Despite being the ‘heir apparent’ to the top post of the International Monetary Fund (IMF), Christine Lagarde has cautioned that her candidacy might be premature.
When CNBC-TV asked her how she would react if offered the IMF job, Lagarde responded: What an interesting question but clearly premature. It is for others to decide, my dear.
She insisted that the job selection process should be transparent and based purely on merit, not by political considerations.
Open, transparent and merit-based: that's the language you find in the Pittsburgh communiqué and in pretty much all the G20 communiqués and literature about the IMF, and France very much sticks to that, Lagarde said.
The position of France is [that the selection process should be] ...'open, transparent and merit based.’”
Since the resignation of the former IMF chief DSK following his arrest and detention arising from sexual assault charges in New York, speculation has swirled across the globe on who would becoming the successor.
Lagarde, the French finance minister, has received the support of most of the major European powers (who clearly want a European to head the IMF as the continent deals with a very difficult debt crisis in Ireland, Greece and Portugal).
The IMF has been run by European males since its formation after the Second World War. Should she get the job, Lagarde, 55, would become the first female chief.
However, Lagarde has refrained from making any public comments about her status as the front-runner for the highly-coveted post.
Moreover, some developing nations have stated that they prefer a non-European to head the fund, given the rising prominence of the emerging markets economies in the global landscape.
Indeed, Mexico has put forward its central bank governor Agustin Carsten as a candidate; Russia is proposing Grigori Marchenko, the chief of Kazakhstan’s central bank, while the Philippines and Thailand reportedly endorse the Singaporean Finance Minister Tharman Shanmugaratnam.
The other BRIC nations (India, China, and Brazil) also reportedly do not want a European to take the helm of IMF.
In mid-April (well before the current crisis at IMF), BRIC leaders said in a statement: “The governing structure of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries.”
More recently, People’s Bank of China Governor Zhou Xiaochuan said the management of international financial institutions should reflect global economic shifts in power.
“The U.S. and Europe should take it upon themselves to really open this up to all candidates that are qualified, not necessarily just Europeans,” Philippine Finance Secretary Cesar Purisima told Bloomberg Television.
But perhaps the biggest obstacle to Lagarde landing the IMF job is a pending legal investigation over her decision to arbitrate a dispute between a prominent French businessman and the state, which led to the awarding of 285-million euros ($400-million) to the plaintiff.
The businessman in question, Bernard Tapie, is a controversial friend and supporter of France President Nicolas Sarkozy.
Opposition Socialists are outraged by Lagarde decision since it involved public money and are demanding a full probe.
Lagarde has denied any wrongdoing. She told the Le Figaro newspaper: As far as I know, there is no new evidence in this case. My reaction is ... calmness about its content but indignation about the way it is being handled.”
A counsel of judges will decide by the middle of next month if they will formally investigate the matter (The IMF is expected to choose a new boss by the end of June).