Carstens in Brazil, Lagarde heads for China

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…

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Poland in the dog-house, Korea and US wavering; Waiting for India…

A lot of developments have been taking place in the race to head the IMF. First lets admonish Poland for deciding to sleep in the dog-house along with the rest of Europe. Polish Finance Minister Jacek Rostowski said about Lagarde on Wednesday: “This is a very good candidacy, it’s hard to imagine a better candidacy and it has the backing of the Polish government.” Never mind that we don’t yet know what the other candidacies will be.

Korea was at least a little better than that. South Korea’s finance minister Yoon Jeung-hyun gave an interview to the Financial Times, and they wrote: “Seoul could not announce its final preference until after June 10, the candidates’ deadline. He said he remained keen to see whether an equally strong candidate to replace Dominique Strauss-Kahn would emerge from a developing nation.” That is more principled than the UK, but Yoon did call Lagarde “a very strong candidate and has the qualities needed to be a good managing director”.

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BRICS come together and demand change, European arguments rebutted

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.

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