Today Lagarde meets with the IMF board following meetings with IMF officials and US Treasury Secretary Timothy Geithner yesterday. Although still a long-shot, Carstens may be buoyed somewhat by the news that Brazil may back him after all. Paulo Nogueira-Batista, Brazil’s executive director at the Fund was quoted as saying “Brazil may well decide to support Carstens”. More symbolic than anything (their chair commands 2.79% of the vote) it at least shows a willingness to express their grievances at the process with deeds as well as words and saves Carstens the embarrassment of not having the support of leaders from his own region. Nogueira-Batista continues, “this institution has a long way to go in undoing problematic governance structures … this [campaign] process has helped somewhat by highlighting the weaknesses”.
Domenico Lombardi, a former IMF board member pointed to the dilemma faced by many nations in voting for anyone else but Lagarde, saying that “in the end this person is going to be the managing director of the institution. There is really no sense in voting for somebody else when it’s clear who will win”.
Still looming is the French courts’ decision on whether to pursue legal action against Lagarde for accusations of abuse of office over a settlement between businessman Bernard Tapie and the French government. Recent reports suggest that an official under her ministry’s authority is too under investigation.
The IMF board will meet on June 28 to discuss the candidates, announcing the victor by June 30.
Carstens is due in China today to drum up some support from the Asian economies. Though neither candidate has the official backing of the Chinese, there have been some statements in Lagarde’s favour, which the French have been happy to take as endorsements. Both sides should be cautious when jumping the gun – in Indonesia; the Finance Minister Angus Martowardojo is under fire for his “personal support” of Lagarde, which is not yet the official stance of the county.
In an interview with the Miami Herald Carstens put forward a case for unified BRICS support:
“If I win, it would be a strong statement of Latin America’s power … And even if we don’t win, a strong Latin American vote against the status quo would be a strong signal that we don’t agree with the way things are being done at the IMF. That’s why it is so important to have a region-wide Latin American vote.”
Continue reading “In the news: Carstens in China, US to move in on Number 2”
Angela Merkel continues to bat back question on the leadership battle. She feels that in the long-run, of course it does not make sense for the US to automatically head the World Bank and the Euro-zone the Fund. How long is a piece of string?*
Former IMF chief economist Simon Johnson continues to stir things up. After giving Ms Lagarde a less than favourable review last week, he shares some thoughts on why exactly it is so important for Europe to hold onto the IMF. Curious given that a few years ago the EU attitude risked pushing the IMF into insignificance.
Away from the press cameras and microphones, what did Ms Lagarde and Brazilian Finance Minister Guido Mantega talk about? Rumour is that Mantega is willing to back her in exchange for “a strategic position” at the Fund, perhaps that of deputy managing director, traditionally held by the US…
Continue reading “Carstens in Brazil, Lagarde heads for China”
Alan Beattie who last week took to twitter with “Dear Emerging Markets: Please stop wittering about open merit-based system for choosing new IMF MD and *nominate someone*. Love, The Media.” Continued to poke at what he sees as the emerging nations apparent lack of conviction and unity, evident in their inability to pick a candidate.
Patience Alan, they’re working on it.
The South African Finance Minister Pravin Gordhan, speaking on behalf of emerging nations reminded reporters that they had until June 10 to name a candidates and that “there’s lots of consultations going on. It’s work in progress.”
This may be the case but with Lagarde’s promotional tour in full swing their chosen candidate may find themselves playing catch up. She started the week in Brazil where she met with the Finance Minister Guido Mantega who early on was oft misreported as being happy with a European head. Brazil’s current stance is more reasoned, stating that they will examine all candidates before lending support although some suggest otherwise. The Brazilians want reform and greater representation for emerging markets. In Brasilia, Lagarde was certainly talking the talk, declaring “if I was elected, I’d make sure that the diversity of members is represented at all levels.”
Continue reading “Emerging markets play their cards close to their chest whilst Lagarde courts Latin America”
In an unprecedented move, late on Tuesday in Washington, the IMF executive directors that represent Brazil, Russia, India, China and South Africa issued a joint statement on the IMF selection process. The statement of course demands a “truly transparent, merit-based and competitive process for the selection of the Managing Director of the IMF and other senior positions in the Bretton Woods institutions.” What is more important is that it shows unity and the demand that the next IMF head be a reformer. This will be a blow to the hopes of Mexico’s Augustin Carstens but also a sharp rebuke to the Europeans and a warning to the US.
Continue reading “BRICS come together and demand change, European arguments rebutted”