Candidates dropping like flies, will there be European concessions?

Despite a flurry of media reports this morning, Manuel is not running to be head of the IMF. He said “My adrenaline is flowing about South Africa right now – it’s where my focus is.” Many have speculated that he had neither the backing of the South African government nor the backing of other emerging markets, so a bid for the job would have been futile.

UK newspaper the Telegraph also suggests that Grigoriy Marchenko will drop out of the race tonight. While Marchenko, in his interview with the paper, does not directly say he’ll drop out, he does speculate: “There’s a lot of information coming from different sources which is implying that there’s agreement between G8 countries about support for Madame Lagarde, and if countries which together have more than 60pc of the vote have agreed to support one candidate, then it’s more or less a done deal.” The Telegraph extrapolates from this that he will withdraw his name.

Continue reading “Candidates dropping like flies, will there be European concessions?”

Wake up Europe! Shots across the Euro-bow

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?