Give emerging markets their due
IT IS nothing short of bizarre that the question of merit versus archaic tradition should even be a topic for debate when it comes to appointing a new head of the International Monetary Fund (IMF).
Dominique Strauss-Kahn’s resignation, following his arrest for an alleged sexual assault on a hotel maid, has naturally elevated the succession issue to the top of the IMF board’s lengthy list of crises that need to be addressed with urgency. And it is inevitable such a prominent position in global finance should be hotly contested, with the regional blocs all anxious to ensure their special interests are not relegated to the backburner.
The world is only just emerging from the 2008 credit crisis and market collapse, with the IMF playing an important role in co- ordinating the recovery and ensuring vulnerable economies with excessive debt burdens are not dragged back into recession.
But neither the need to find a replacement for Mr Strauss-Kahn who can hit the ground running on the most pressing issues facing the world, nor the fact that the fragile state of the European economy is chief among them, justifies sticking to the "convention" that the head of the IMF should be European.
It is gratifying that SA’s stance on this point of principle is supported by the Group of 20, whose committee on IMF reform happens to be co-chaired by Finance Minister Pravin Gordhan, as well as prominent Europeans such as former UK prime minister Gordon Brown, himself a candidate for the job.
The state of the world economy demands a strong and credible IMF; sticking to an outdated way of finding the best person to replace Mr Strauss-Kahn would undermine the organisation’s legitimacy in emerging markets in particular, at a time when their importance to the world’s financial health is rising.
As Australian Treasurer Wayne Swan commented, the most suitable candidate may well be European, although this newspaper believes the IMF board could do a lot worse than Planning Minister Trevor Manuel , who would bring a perspective to the organisation that it has lacked for the past 60 years.
Merit is a subjective concept, and there will inevitably be some diplomatic horse-trading associated with such international appointments. That may make it difficult for the major emerging countries to agree on a candidate, and so weaken their position. However, there are solid arguments against another European getting the job at this juncture, especially because there is fundamental disagreement within Europe on how the banking and sovereign debt crises that continue to beset the region should be resolved.
Could French Finance Minister Christine Lagarde, who has emerged as an early favourite for the IMF job, really be trusted to make unbiased judgments on issues such as rescue packages for defaulting European Union (EU) members when she has already nailed her colours so firmly to the mast of the French government? Can it be taken for granted that what is good for the EU and the survival of the European monetary union is necessarily also good for the rest of the world?
Europe is an important part of the world economy but it is no longer the financial centre around which all other nations revolve. Nor for that matter is the US, which makes a similar informal claim to the top job in the World Bank, for similarly unjustifiable reasons. For the developed nations of the northern hemisphere to cling to such privileges is shortsighted, since the tide of history is turning against them. China is the new epicentre of the world economy, in effect financing the global recovery by buying US debt.
The failure of the EU to prevent member countries from defaulting would be a significant setback, but the fate of Europe is arguably less important to the global financial system than the continued growth of the leading emerging markets that have so far helped avoid a repeat of the Great Depression.
The IEC must fix its mistake
THE Independent Electoral Commission (IEC) has been lauded for once again pulling off a well- organised election with minimum violence and delivering results quickly, which is praise profoundly deserved.
But, unfortunately, it has let itself down on the finishing line.
The one thing you really want from an electoral commission is the ability to add. Yet the IEC has put out the wrong results, which is bad enough, but it then dragged its feet in correcting them.
The problem lies with what the commission did with the results in calculating the general support of the parties. There is no reason to think there is any malfeasance or deliberate attempt to mislead; it seems like someone just made a silly mistake. The IEC did in fact use the correct figures in a presentation on Saturday, but has so far not really acknowledged the mistake.
The problem lies in the fact that the local government elections are complicated because, in some areas, people vote twice, and in other areas three times. This is because of the inclusion of district councils. Voters outside the metro areas vote for ward candidates. They also cast a proportional representation vote, and they vote for district councils. Metro voters only do the first two.
However, electoral analysis requires an assessment of not only these specific results, but also how the general support for differing parties is panning out. In an effort to provide this tally, the IEC decided to take each party’s support in each of the categories, and divide by three. This figure was the one widely quoted in the press.
However, doing so distorts the picture since it ascribes more weight to rural voters than in fact exists. The error is partly rectified by the fact that the weighting of the "district council" column is reduced to 40% of its value.
But the error remains because the third vote for district councils should be discarded entirely, not simply given a lesser weighting.
How did this affect the results? The ANC, for example, won a total of 60,98% of the ward votes, 62,93% of the proportional representation votes and 69,43% of the district council votes. The IEC therefore pegs its final proportion of the vote at 63,65%. The calculation was not made for the 2006 elections, so the most quoted figure is the proportional representation level the ANC gained in 2006, of about 65% of the votes. Hence, it appears that the ANC lost only a bit less than 1,35 percentage points.
In fact, it lost more than double that figure. With its support predominantly in the metro areas, the DA won 23,9% of the vote, not 21,9% as the IEC says.
For the sake of its credibility, the commission needs to publicly correct the error.
But, unfortunately, it has let itself down on the finishing line.
The one thing you really want from an electoral commission is the ability to add. Yet the IEC has put out the wrong results, which is bad enough, but it then dragged its feet in correcting them.
The problem lies with what the commission did with the results in calculating the general support of the parties. There is no reason to think there is any malfeasance or deliberate attempt to mislead; it seems like someone just made a silly mistake. The IEC did in fact use the correct figures in a presentation on Saturday, but has so far not really acknowledged the mistake.
The problem lies in the fact that the local government elections are complicated because, in some areas, people vote twice, and in other areas three times. This is because of the inclusion of district councils. Voters outside the metro areas vote for ward candidates. They also cast a proportional representation vote, and they vote for district councils. Metro voters only do the first two.
However, electoral analysis requires an assessment of not only these specific results, but also how the general support for differing parties is panning out. In an effort to provide this tally, the IEC decided to take each party’s support in each of the categories, and divide by three. This figure was the one widely quoted in the press.
However, doing so distorts the picture since it ascribes more weight to rural voters than in fact exists. The error is partly rectified by the fact that the weighting of the "district council" column is reduced to 40% of its value.
But the error remains because the third vote for district councils should be discarded entirely, not simply given a lesser weighting.
How did this affect the results? The ANC, for example, won a total of 60,98% of the ward votes, 62,93% of the proportional representation votes and 69,43% of the district council votes. The IEC therefore pegs its final proportion of the vote at 63,65%. The calculation was not made for the 2006 elections, so the most quoted figure is the proportional representation level the ANC gained in 2006, of about 65% of the votes. Hence, it appears that the ANC lost only a bit less than 1,35 percentage points.
In fact, it lost more than double that figure. With its support predominantly in the metro areas, the DA won 23,9% of the vote, not 21,9% as the IEC says.
For the sake of its credibility, the commission needs to publicly correct the error.
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