evolved under Mr. Strauss-Kahn. His predecessors were technocrats who preferred the background to the limelight. Mr. Strauss-Kahn was different. As a former economics professor, he was more the comfortable with the technicalities of the job. But he also was a master politician, and he put his skills to use to refurbish the IMF's image. "He brought something new to the way we view IMF leadership," said Bessma Momani, who studies the fund as a senior fellow at the Centre for International Governance Innovation and as an associate professor at the University of Waterloo. "He brought a human face to the institution like no other leader has done."
The IMF is a more overtly political institution now than it used to be. The managing director is invited to the meetings of G20 leaders, and the IMF is in the middle of the group's plan to perform peer reviews of member economies. The leader of the fund will need a politician's touch, which might favor prospective candidates such as Mr. Dervis or Ms. Lagarde.
Mr. Carney's best hope is a truly meritocratic selection process: long odds, to be sure. His second-best hope is an impasse between emerging markets and Europe over who to select to replace Mr. Strauss-Kahn. A non-Canadian with access to international officials said Europeans could overplay their hand, failing to recognize the uneasiness that emerging markets have with all the money the IMF is pumping into Europe. Under this scenario, a well-respected technocrat such as Mr. Carney could be a possible compromise.
Is that enough to qualify Mr. Carney for the status of dark horse? Jeremy Harrison, the Bank of Canada's spokesman, declined to comment. Let the guessing games begin.