IMF chief promises Asia greater say

By Cho Jin-seo

Staff reporter

DAEJEON ― The chief of the International Monetary Fund (IMF) offered an olive branch to Asian countries Monday, expressing regret over the draconian measures his organization imposed on them during the financial crisis that hit the region in the late 1990s.

Dominique Strauss-Kahn, managing director of the IMF, said there was "more than necessary" pain, promising to establish friendlier relations with Asia's emerging economies.

"It's time to reinvent our relationship with Asian countries," he told reporters at a two-day conference the IMF co-hosted with the Ministry of Finance and Economy. "We need Asian countries to feel at home at the IMF. It's no secret that in the last 10 years this has not always been the case, because of bad memories."

His message for renewed friendship was also reflected in a keynote speech at the International Forum, titled "Asia 21: Leading the Way Forward."

The IMF has an image problem in many Asian countries, including Korea, due to the severe measures it imposed as a remedy to the 1997-98 Asian crisis.

It recommended corporate restructuring, high interest rates and a tight fiscal budget, which led to high unemployment and social unrest in many countries.

To the contrary, the IMF has been suggesting expansionary policies to nations during the latest global financial crisis, which led to skepticism on its fairness even from Western critics.

One solution is to let Asia share the power. Strauss-Kahn, a seasoned French politician and economist, reiterated the IMF's promise to shift an additional 5 percent of voting stock in the IMF from developed nations to developing ones.

Currently, China's voting share is only 3.65 percent, while France, Germany and the United Kingdom each has more than 5 percent. India and Korea have 1.88 percent and 1.33 percent, respectively, smaller than that of Belgium. The United States dominates with 16.74 percent.

"To feel comfortable, you need to have your own room, which means we have to make room for Asian countries by increasing Asian shares and decreasing some European countries' shares. Europeans understand that," Strauss-Kahn said.

He also promised to give more senior staff positions at the IMF to Asians.

"You also need more Asian staff working at the IMF. I'm doing my best to have fewer European citizens and fewer U.S. citizens, and more Asians and more people from other parts of the world."

Kahn is hosting the conference along with Korean Finance Minister Yoon Jeung-hyun. In an event which is more like a promotional tour than an academic debate, the organizers invited some 200 influential figures, including a dozen central bankers from the region.

It is probably unfair to blame Kahn, who was not even at the IMF at the time of the Asian crisis, for the bitter memories Asian countries still hold from the 1990s.

Nevertheless, Korean reporters at the press conference peppered him with similar questions by continuing to ask about the IMF's past policy mistakes in Asia. Minister Yoon, too, was unusually straightforward in criticizing the IMF.

"Up until now, it seems that the IMF has not fully assumed its role of ensuring macroeconomic stability and supporting economic development in developing Asian countries," he said. "As Asia's clout and responsibilities in the global economy grow further, the role of the IMF must change accordingly, to adjust to the new realities of the post-crisis world."