France's Economy Minister Christine Lagarde addresses a news conference.Aly Song/REUTERS
The headquarters of the International Monetary Fund is a 10-minute walk west on Pennsylvania Avenue from the United States Treasury Department. On the way, you pass the White House. And casting a long shadow is Capitol Hill.
The proximity of the IMF to the centres of American power is the most visible expression of the U.S.'s outsized influence over the institution.
Washington was chosen as the fund's home "against the virtually unanimous wish of every other country," Canadian economist Louis Rasminsky wrote from the institution's inaugural meeting in 1946.
Today, the U.S. government is once again set to determine the future course of an institution that has grown to serve 187 countries.
Dominique Strauss-Kahn's resignation as the IMF's managing director this week amid sexual assault charges has put a spotlight on the U.S.'s gentleman's agreement with Europe to always put a continental European in the IMF's top executive suite. The quid pro quo for the U.S. has been the right to select an American for the No. 2 spot at the fund and the presidency of the IMF's sister institution, the World Bank.
At the Group of 20 Summit in London in April, 2009, leaders - including U.S. President Barack Obama and his counterparts from Germany, France, Italy and the European Union - agreed that the "heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based process."
That pledge has put the Obama administration in a difficult position. The U.S. is the lone country with enough votes at the IMF to wield a veto over most decisions. That makes the U.S. kingmaker in the race to replace Mr. Strauss-Kahn - or queenmaker, if Europe's leading countries get their way.
European politicians are rapidly coalescing around the candidacy of French Finance Minister Christine Lagarde. Incongruities such as the G20's commitment in London to an open process and the fact that a Frenchman has run the IMF for 35 of its 65 years - including the last 3½ under Mr. Strauss-Kahn - appear to count for little.
German Chancellor Angela Merkel told reporters in Berlin Friday that "among the names mentioned for the IMF succession is French minister Christine Lagarde, whom I rate highly." Italian Prime Minister Silvio Berlusconi is among the leaders who publicly endorsed Ms. Lagarde on Thursday.
The rush by the Europeans to put forward a candidate amounts to an effort to game the system. Officials in countries such as China, Thailand, Brazil and South Africa have said this week that a candidate from an emerging market deserves a legitimate shot at the IMF job.
Yet these countries appear to lack the cohesion to quickly settle on a single candidate - especially one to match the prominence of the highly regarded Ms. Lagarde.
Kemal Dervis, the former Turkish finance minister who was among the favourites on odds maker William Hill's list of potential IMF managing directors, said in a statement that he will not be seeking the job. Philippine Finance Secretary Cesar Purisima said in an interview with Bloomberg News that Singapore Finance Minister Tharman Shanmugaratnam, who chairs the IMF's steering committee of ministers and central bankers, should be considered. Russia and some other ex-Soviet states are backing the head of Kazakhstan's central bank, Grigory Marchenko.
The U.S., meanwhile, appears to be struggling with a decision on how to wield its influence.
On Tuesday, Robert Hormats, a senior economic adviser to Secretary of State Hillary Clinton, declined to answer a question about IMF succession. A couple of days later, the Treasury issued a short statement that said Secretary Timothy Geithner wanted an "open process that leads to a prompt succession." That comment, with its emphasis on a quick transition, was widely interpreted as a nod to Ms. Lagarde's candidacy. On Friday, Mr. Geithner issued a second statement on the matter.
"We are consulting broadly with the fund's shareholders from emerging markets, as well as from advanced economies," Mr. Geithner said. "We are prepared to support a candidate with the requisite, deep experience and leadership qualities, and who can command broad support among the fund's membership."
It's to the U.S.'s advantage to support a European candidate who can pick up some support outside Europe because that would create a precedent running an American for senior positions at the IMF and the World Bank, said Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington.
Republican Richard Lugar, the ranking member of the Senate Foreign Relations Committee, said in a report last year that the World Bank president should continue to be an American. Mr. Lugar's conclusion is often cited as evidence that obtaining U.S. funding for the World Bank's poverty agenda would be made more difficult with a non-American in charge.
"The administration is thinking about the World Bank," said Mr. Kirkegaard.