It is no surprise that the leading candidate to succeed Dominique Strauss-Kahn at the International Monetary Fund is another French citizen, finance minister Christine Lagarde. Yet, beyond northwestern Europe there has emerged an exceptional leader from an unlikely place: Kazakhstan.
Grigori Marchenko is Kazakhstan's central bank governor who has brought about just the kind of reforms and macroeconomic stability in his country that the IMF is supposed to cultivate in other developing nations. Marchenko's nomination by his vast but sparsely populated homeland was quickly endorsed by Russia and other former Soviet nations.
The endorsements were noted in the Western press with little reference to Marchenko beyond terming him, according to the Wall Street Journal Europe, a "competent technocrat." Having worked with Marchenko, I believe a more accurate label is "one of the most remarkable financial policymakers of the past 25 years."
As key economic advisor to Kazakh President Nursultan Nazarbayev from 1997-99, Marchenko is credited with Kazakhstan's soft landing following the Russian default of August 1998. In its immediate aftermath, Kazakhstan spent much of its then scarce foreign exchange to keep its currency from free-falling; once the panic subsided, the monetary authorities then switched to a floating exchange rate.
As chairman of the National Bank of Kazakhstan (NBK), Marchenko steered Kazakhstan to policies of financial stability, openness, and the development of a modern, transparent financial sector dramatically different from those in other transition nations. Private banks became dominant, a mortgage market emerged, strict reporting standards were imposed (with the NBK taking over regulatory authority), and a national oil fund was established. Kazakhstan became the first Commonwealth of Independent States (CIS) country to gain an investment grade from the global ratings agencies and also the first to regain and then surpass its Soviet-era GDP level.
After stepping down in 2004, Marchenko built Halyk Bank, one of the nation's largest, into a modern financial institution (including putting his reputation at stake by wisely refusing to build assets by borrowing heavily from abroad, thereby keeping it from crisis when foreign capital fled in 2009: today Halyk is by far the most profitable among the large Kazakh banks, among the first to restart lending after the crisis, and the only one to have repaid capital the government injected in 2009). His return in 2009 to head the NBK was met with approval from the financial sector, and again Marchenko took vigorous steps to deal with a crisis that had both international and domestic causes.
And these accomplishments actually represent secondary achievements. His primary fame in Kazakhstan is as the architect of the nation's radical social security reform. As head of a small group of self-confident, dynamic liberalizers, Marchenko convinced President Nazarbayev to allow the nation to move rapidly to a system of fully funded individual retirement accounts in response to large social security deficits. While the nation was skeptical initially, the reforms stuck, and (against my prediction a decade ago) the system is stable and flourishing.
There have been some problems with Kazakhstan's pension system, caused largely by a combination of a strong currency and the lack of economic diversification. But, these failings cannot be blamed on Marchenko, who oversaw the creation of guarantees and reporting requirements that have preserved individuals' contributions - a novel experience for a population that had seen its earlier savings wiped out by hyperinflation and bankruptcies.
Marchenko's other achievements include developing Zhilstroysberbank, modeled on Germany's Sparkassen (building society); creating the Private Deposit Guarantee Fund, similar to America's FDIC; and pushing through the 2006 Securitization Law -- and the resultant introduction into Kazakhstan of financial trust relationships, which are critical for protecting creditors and assets. A complete list is much longer, but there can be no doubt that Marchenko has built a modern financial sector from scratch.
Of course, being bright and creative is helpful but not a sufficient condition for success at the helm of the IMF. Management and negotiating skills are critical, and these too are areas where Marchenko stands out. Originally trained in languages, he enjoys near native English, German, Spanish and Russian. His interpersonal skills are also reflected in his prominence in Kazakhstan -- of Slavic background, he is respected and admired in a predominately Muslim, Asian society (with, happily, a more meritocratic bent than Europe).
While possibly biased, it is hard for me to imagine a European candidate for managing director of the IMF comparable in caliber and experience to Marchenko. He certainly should have appeal across the American political spectrum: he has a record of privatization efforts, fiscal austerity and promotion of a private social security system. At the same time, he has quietly promoted social justice, advocated for greater democratization and loudly promoted transparency and combated corruption. It is time for America, Britain and Japan to endorse a top-flight dark horse candidate.