Will Mexico back Carstens as the next IMF managing director?

In an interview with Bloomberg published on July 29, Andres Manuel Lopez Obrador (ALMO), Mexico’s President, noted that he would support former central bank governor who now heads the Bank for International Settlements, Agustin Carstens, should Carstens be nominated as a candidate.

ALMO noted that despite their “political differences”, he would hypothetically support Carstens, stating that: “I would like to. I would always support a Mexican, if they’re a specialist in the material…” Earlier this month, Carstens declined to comment as to whether he would be eager to run for the position of IMF managing director.

The discussion around Carstens potential candidacy will conjure up memories of the 2011 leadership race for the IMF managing director. Carstens was shortlisted alongside Christine Lagarde for the position, following the resignation of former head of the IMF Dominique Strauss-Kahn, who was arrested in the US on charges of an alleged sexual assault.

Carstens, however, subsequently failed to galvanise support among emerging economies, who are structurally underrepresented in the current IMF governance configurations. Interestingly, as part of his bid, Carstens noted that should the IMF follow through with the ‘gentleman’s agreement’ and select a European candidate for the post, it may produce a conflict of interest, as Europe struggled with a post-crash debt crisis. He noted: “We could have a situation where borrowers dominate the institution,” stressing that the European region needed a fresh perspective in order to solve the problem.

Continue reading “Will Mexico back Carstens as the next IMF managing director?”

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.

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!

Drawing straws, Australia and Canada back Carstens, China (probably) back Lagarde

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?

Jubilee Debt Campaign UK launch online action demanding public hearing

Jubilee Debt Campaign have launched an action calling for Christine Lagarde and Agustín Carstens to commit to a public hearing with people affected by the IMF around the world. They say:

Millions of people around the world are affected by the impact of the IMF’s loan conditions and economic ‘advice’, yet there’s been no opportunity for anyone outside the global financial elite to question them in detail and in public … It’s time those on the receiving end had a chance to ask the questions in a public hearing

As well as refering to questions already set out by civil society, the action focuses particularly on the following two questions:

First, I believe it is outdated, undemocratic and illegitimate for senior management at international financial institutions to be nominated and chosen on the basis of their nationality. Powerful countries must stop undermining multilateral institutions by maintaining their stranglehold over certain positions. Will you commit to appointing your deputy managing directors through a genuinely open, merit-based and transparent process?

Second, IMF-sanctioned austerity policies are causing irreparable social, and economic damage in many countries across the world.  Will you commit to reviewing and reversing these policies, to support instead sustainable job creation and prevent the poorest from being the victims of global economic problems?

Go here to TAKE ACTION!