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…

Continue reading “Carstens in Brazil, Lagarde heads for China”

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.

Continue reading “BRICS come together and demand change, European arguments rebutted”

What is Russia thinking?

Russia’s backing of  Grigory Marchenko, governor of the Kazakh central bank has added spice – and a side order of mischief – to the IMF leadership race. Marchenko disarmingly gave the game away by saying “this is all so unexpected” and admitting success was only “theoretically possible”.  So that makes two no-hope candidates in a row – or am I underestimating theRussian bear?

Russia’s real prize is a united front with emerging markets around a single candidate – probably the only way another ludicrous European stitch-up can be prevented. Presumably it hopes to gain first mover advantage with  other BRIC countries slow to muster their own champion, and dealt a blow by the withdrawal of initial bookies’ favourite Kemal Dervis.

Offical nominations open on Monday. I’m strapping myself in for more twists and turns, not least the ongoing full scale judicial inquiry into European frontrunner Christine Lagarde.

IMF critics must be licking their lips – sex scandals, backroom carve ups between yesterday’s powers, corruption allegations, a hastily announced process with little time for scrutiny, the exclusion of most of the best candidates because they hold the wrong passports – what better way to discredit the institution?