The next chief of the International Monetary Fund (IMF) will likely be one of two candidates, France Finance Minister Christine Lagarde (who has officially announced her interest in the job) and Mexico’s central bank governor Agustin Carstens, who is also lobbying for the sought-after position.
(The former IMF managing director, Dominique Strauss-Kahn resigned after being arrested for sexual assault in New York).
The election of either Lagarde or Carstens would represent a sea-change for the venerable IMF – ever since its formation at the end of the World War II, the organization has been helmed by European males.
Carstens has insisted that the growing dominance of the emerging markets on the global economic landscape would make him the preferable choice.
In any case, each candidate would appear to have the backing of Timothy Geithner, the U.S. Treasury Secretary, who described both likely candidates as “credible.”
They're very talented people,” Geithner told Politico. “Christine Lagarde is an exceptionally capable person, an excellent mix of financial, economic knowledge, talent, and the kind of political skills you need. Agustin has that as well.
Geithner said that the U.S. – which is the largest contributor to the Find -- will assist in the election of the next IMF boss, adding that the organization’s structure and hierarchy should reflect the “balance of power in the world today.
He called for an open and transparent selection process.
Meanwhile, Carstens told the Financial Times newspaper that he will advocate for greater involvement of the emerging markets in IMF affairs.
“What we are expecting, and the flag that we are trying to carry, is the flag of emerging markets. What we want is a stronger representation,” he said.
Carstens, who has already served as deputy managing director at IMNF form 2003-2006, also said: “In the same way that [the] emerging markets will have the power of mentioning what advanced economies might be doing better, [our increased role] should also come with the recognition that their stature is such that whatever they do has an impact on the rest of the world. We also have to be prepared for our policies to be debated in the context of the Fund.”
The BRIC nations (Brazil, Russia, India and China) released statement which said: “adequate representation of emerging market and developing members in the [IMF’s] management is critical to its legitimacy and effectiveness”.
However, Brazil backed off from specifically endorsing Carstens.
Finance Minister Guido Mantega avoided answering questions about Carsten’s candidacy, telling reporters: What matters here is having a good candidate, not nationality.
According to report in Reuters, Brazil is not a strong supporter of Carstens because he is viewed as being too orthodox and not committed to significant reforms.
Meanwhile, Carstens also told the Financial Times that Europe should not worry that an IMF chief from the developing world would ignore the euro zone debt crisis.
“I can understand why Europeans think that right now it would be important for them to preserve their position at the Fund but I can assure you that not only me but any other managing director would have Europe at the top of its list … I would be willing to put my job on the line for Europe,” he said.
Carstens separately told Bloomberg TV: “I don’t see why... to contribute to solving the crisis in Europe, a European has to be the managing director. Right now the crisis is in Europe, but we don’t know where the next crisis will be.”
The next IMF chief is scheduled to be named on June 30. He or she will serve a five-year term.