Britain was comprehensively outmanoeuvred yesterday when President Sarkozy succeeded in placing Dominique Strauss-Kahn, a former French finance minister, in pole position to become the next head of the International Monetary Fund.

The decision, taken during a lengthy, informal breakfast in Brussels, was an early setback to Alistair Darling, the new Chancellor, who was attending his first European Union finance ministers’ meeting.

He had argued in vain against a snap selection process, insisting that the time had come for a radical reform of the tradition whereby Europe is guaranteed the top job at the IMF and the United States its equivalent at the World Bank.

“The British Government does not believe this situation is sustainable in the long term. We need a more open and transparent system. There needs to be an opportunity for all members of the IMF to assess individual candidates and to pick the best one for the job,” he said.

The Chancellor’s attempt to open up the contest was swept aside. Shortly before lunch, Fernando Teixeira dos Santos, the Portuguese Finance Minister chairing the meeting, announced that “a political understanding” had been reached on the French candidate.

Mr Strauss-Kahn, he said, had “the necessary qualifications and technical skill in finance and in economics in general, over and above his political skills and experience” to take over from Rodrigo de Rato, the former Spanish finance minister, who had unexpectedly resigned to spend more time with his family.

The rebuff that Britain received was later underlined by a spokesman, who insisted “we do not feel bound by a discussion” that had taken place informally over breakfast.

Mr Darling took pains to describe Mr Strauss-Kahn as “a very credible candidate” and neither he nor Gordon Brown may wish to upset long-term working relationships by actively canvassing alternative names.

After the announcement in Brussels, Mr Strauss-Kahn hinted that he was not opposed to Britain’s attempt to open the door to reform. “The upcoming period should be one of adapting the IMF to the new order created by the globalisation of finance. The mission of the fund will have to be redefined, as will the respective places of different partners, notably in giving emerging countries the role they are due,” he said.

Mr Strauss-Kahn’s formal nomination represents an audacious political coup for Mr Sarkozy. The French President had selected, and actively campaigned for, his political opponent to win the role. In the process, he contacted European Union leaders, including Mr Brown. The previous evening he had wooed eurozone finance ministers with France’s economic reform programme.

Mr Sarkozy has thus removed a dangerous political rival, continued to reach out to different talents in the country and to restore some of its battered pride.

If Mr Strauss-Kahn becomes the IMF managing director in October, Frenchmen will be at the helm of four leading international institutions: the IMF, the European Central Bank, the World Trade Organisation and the European Bank for Reconstruction and Development. A key factor in the quick decision was a fear, expressed by Jean-Claude Juncker, Luxembourg’s Prime Minister, that the EU would look indecisive if the selection process became drawn out and several candidates entered the ring.

Rise to the top

Born: April 25, 1949
1977: becomes economics professor
1981: joins Socialist Party
1986: elected to parliament 1988: chair of the National Assembly Committee on Finances
1991-93: Junior Industry Minister
1997: Economics, Finance and Industry Minister; wins IMF praise
1999: resigns after accusations of involvement in two financial scandals; is cleared later
2002: reelected to parliament
2005: announces candidacy for Socialist Party presidential nomination
2007: loses nomination to Ségolène Royal, who is defeated by Nicolas Sarkozy in the final poll

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