Lagarde signs on the dotted line, gears up for first press conference

On the day of her appointment the IMF made public Lagarde’s contract, it’s interesting to examine the differences between hers’ and the one signed by her predecessor DSK…

Most are expected and unremarkable, some changes to language regarding parter/spouse and an updated salary. But papers were quick to pick up on the additional clause committing Lagarde to observe rules regarding her ethical conduct:

As managing director, you are expected to observe the highest standards of ethical conduct, consistent with the values of integrity, impartiality and discretion. You shall strive to avoid even the appearance of impropriety in your conduct.

This includes taking part in the Fund’s ethics training programme. The clause also deals more explicitly with conflicts of interest, both internal and external.

In the performance of your duties as Managing Director, you have an exclusive duty of loyalty to the Fund and shall avoid any conflict of interest or the appearance of such a conflict.

Interestingly, given that it was known by all that DSK intended to run for the French presidency, clause 2 (d) is extended to clarify:

you will not, in your personal capacity, attend political party meetings, assume any leadership role within a political party, or otherwise engage in partisan political activity.

As Alan Beattie comments, it is hard not to see these changes as a response to DSKs indiscretions and political aspirations. On the latter, Beattie mentions a proposal that “IMF MDs should sign a pledge to stay out of elected office for the first five years after they leave the Fund”.

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In the news: Carstens in China, US to move in on Number 2

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.”

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DSK scandal busts open leadership battle

Dominique Strauss-Khan’s arrest and potentially imminent resignation, shines a light on debates over the IMF’s leadership selection process. Namely, whether European heads of state will once again cherry pick the head of the Fund, or if they will heed to calls for respecting their promise to have an open and merit based selection process.

Amongst the gossip and speculation, some news sources have pondered what this event means both for French politics and the direction of the world’s lender of last resort. Many feel it’s high time the Fund got with the times and appointed a non-European head, ideally one from the developing world.

In the Guardian today Michael Burke asks whether the next IMF head should be from China or India. Such a move would on the one hand mark a stark break with convention, but on the other it will likely leave us with a head that may be as asia-centric as DSK was euro –centric. Although the names of some candidate from the global south have been proposed, for those wishing for such a change initial signs aren’t good. Angela Merkel has already declared that European leaders will propose a candidate when DSK steps down. Arguing that in light of the present euro-zone crisis, “Europe has good candidates to offer”.

In the mean time US-national John Lipsky, the Deputy Managing Director since 2006, has been appointed as interim boss.

Here at IMFboss the concerns that lead us to launch the site remain, we call for an open and fair selection process with voting done by a ‘double majority’ of states and shares, reflecting the view of and gaining legitimacy from the support of all member nations.