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Russia Backs Czech to Head IMF, But Czechs Don't

By Reuters
Wednesday, 22 Aug 2007 | 6:49 AM ET

Russia nominated former Czech premier and central bank chief Josef Tosovsky on Wednesday to run the International Monetary Fund, but the Czech government immediately disowned his candidacy.

The announcement confirms news that broke on Tuesday and brings a second contender into the race to head the global lender after the European Union proposed France's former finance minister, Dominique Strauss-Kahn.

But the demarche appeared to backfire as the Czech Republic - which broke away from the Soviet orbit in 1989 and joined the EU in 2004 - repudiated Tosovsky's candidacy and instead endorsed Strauss-Kahn.

"Mr. Tosovsky is not the Czech Republic's candidate," Czech Deputy Prime Minister Alexandr Vondra told Reuters through an assistant.

The Kremlin denied Russia was playing politics by proposing Tosovsky, who headed the Czech central bank from 1990 to 2000 and was drafted in by President Vaclav Havel as caretaker prime minister during a political crisis in 1997.

"Tosovsky's candidacy, backed by a number of states, has been proposed for professional reasons," Kremlin spokesman Dmitry Peskov said. "The nomination is in no way aimed against Strauss-Kahn."

Challenge

The nomination reflects a desire on the part of big emerging market nations to break a duopoly under which the EU chooses the head of the IMF while the United States picks the boss of its sister institution, the World Bank.

"We held broad consultations with our colleagues from other countries and are convinced that a majority of them support the election of the fund's managing director on a competitive basis," the Russian Finance Ministry said in a statement.

The ministry did not say which other countries had backed Tosovsky's candidacy, instead describing the economist as "the right person, in the right place, at the right time."

Tosovsky, 56, accepted the nomination, saying: "I am pleased that my proposed nomination received a positive reaction from finance ministers and governors of several countries from all regions."

Tosovsky now chairs the Financial Stability Institute in Switzerland, a branch of the Bank for International Settlements, but is no longer viewed as an establishment figure in Prague.

Dissonance

The dissonance between Moscow and Prague on the IMF race may reflect strains over plans by the United States to site an anti-missile defence system in the Czech Republic and Poland, diplomats said.

Russia, already angered by the eastward enlargement of NATO that brought the western alliance up to its frontier, regards the shield as a security threat.

Its military chief of staff, Yuri Baluyevsky, said this week it would be a "big mistake" for the Czechs to host a radar station on its territory as part of the system to track missiles crossing European territory.

The IMF job fell vacant in July after the sudden resignation of Rodrigo Rato, who was in the midst of reforming the 63-year-old fund to boost its monitoring of the world economy and give greater voting clout to emerging powers like China.

The selection process is due to be completed by August 31, after which the IMF board will decide who gets to head up the Washington-based institution.

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