Immoral Hazard

Ever since International Monetary Fund managing director Dominique Strauss-Kahn’s arrest last weekend, eye-popping developments have come fast and furious — most memorably the “perp walk” the Frenchman took to face prosecutors’ accusations that he sexually assaulted a hotel maid.

Now comes a spectacle that is appalling in a different way: a power grab by officials of the European Union who are insisting that they must retain their prerogative to name one of their own as Strauss-Kahn’s successor at the IMF.

The Europeans will probably get their way. If so, that will be a travesty.

The chorus began to emanate from continental capitals even before the IMF chief had a chance to acquaint himself with the unpleasantries of Rikers Island. According to top policymakers in Brussels, Berlin, and elsewhere in Europe, it is necessary to continue — at least for a while longer — the “understanding” about the management of the Fund that has existed ever since its creation in the 1940s, namely that its head will be a European.

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