"In order to clear the way for the search for a candidate who will be supported by all the IMF members, I wrote last weekend to Chancellor Schroeder, asking with all respect for the post to be allowed to withdraw my candidacy," Koch-Weser said in a statement released by the German finance ministry. "It is an urgent necessity that a successor be found for Michel Camdessus as IMF managing director who can exercise his office with the wide support of all IMF member states," said Koch-Weser, a former World Bank official.

Koehler, a former German deputy finance minister under Schroeder's conservative predecessor Helmut Kohl, was appointed to run the EBRD in July 1998. He said in a statement Schroeder had called him to ask whether he would stand as head of the IMF.

The 57-year-old said he would agree to run as candidate for IMF managing director "if a broad majority of (IMF) shareholders is of the view that I am needed at the helm of the Fund".

The London-based EBRD was set up to oversee the transition to capitalism in eastern Europe. Koch-Weser's candidacy suffered a decisive setback last Thursday when he failed to win a broad consensus in a straw poll of IMF members. Aside from US opposition, many countries chose to abstain. In a copy of the letter dated March 4 written to Schroeder, Koch-Weser said it was clear US resistance to him would make it next to impossible to run what is considered as one of the world's most vital international institutions.

"In order not to stand in the way of an improved atmosphere with the United States, I would request to you that I be allowed to withdraw my candidacy," Koch-Weser wrote to Schroeder. The succession battle that has followed the resignation of French former IMF head Michel Camdessus is seen reflecting a debate over the future function of the IMF.

The United States wants to make it into a leaner body dealing with economic crises rather than sponsoring and encouraging long-term economic reforms.

-- (Reuters)