The IMF board is due to convene tomorrow to discuss the merits of each candidate. Reports suggest that today they are to take a straw poll of member governments to see whether any candidate has a clear majority. This chart gives you a pretty good idea of what the results might look like…
The US has in the past said it would support the candidate with broad geographic support, the outcome of the straw poll then, is likely to give them the justification to support Lagarde and skirt around accusations that a motivating factor is control of the IMF deputy MD post and of course the World Bank presidency.
In the past couple days a number of nations have jumped off the fence and are publically putting their support behind a candidate. Joining the Carstens camp are Canada and Australia who released a joint statement of Friday. After reiterating the need for an open, transparent and merit based process they go on to say:
Agustín Carstens’ previous experience in the IMF, combined with his background as Finance Minister of Mexico and his current position as Governor of the Mexican central bank, equip him very well to understand and address, on a collaborative and inclusive basis with IMF member countries, the challenges faced by the global economy. Accordingly, after due consideration of the candidates and the IMF selection criteria, we have decided to support him for the position of IMF Managing Director.
Lagarde it seems may at last have the support of China, though the tone suggests they are more resigned to the inevitably of her appointment. China’s central bank chief said “of course we still do not know what the final situation will be. Currently, there doesn’t seem to be anything unclear about it”.
So is that a known unkown or an unkown known?
Strange times produce strange bedfellows. In a direct challenge to the European gang’s attempt to shoehorn in yet another French MD, South Africa and Australia have issued a joint statement saying that, “For too long, the IMF’s legitimacy has been undermined by a convention to appoint its senior management on the basis of their nationality.”
This is precisely the point that European governments – seemingly stuck in a nineteenth century timewarp – seem pigheadedly determined to ignore. Forcing in another European undermines the legitimacy of the IMF, making it look absurdly out of touch in a global economy powered by China, India and other emerging markets. It will also do them no favours in Europe – will an insider who owes their position to the backing of the Euro club really speak truth to power and help them take the hard choices ahead? I doubt it and so do leading analysts at the Peterson Institute. In a thoughtful article, Veron and Subramanian argue:
“if and when Greece comes back for its second tranche of borrowing, the MD will have … to convince Europe, in what promises to be a heated discussion, that Greece has a solvency problem and requires debt restructuring; or, if the IMF concludes that Greece merits international support and all other options are worse, to convince the rest of the world to extend further financial commitments. Either way, there is less need for a European and more for an objective outsider.”
Amar Bhattacharya of the G24 group of developing countries at the Fund puts it well: “There are very, very strong able candidates from the developing world and there has never been a more important time for change for the institution given the challenges it faces and the need for true multilateralism.” It seems obvious to me that Europe’s best interest lies in a truly open, merit-based process: but are there any leading European politicians far-sighted enough to see that?