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Thursday, 14 September, 2000, 19:03 GMT 20:03 UK
The IMF's pragmatist
The new director of the International Monetary Fund, Horst Koehler, has cut a radical figure in the first four months on the job.
Mr Koehler, who was appointed after a squabble between Europe and America, arrived too late to take part in the IMF's spring meeting, and faces his first major test in Prague.
With major anti-globalisation protests likely, Mr Koehler has emphasised that the Fund is responding to their concerns.
His message to the demonstrators is that they should be aware that "in the fund there is a willingness to change."
Mr Koehler went out of his way to meet non-governmental organisations in London on his way to Prague, and promised that the IMF was willing to speed up debt relief.
Adrian Lovett of the Jubilee 2000 coalition which campaigns for debt relief said that Mr Koehler "has made a good start."
Relations with World Bank
Mr Koehler has also moved to agree clearer boundaries with the IMF's sister organisation, the World Bank.
Critics have accused the IMF of taking over economist management of too many poor countries after the world financial crisis, sidelining the Bank.
And Mr Koehler appears more willing to limit the IMF's role, and also to reduce the demands it makes on countries for policy changes (the so-called "conditionality") which many poor countries believe are unfair.
In one of his early trips abroad, Mr Koehler criticised his organisation for forcing Mozambique and Indonesia to cut tariffs on imports of sugar as a pre-condition for an IMF loan.
"I don't want to see the Fund indirectly being an instrument where rich countries keep up their protection while we tell poor countries they should accelerate their structural change," he said in an interview with the Financial Times newspaper.
One of Mr Koehler's biggest challenges may be in forging a new working relationship with the private sector, especially the banks and bondholders which now provide much of the lending to developing countries.
The IMF has been pressing for "constructive engagement" of private banks in arranging for bail-outs in times of financial crisis, and has set up a Capital Markets Consultative Group.
But it admits that the response to its concrete proposals has been slow so far.
Mr Koehler was not Europe's first choice for the post of the head of the IMF.
The European Union's first candidate, Germany's deputy finance minister Caio Koch-Weser, was rejected by the administration in Washington because they believed he lacked enough international experience.
Europe traditionally appoints the head of the IMF, in a deal which gives Washington the post of World Bank chief.
And with Germany determined for the first time see one of its nationals at the helm, Mr Koehler emerged as the compromise candidate.
For one thing, he had experience in turning around organisations that are as troubled as the International Monetary Fund.
Mr Koehler's last job was President of the troubled European Bank for Reconstruction and Development (EBRD).
When he took the helm in September 1998, the EBRD was in deep trouble.
Given the job of boosting economic regeneration in Eastern Europe, the bank had made headlines for all the wrong reasons.
Numerous investments had gone wrong, and the bank seemed to be better at spending on its plush headquarters than any of its clients.
Mr Koehler quickly managed to get the EBRD out of the headlines, out of the red and refocus its efforts on Eastern Europe.
IMF staff beware
Success came at the price of popularity.
Mr Koehler has been described by some as a "tough pragmatist". Others have suggested that he is abrupt, if not blunt.
Mr Koehler himself says that he is "speaking candidly".
Staff at the IMF may wish they had got mild-mannered Caio Koch-Weser instead.
Entering the world stage
Mr Koehler entered the stage of international finance from an unlikely quarter, Germany's network of local and provincial savings banks.
A card-carrying member of then-Chancellor Kohl's Christian Democratic party, he was moved into the job of president of Germany's Savings Bank Association, a post he held from 1993 to 1998.
Neither that nor his PhD in economics were enough to qualify him for the EBRD job.
His real strength - and the reason why he got the IMF job - is his experience in the field of European monetary diplomacy.
As junior finance minister from 1990 to 1993 he was instrumental in drafting the Maastricht Treaty.
As an architect of Europe's Economic and Monetary Union, and a former 'sherpa' of Chancellor Kohl at various G7 summits, he is well known on the scene of international finance.
He also was Deputy Governor for Germany at the World Bank.
These experiences helped him overcome his lack of experience in other areas. Only former finance ministers and central bank presidents have held the position so far.
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