By Mohamed El-Erian

The opinions expressed are his own.

Eager to retain a historical but outmoded entitlement, European politicians seem to be coalescing around Christine Lagarde to replace Dominique Strauss-Kahn as Managing Director of the IMF. Lagarde has the qualifications to successfully lead a multilateral institution that is central to the well being of the global economy. Her ability to do so, however, may critically depend on how she is appointed.

Lagarde has considerable skills and expertise; she has gained important experience in both the private and public sectors; and, judging from her stint as France’s Minister of Finance, she has navigated well the corridors of political power at the national and European levels.

Lagarde would be the first woman to lead a Bretton Woods institution. Such an overdue appointment would send an important message to an IMF demoralized by disturbing allegations of sexual assault by Strauss-Kahn. It would also come at a time when delicate questions are being raised as to whether the institution has historically been tolerant of inappropriate behavior.

Yet Lagarde’s appointment would be controversial, not because of her qualifications but because of the circumstances. Regrettably, her name has emerged in the context of a vocal desire by European politicians to extend a feudalistic tradition that is both outmoded and harmful — that of having one of their nationals, and only their nationals, at the helm of the IMF.

This tradition is rightly opposed around the world. After all, merit rather than nationality should be the guiding principle for a critical multilateral post. And there are many non-Europeans that deserve very serious consideration, be they Africans, Asians, Latin Americans or North Americans.

It has not helped that European politicians have resorted to silly excuses to justify the appointment of yet another of their nationals. Consider the often-cited argument that this is needed because the IMF is heavily involved in resolving the region’s peripheral debt crisis.

Such a view was never cited when the epicenter of the crises were in Asia or in Latin America; nor were they mentioned when the IMF stepped up its involvement in Africa. And rightly so. Indeed, it was viewed as a sign of strength that the head of the IMF was not from the part of the world in turmoil.

Also remember that the post of Managing Director carries a five-year term. So, are European politicians telling us that the turmoil in their region will persist for that long? And can they assure us that no other part of the world will experience systemic dislocations during that time?

Citing the urgency of the appointment is also feeble. Yes, the IMF runs like an army and, as such, the loss of its general can be destabilizing. Yes, the global economy is in the midst of major national and global realignments. But the IMF is also an institution with talented staff and deep institutional roots. Speed should not trump legitimacy when it comes to a new head.

The fact is that Europe is keen to maintain control. It is allowing an obsession with control and national prestige to dominate the spirit and requirements of multilateralism. Meanwhile, the US does not appear counter as it is in no rush to give up its historical entitlement to the number two position at the IMF (and also the presidency of the World Bank).

To the disappointment of many, it looks like yet another opportunity will be missed to establish an important element of legitimacy for the IMF. While highly unfortunate, all is not lost however. In this second best world, it would be in everyone’s interest to find a way to reconcile Lagarde’s qualifications for the job with the unfortunate context for her potential appointment. And there is a way.

Instead of a new five-year term, Lagarde should be appointed just to complete Strauss-Kahn’s term that runs until 2012. During this period, Lagarde would be charged to lead the IMF’s Executive Board to put in place a selection process that is open to all nationalities, transparent and merit-based — or the minimum standard of governance for an institution that is owned by 187 member countries and charged to serve them under the principle of “uniformity of treatment.”

Of course, come next year, Lagarde would be eligible to stand for a full term in an election that is open to all; and one that is based on merit rather than misplaced notions of national prestige and harmful political horse-trading. If my assessment of her qualifications is correct, she would be well placed to secure the necessary global support under a process that is credible and long, long overdue.

Mohamed El-Erian is CEO of PIMCO. He spent 15 years at the IMF (1983-2007) and his name was mentioned in connection with potential candidates to replace Mr. Strauss Kahn. On Tuesday, he indicated that he has no interest in pursuing the post.

Photo: From L-R, France’s Budget, Civil Service and Government Minister Francois Baroin, Finance and Economy Minister Christine Lagarde and Interior Minister Claude Gueant attend the questions to the government session at the National Assembly in Paris May 11, 2011. REUTERS/Charles Platiau