Christine Lagarde as IMF chief? This is a gift to the fund’s critics

 She may be the first woman boss but she’s no reformer, and won’t address wider equalities to rebalance the global economy

First published by the Guardian on 29 June 2011.

By Peter Chowla

After the last three years of financial crises and bailouts, no one can deny that leadership of an international institution like the International Monetary Fund matters. Previous leaders brought some significant changes to the IMF but did not go nearly far enough. The fund is still giving bad advice to European countries, such as supporting the fantasy that Greece can recover without restructuring its debt, and is continuing to force damaging spending cuts in times of recession. The question now is whether Christine Lagarde’s tenure as managing director of the fund will be any better.

The signs are not good.

Read the rest of the article on the Guardian.

 

Consensus 101

Many of us thought that the leadership would be decided by vote. What with a number of countries, and crucially countries holding board seats, coming out in support of Cartens. But according to the official press release, the decision was made by consensus. Now consensus isn’t the same as unanimity, still I find it a little curious that it was reached so quickly. How might it have happened?

Assume that they follow the standard consensus process which looks a little like this:

 

Lets break it down step by step

Discussion: So here’s where they consider the merits of each candidate on paper and in person, no doubt scrutinising answers to their list of questions and scoring against the agreed criteria. These questions haven’t yet been made public but we hope that, in the interest of transparency, they will surface soon enough.

Proposal: After letting opposing sides argue it out for a piece, John Lipsky hushes the crowd. Sucks a thumb and tests the air to see which way the mood lay, clears his throat and sets out a proposal: “Lagarde to head the Fund”

Test for consensus: No. I’m sure the countries backing Carstens would stand their ground for a little while longer yet…Cue eye-rolling, foot tapping and impatient sighs from the US and European board members.

Concerns raised: Mexico got on the soap box? UK puts the kettle on.

Modification to proposal: Did they modify the proposal? Well, seeing as no modifications could realistically have been made, probably not. Unless there was an under the table promise of the deputy MD post (fat chance) or a high-level IMF appointment (time will tell).

Stand Aside: It is more likely that some members, if not for turning, simply backed down.

Test for consensus take two: Why not.

Consensus Achieved: So there you have it, pencils down and Lagarde on speed-dial

Ok, well I for one doubt it was anything like that. Still I’m curious as to how the debate, if there was one, played out. Did board members representing groups of countries have a clear battle plan? How long to stand their ground? What demands or concessions to make?

Perhaps a board member will tell all in days to come? We’ll keep an ear to the ground.

Press release: Reaction to the appointment of Christine Lagarde as head of the IMF

In response to the news that the IMF has selected Christine Lagarde to replace Dominique Strauss-Kahn as Managing Director of the IMF, Jesse Griffiths, Coordinator of the Bretton Woods Project has said:

“The Europeans have shamefully held onto control of the Fund in a well orchestrated stitch-up. Unfortunately, the outcome was clear long before the selection process officially started, once the Europeans decided to use their unfair over-representation at the Fund to force through their candidate.”

“There was a shocking lack of transparency to the whole process with no public interviews held and Board decisions once again made behind closed doors.”

Nick Dearden, Director of the Jubilee Debt Campaign adds:

“The nature of Lagarde;s selection shows once again how out of touch the IMF is. This further tarnishes the IMF’s legitimacy in a rapidly changing world.”

“This decision is bad news for European countries in crisis: the key architect of disastrous austerity policies in Greece is now at the helm of the Fund and she has already made clear to Greek legislators that they should listen to Northern Europe’s interests, rather than the interests of their own people. The IMF has learnt nothing from the debt crises of the past.”

For information: Jesse Griffiths + 44 (0) 7968 041 747 / jgriffiths@brettonwoodsproject.org

Exit poll: What if we got to vote?

Our poll on who you think the worst candidate nominated for head of the Fund has the favourite bringing up the rear. Lagarde recieved 33.71% of the vote with Carstens on 24.72%. The rest was split between the no-runner and Mr Early Retirement

Though the end result is by now all too clear, the Board will likely keep us waiting until June 30th before putting out an official press release announcing Lagarde as the new IMF boss.

All in all a rather malagrugrous state of affairs. I’d say!

The race is over: US Endorses Lagarde

As the IMF board prepares to meet today to try to make the decision, Reuters is reporting that US Treasury Secretary has confirmed it – `Mr. Geithner said Lagarde’s “exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy.”

No hint that they’ll just ask her to finish out the remaining year of DSK’s term – this looks like a 5-year appointment.

A big thank you to the US government from IMFboss for keeping the suspense alive for so long.  It also created the illusion of deliberation, maybe even a bit of democracy.