July 20, 2012

Departing IMF economist blasts fund for eurozone 'failure'

A senior economist who left the institution spearheading the bailouts of three eurozone countries has lambasted its lack of leadership and said its first female chief is not fit for the job.

In a leaving letter obtained exclusively by CNN and addressed to Shakour Shaalan, dean of the executive board of the International Monetary Fund, 20-year veteran Peter Doyle says he is "ashamed to have had any association with the Fund at all."

Doyle, a former advisor to the IMF's European Department, which runs its programs for Greece, Portugal and Ireland, argues the body's failure to deliver timely and sustained warnings to the region's dithering politicians had led to widespread suffering for those living in stricken countries and the risk of worse to come.

The institution's lack of decisive action, Doyle says, has left "the second global reserve currency (the euro) on the brink."

"The fund for the past two years has been playing catch-up and reactive roles in the last ditch efforts to save it," he writes.

Doyle, a former IMF division head for Israel and non-eurozone nations Sweden and Denmark, was widely respected within the organization, according to IMF insiders who did not wished to be named due to the sensitivity of the issue.

As such, the IMF said Doyle did not specifically work on nations within the monetary union. But his comments highlight strong feelings among the fund's economists about its work underway in places like Greece.

His attack comes amid concerns the fund's stringent austerity measures for debtor nations are doing more harm than good whilst failing to contain a crisis that is now well into its third year.

Doyle penned his missive on June 18 just as senior IMF representatives, including its first female Managing Director, Christine Lagarde, were trying to hammer out a new set of emergency measures with key eurozone heads of government at the Group of 20 summit in Los Cabos, Mexico.

Doyle says one of the reasons the IMF has not delivered on its surveillance of the global economy is European bias which if anything, he says, is "becoming more deeply entrenched."

"This fact is most clear," Doyle states, "in regard to the appointments for Managing Director, which over the past decade, have all-too-evidently been disastrous."

Referring to Lagarde - who recently completed her first year in the role - Doyle says, "even the current incumbent is tainted, as neither her gender, integrity, or elan can't make up for the fundamental illegitimacy of the selection process."

Doyle, who copied in Stanley Fischer, governor of the Bank of Israel, and Stefan Ingves, head of the Sweden's central bank, says his early warnings of the impending crisis were "identified well in advance but were suppressed."

William Murray, a spokesman for the IMF in Washington, said the fund had found no evidence to substantiate that claim, from Doyle or any other sources.

Doyle went on to accuse the IMF's board of preferring a "handicapped fund" paralyzed by the powerplay of international politics within its upper echelons and "subject to those proximate roots of surveillance failure."

"There are good salty people here," Doyle signs off, "but this one is moving on. You might want to take care not to lose others."

The IMF's Murray says, "A lot of the points raised are covered by a host of public reports related to the IMF's economic surveillance and public statements by the management on these issues."

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