Berlin, Brussels Kristalina Georgieva is fighting. Straighten your back, carry on, pretend normality. On Tuesday, the head of the International Monetary Fund (IMF) will give the usual outlook on the world economy in a speech and set the topics for the IMF autumn meeting the following week. Georgieva wants to warn of “permanent breaks” between rich, largely vaccinated countries and poor, largely unvaccinated countries.
Actually, the IMF autumn meeting in Georgieva was supposed to prepare the big stage. For the first time since October 2019, finance ministers and central bankers will meet again in person in Washington. But now the meeting threatens to be overshadowed by allegations against the IMF boss. Georgieva is counted.
US MPs in Congress question the suitability of the 68-year-old, while top US economists are making serious allegations against them. The “Economist”, the bible of international high finance, has even called for the head of the IMF to resign.
The occasion is a data scandal from Georgia during his time at the World Bank, the sister organization of the IMF. According to a study by the US law firm WilmerHale, the Bulgarian is said to have campaigned to improve the “Doing Business Report”, which compares the business friendliness of states, in favor of China.
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The report suggests that Georgiewa put employees under pressure at the time. One motive could have been to secure China’s support for an upcoming capital increase at the World Bank. More than 300 former World Bank employees have now signed a letter in which they warn of “unprecedented reputational risks”. The most valuable asset of Washington’s financial institutions is at stake: their credibility.
Georgieva sees himself as a victim of a dirt campaign
The IMF boss denies the allegations. However, according to Handelsblatt information, the affair is not the only criticism of Georgieva: There is also unrest within the IMF, employees are disturbed by their management style, and there is talk of “serious skills weaknesses”.
All of this comes at an inopportune time for the IMF. Because the world financial fire brigade from Washington is playing a central role in the corona pandemic. As recently as August, the IMF made available an additional $ 650 billion to combat the crisis. 275 billion dollars are earmarked for emerging and developing countries – an amount that the IMF plans to increase.
The fund tries to convince the industrialized nations to leave parts of their additionally created reserves to the developing countries. These discussions are to be continued at the autumn meeting.
But now of all times the IMF has to deal with the past of its own boss. A commission set up is investigating Georgia’s role in the doing business affair and will present its results to the IMF board of directors.
The presumption that the World Bank report was shot was raised by Nobel Prize winner Paul Romer, who was chief economist at the World Bank until 2018. When he tried to prevent short-term changes in the methodology of the study that would falsify the results, Georgieva deprived him of all authority to do so, said Romer.
In an internal meeting in preparation for the annual meeting, the IMF boss once again described the portrayal of her role in the report as “untrue”. Georgiewa has also hired her own consultancy to weather the crisis: SKDK, whose clients have included prominent Democrats like Joe Biden.
The IMF has been sorting things out internally for a long time: The Africans are loyal to Georgieva because they are currently benefiting greatly from the fund’s money. Among the Europeans who pushed Georgieva through as head of the IMF, however, some countries are now critical of the Bulgarian, it is said.
USA are noticeably silent
The key to Georgia’s future, however, lies in the USA. The Americans have remained remarkably quiet so far, even though the fight against China’s growing international influence is one of the few positions on which Democrats and Republicans still agree.
Georgiewa and US Treasury Secretary Janet Yellen maintained a close exchange during the pandemic, but Yellen recently left Georgiewa’s offers to talk unanswered. Also spicy: David Lipton of all people could play a key role. The former deputy head of the IMF is one of Yellen’s advisors and is likely to have an account with Georgieva.
When the Bulgarian took over the fund, Lipton fell victim to the restructuring of the management team. The American enjoyed an excellent reputation in the IMF and was the undisputed chief strategist of the institution.
Georgieva did not want to give him exactly this prominent function. She wants to decide for herself, delegating less than her predecessor Christine Lagarde, who was not an economist and therefore left Lipton a lot of freedom.
In the meantime, the IMF has been tailored to Georgieva, which is causing displeasure internally. Her abundance of power does not correspond to her ability, Georgiewa is not very familiar with a number of topics, it is said. Others also defend the IMF boss: She is much more accessible than her predecessor, who had the habitus of a grand dame.
Several well-known economists jump aside Georgieva. In an open letter to the IMF board of directors, the Briton Nicolas Stern praised Georgia’s “integrity” in the highest tones, he doubts the substance of the audit report and warns of a change in leadership.
The US Nobel Prize laureate Joseph Stiglitz even sees the affair as a “coup attempt” by interested circles because, unlike in the past, the IMF is no longer tinkering with brutal austerity measures in needy states and is instead focusing more on social and ecological issues. Because Georgieva is using this course to dig a bit of the water off her old employer, the World Bank, she apparently made enemies there.
But it is not only because of these defense speeches that there is currently little to suggest that Georgieva will actually lose her office in the end. The Europeans only raised the Bulgarian to the post two years ago. And the US government has other concerns right now, Biden’s infrastructure program and social package are stuck in Congress.
And a look into the past shows that an IMF boss is not dismissed that quickly. Dominique Strauss-Kahn was able to hold on despite various sex affairs and internal investigations. Only when he was taken away in handcuffs did he lose his position.
More: How Kristalina Georgiewa became one of the most powerful financial managers in the world