Lawson gains as contender for OECD title: A weigh-in report on the fight from Peter Torday

FINAL campaigning has begun for the coveted top job at the Organisation for Economic Co- operation and Development, and to some surprise Lord Lawson, the initially unfancied UK candidate, has crept up on the favourite, the Canadian politician Donald Johnston.

Four candidates are competing for the Paris-based position of secretary-general, which pays pounds 125,000 tax-free and comes with a luxury apartment in the super-chic 16th district.

The expiry of Jean-Claude Paye's term as OECD secretary-general this September has provoked a lot of interest among its 24 member governments - which until the imminent arrival of Mexico had been an exclusive club of rich industrial countries. They want to revive the organisation's importance, which has waned since the 1950s and 1960s when it played a leading role in guiding the economic reconstruction of post-war Europe. It once served as a forum for genuine debate on economic policies of member governments, but these days the secretariat is too scared of its paymasters to issue sharp critiques. And the ministerial meetings have degenerated into a series of set- piece speeches followed by boring communiques.

Governments are now saying they want to change all that.

One way to revive the OECD is to put a politician at its head rather than the urbane French diplomat who has presided for the past 10 years. Earlier this year, Britain did that by putting forward Lord Lawson, the former chancellor.

But he faces formidable competition. The United States and Japan, which pay around 48 per cent of the OECD budget, believe it is time to end the tradition under which a European always heads the organisation.

With US and Japanese backing, Canada has proposed Johnston, president of the governing Liberal Party and a former minister in Pierre Trudeau's government. With Mexico about to become a member, Mr Johnston would in effect become Nafta (North American Free Trade Agreement) candidate and fulfil the US aim of reshaping the OECD in the image of the three main trading blocs - Europe, Asia and the Americas.

If Washington does not get its way, it has privately threatened to downgrade its role in the OECD and to build a similar organisation within the recently formed Asia Pacific Economic Co-operation forum.

As if that were not enough, Lord Lawson's candidacy may have been tarnished by his reputation as a Thatcherite.

His recent memoirs, moreover, refer unfavourably to the OECD, saying it has 'outlived its usefulness,' and that its annual ministerial meetings are 'a waste of time and money'.

Until recently, it had been assumed that Mr Johnston, who has the backing of Lloyd Bentsen, the US Treasury Secretary, and Robert Reich, the interventionist US Labour Secretary, was way ahead. But Mr Johnston's exhaustive lobbying tour of OECD capitals has left a mixed impression. Some countries view him as more of a bureaucrat than the politician they would like to re-invigorate the organisation.

By contrast, Lord Lawson addressed a recent lunch for OECD ambassadors and, according to sources present, left them highly impressed. This will not be enough, but it is sufficient to ensure that the former chancellor is a serious runner.

At that lunch and in an article in Le Monde, Lord Lawson spelled out his vision for the organisation. His ideas were less Thatcherite than expected and in some ways - such as his emphasis on the unemployment crisis and the OECD's need to become more relevant to the emerging global economy - not dissimilar from those of the centrist Canadian.

In sum, the former chancellor has stayed in the race using his own impressive political and intellectual talents, despite starting with little support.

The fact that he has done so, despite the perception that Mr Johnston remains the favourite, means there could be an embarrassing stand-off, since by tradition the winner must be chosen by consensus.

Trailing far behind is Lorenz Schomerus, a German trade negotiator, whose candidacy appears not to be seriously backed by Bonn. That leaves Mr Paye, who declared himself available for re-appointment despite having held the job for 10 years. Paris has backed him, even though rumours surfaced recently that he might be appointed French ambassador to Washington.

Complicating matters further is European reluctance to contemplate the OECD leadership issue at the annual meetings early in June, as the US would like. The Europeans would prefer to settle the succession of the president of the EU Commission first.

There is even a remote possibility that Sir Leon Brittan, a long-shot candidate for the Commission job, might be offered the OECD post in consolation. According to one OECD official, Sir Leon - liked in Washington as much as in Europe - would be a 'shoo-in' if he applied.

As for the US threat to downgrade its participation in the OECD, no one believes it, because the agency has worked as a forum for persuading Europeans to adopt US economic policies. One former OECD official said: 'The OECD is a US front organisation. And if you are a front organisation you cannot have an American candidate at the helm.'

Mr Paye's chances of staying in his job seem slim. But some European diplomats believe that in the event of deadlock, he might triumph as the compromise candidate.

(Photograph omitted)