Former Prime Minister Paul Keating has rubbished a front-page story in today’s Sydney Morning Herald that claims he is interested in succeeding Dominique Strauss-Kahn as head of the International Monetary Fund.

“The story is simply a speculative beat up by Peter Hartcher and the Sydney Morning Herald,” Keating told Crikey this morning. “I did not respond in any way to Herald queries about my interest or otherwise in this position.”

The Herald story, written by political editor Peter Hartcher and political correspondent Phillip Coorey, claims Keating and former Liberal treasurer Peter Costello have “emerged as possible replacements for Mr Strauss-Kahn”, despite the fact neither has publicly expressed any interest in the role which is widely expected to be handed to a European.

Leading economists have told Crikey that even if Keating or Costello were interested in the demanding job, neither man is an ideal candidate, despite the fact they are widely-regarded as outstanding treasurers.

Since World War II there has been unwritten convention that the head of the IMF has to be a European. French Finance Minister Christine Lagarde is seen by many fund-watchers as the frontrunner for the top job.

“They may be interested but I think their chances are Buckley’s,” said Alan Oster, chief economist at NAB.

“The reality is the Europeans will have enough people voting…Political realities mean they probably won’t get it. I’d be surprised if either of them were interested.”

Grattan Institute economist Saul Eslake told Crikey the best Australian candidate for the job would be former RBA governor Ian Macfarlane, who says he isn’t interested.

“It’s a technocratic position — this is not a political job although it does have political dimensions,” he said. “This is not a job for politicians — it’s a job for central bankers… I don’t see why the job of managing director of the IMF has become a resting place for politicians.”

But Eslake says either Costello or Keating have credentials as least as strong as Lagarde’s.

“If she has political ambitions like Strauss-Kahn had, why wouldn’t the rest of the world think they’d go soft on Europe in times of financial difficulties?”

Christopher Joye, an economist at Rismark International, agreed, saying: “I don’t think a career span in politics is the best preparation for the IMF requirements.

“My short view on this is while they’re two outstanding political operators, I wouldn’t classify them as outstanding economic policy experts. It’s not appropriate at all to politicise the IMF role.”

Joye says the best Australian candidate would be former Reserve Bank deputy governor and Asian economic policy expert Stephen Grenville. Shadow foreign affairs minister Julie Bishop has been lobbying for Australia to put forward Costello for the role.

Crikey tried to get a response from Costello, who works as a director of boutique investment banking firm BKK Partners, but he did not respond before deadline.

Peter Fray

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