Italy finance minister wins key IMF policy post

By Lesley Wroughton

WASHINGTON (Reuters) - Italian Economy Minister Tommaso Padoa-Schioppa was elected to chair the International Monetary Fund's steering committee, diplomatic and IMF sources said on Wednesday, keeping Europeans in influential posts at the global financial institution.

The former European Central Bank board member won a highly secretive vote among the 24-member International Monetary and Financial Committee (IMFC) in a close run-off with Canadian Finance Minister Jim Flaherty.

Padoa-Schioppa's election ended the best immediate chance that emerging market nations had to claim a position in the upper policy-making ranks of the institution and would likely fuel further tensions with large developing countries, which want a greater say in the running of the IMF.

Padoa-Schioppa replaces Britain's Gordon Brown who left the post after 10 years in July following his promotion to prime minister. The job has always been Europe's except in the 1980s when Canada briefly filled the chair.

The post was widely expected to go to Indian Finance Minister Palaniappan Chidambaram in a move that would have signaled that industrial nations were willing to cede some of their dominance in the IMF.

But India lost its unprecedented bid to become the first developing country to head the committee in a second round of voting on Monday, after an alliance of Anglo-African countries abandoned the Indian camp.

Some insiders said the move by the African countries, led by Nigeria, was indicative of growing divisions within the Group of 11 developing countries club between large emerging nations and poorer ones that are still aid-dependent.

Emerging economies have long pushed for a shake-up in the governance of the institution as the fund considers an overhaul of its voting power to reflect the growing weight of rising economic powers in Asia and elsewhere.

The selection of Padoa-Schioppa follows the appointment on Friday of former French finance minister, Dominique Strauss-Kahn, as the next IMF Managing Director, succeeding Spaniard Rodrigo Rato in November.