Prepare for an epic battle over the appointment of a new head of the International Monetary Fund (IMF) following Dominique Strauss-Kahn’s resignation as the organisations’s managing director. Europeans are insisting the job should once again go to a European candidate. Countries like China, India, Mexico and South Africa, however, say it’s time to end Europe’s traditional grip on IMF leadership and appoint a representative from an emerging nation.

The struggle for influence in global institutions between old and new powers has been brewing for many years. Newly-empowered emerging countries are impatient for a stronger say in economic global governance. They are especially adamant that the Bretton Woods institutions should reflect the emerging world’s rising economic clout.

There’s no doubt: Europe is currently over-represented in international bodies like the IMF and the World Bank. The cozy deal under which Europe gets to appoint the head of the IMF while an American leads the World Bank has also run its course. The point has been repeatedly made in the G20. There is no agreement, however, on the timing of the change-over to a new system.

Strauss-Kahn’s resignation offers an early opportunity to move to a more modern 21st Century system for selecting top international civil servants. Appointments should be based on merit and qualification rather than nationality, a point made by many emerging countries and by Australia.

As many EU governments have underlined, French Finance Minister Christine Lagarde is well-placed to become the next IMF managing director. But they are wrong to insist that Lagarde should get the job because she is European. The EU argument, presented among others by German Chancellor Angela Merkel and EU Commission President Jose Manuel Barroso, that the new IMF chief must be sensitive to Eurozone economic woes is unconvincing – and inappropriate.

The next IMF head should not be seen as doing special favours to Europe. EU policymakers’ insistence that Europe has a historical right to the job sends the wrong message to those who complain that Europeans are unwilling to cede existing power and privilege to newcomers.

At stake in this debate is Europe’s ability to adapt to life in a globalised world and its willingness to accept the shift of power from older, industrialised countries to the world’s new and dynamic emerging economies. It is advisable therefore to open up the IMF competition, focus on merit and qualification and let the best man/woman win.

The issue of IMF leadership was also discussed at our roundtable debate “Taming the turmoil: New rules for global finance” on 19 May 2011 and will be tackled at our Asia-Europe conference on 21 June 2011.