VZCZCXRO0442
OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHPG #0978/01 2390540
ZNR UUUUU ZZH
O 270540Z AUG 07
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9530
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 PRAGUE 000978 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PREL PGOV RU EZ
SUBJECT: CZECH REPUBLIC REJECTS SURPRISE RUSSIAN NOMINATION 
OF TOSOVSKY FOR IMF HEAD 
 
 
¶1. (SBU) SUMMARY AND COMMENT: Russia's surprise nomination of 
former Czech central bank governor and former Prime Minister 
Josef Tosovsky as IMF Managing Director has received much 
attention in Czech media, mostly in the form of negative and 
cynical commentary about Tosovsky's checkered past and 
Russian motivations for the nomination.  While no one 
questions Tosovsky's qualifications for the job, the 
nomination has revived old suspicions based on Tosovsky's 
Communist Party membership, widely rumored (and denied) 
connections to the secret police (STB), and his possible 
involvement in "tunneling" (privatization schemes resulting 
in asset stripping).  According to open STB files, Tosovsky 
worked on "economic information only" in his previous 
capacity as advisor to the central bank governor but never 
reported on individual persons.  Other than his Communist 
Party connections, Tosovsky's current connections to Russia 
remain unclear.  Likewise, there is no consensus here on 
Russia's motives for this move.  The Czech government 
position is clear:  they will not break ranks with the EU and 
will support the EU candidate, Strauss-Kahn.  END SUMMARY AND 
COMMENT. 
 
------------------------------ 
NEGATIVE AND CYNICAL REACTIONS 
------------------------------ 
 
¶2. (SBU) Czech politicians and the media appear to have been 
genuinely surprised with Russia's decision to nominate 
Tosovsky for the IMF post.  Most official comments made clear 
that the Czechs did not appreciate being put in the difficult 
position of having to choose between the EU candidate and a 
countryman.  But the government quickly stated that they 
would not break consensus and that Strauss-Kahn remained 
their choice for the position.  The comments of government 
officials have been, at best, strained.  Thus far, the only 
truly supportive reaction to the nomination came from former 
President Vaclav Havel (who tapped Tosovsky to head a 
caretaker government in 1998).  An editorial in the leading 
mainstream daily paper (Mlada Fronta Dnes) highlights 
Tosovsky's qualifications, describing him as a first-class 
candidate who may be better qualified than the current EU 
candidate from France given his respect within financial 
markets and strong reputation among central banks.  The 
journalist (Pavel Paral) says that for Tosovsky to have a 
chance, he will need USG support and the U.S. has not yet 
given its position.  Paral also states this would be a great 
opportunity for the U.S. to "take revenge" for the European 
countries bringing down Paul Wolfowitz as World Bank 
president with a "fabricated scandal." 
 
¶3. (SBU) While President Klaus has thus far refrained from 
making any public statements, the fact that Havel (his 
nemesis) supports Tosovsky's nomination would be reason 
enough for him to oppose it.  However, Klaus also has other 
reasons:  he blames then-central bank governor Tosovsky for 
the collapse of the government Klaus led following the 1997 
economic crisis.  While Klaus has been silent, his people 
have not been.  Klaus's spokesman told local journalists that 
the President considers the Russian nomination "strange" 
since it is not usual for a State to nominate a citizen of 
another State, but declined to speculate on Russian 
motivations.  Klaus's Political Advisor, Ladislav Jakl, was 
quoted in the press as saying, "One cannot help wondering 
whether he (Tosovsky) did not act in the interest of a 
foreign power some other time already." 
 
------------------------------ 
THEORIES BEHIND THE NOMINATION 
------------------------------ 
 
¶4. (SBU) There is considerable speculation in Prague about 
Russian motives for this nomination (accompanied by somewhat 
less speculation about Tosovsky was thinking in agreeing to 
what seems surely to be a losing proposition).  The 
charitable view is that Russia is seeking a European 
candidate from a transition country to bring a new 
perspective to the top of the IMF, and to curry favor with 
large developing countries.  The less charitable view is that 
Russia's only motive is to split the EU by trying to get the 
Czechs (and perhaps other "new" members) to abandon the 
French candidate, while possibly trying to revive the old 
"brotherhood."  There is also no clarity on the question of 
whether or not the Russians are actually serious, or just 
trying to look like a shining international statesman 
(similar to his proposals for missile defense).  If the 
Russians were serious about trying to woo at least the Czechs 
away from the EU, they miscalculated in choosing Tosovsky, 
and with their execution of the plan.  Assuming they are 
serious, they appear to have also miscalculated by 
 
PRAGUE 00000978  002 OF 002 
 
 
underestimating the tendency for Czechs to disapprove of 
Czechs who are either successful or highly respected abroad 
(e.g., Havel, Kundera, Tosovsky). 
 
--------------- 
BIOGRAPHIC INFO 
--------------- 
 
¶5. (U) The bio below is from open sources and is lacking some 
details and does not account for every year.  There are 
rumors that Tosovsky studied in Russia but post is not able 
to confirm. 
 
September 28, 1950 Born in Nachod, Czechoslovakia (Eastern 
Bohemia) 
1973 graduated from the Prague School of Economics with a 
focus on foreign trade 
1973 started work at the central bank (Czechoslovak State 
Bank, CSSB) 
1976 joined the Communist Party of Czechoslovakia 
1977 started working for the London branch of Zivnostenska 
Banka 
1980 left for France to study banking 
1984 - 85 Economist with London branch of Zivnostenska Banka 
1986 - 99 Advisor to central bank Governor Jan Stejskal 
1989 returned to London 
1990 - 92 Governor of Central Bank of Czechoslovakia (CSSB) 
1992 - 97 Governor of Central Bank of Czech Republic (Czech 
National Bank, CNB) 
January - July 1998  caretaker Prime Minister 
July 1998 - November 2000 Governor of CNB 
December 2000 to present Chairman of BIS Financial Stability 
Institute, Basel, Switzerland 
GRABER