First published on the World Development Movement blog on 30 June 2011
As Christine Lagarde is briefed on her new job as the managing director of the IMF (the World Bank’s sister organisation, set up post-war to promote economic stability) we are left to reflect on the rigged selection process and sad inevitability of her appointment. The legitimacy of the Fund, already in pieces, was dealt a further blow by this debacle.
Lagarde was crowned long before the formal selection process had even begun. European leaders brazenly ignored their previous commitments to an open, merit-based and transparent process. Using the Eurozone crisis as an excuse both for the speed of the process (cut from ten weeks to six), and the need for a European head, they praised and promoted Lagarde’s candidacy, openly undermining the selection process. This necessity for local knowledge and understanding clearly wasn’t the case when Africa, Asia and Latin America were in crisis.
Full article available here
Today Lagarde meets with the IMF board following meetings with IMF officials and US Treasury Secretary Timothy Geithner yesterday. Although still a long-shot, Carstens may be buoyed somewhat by the news that Brazil may back him after all. Paulo Nogueira-Batista, Brazil’s executive director at the Fund was quoted as saying “Brazil may well decide to support Carstens”. More symbolic than anything (their chair commands 2.79% of the vote) it at least shows a willingness to express their grievances at the process with deeds as well as words and saves Carstens the embarrassment of not having the support of leaders from his own region. Nogueira-Batista continues, “this institution has a long way to go in undoing problematic governance structures … this [campaign] process has helped somewhat by highlighting the weaknesses”.
Domenico Lombardi, a former IMF board member pointed to the dilemma faced by many nations in voting for anyone else but Lagarde, saying that “in the end this person is going to be the managing director of the institution. There is really no sense in voting for somebody else when it’s clear who will win”.
Still looming is the French courts’ decision on whether to pursue legal action against Lagarde for accusations of abuse of office over a settlement between businessman Bernard Tapie and the French government. Recent reports suggest that an official under her ministry’s authority is too under investigation.
The IMF board will meet on June 28 to discuss the candidates, announcing the victor by June 30.
By John Jacobs, program officer for the Halifax Initiative. A coalition of development, environment, faith-based, human rights and labour groups, and the Canadian presence for public interest work and education on the IFIs.
Originally published in the Chronicle Herald
The candidates being considered for International Monetary Fund’s new boss do not inspire much hope for an institution in need of credibility. Much of the media’s focus has been on the nationality of the candidates rather than on which capabilities are needed to address the IMF’s major challenges: shifting to a more flexible policy orientation and adapting to a changed global economy.
According to a recent report by the IMF’s Independent Evaluation Office, the Fund’s effectiveness has been hindered by a “high degree of groupthink, intellectual capture and inadequate intellectual approaches.” The groupthink was founded on the belief that “market discipline and self-regulation [are] sufficient to stave off serious problems in financial institutions.”
Put another way, the IMF believed that the global financial markets should be left to their own devices to chart the contours of economic globalization. As a result, mere months before the financial crisis, the “IMF’s banner message was one of continued optimism and … pointed to a positive near-term outlook and fundamentally sound financial market conditions.” The Fund continued to endorse “light-touch regulation and supervision policies” — policies that we now know contributed to the crisis.
Continue reading “Is IMF choosing the right boss?”
With nominations in and lobbying winding down we want to know who you’d (dis)like to see as the head of the IMF [see sidebar].
But who will our governments be supporting?
Our friend Tony Fleming over at Global Memo has been keeping a tally of country position statements. Pick a country and see what they say. What’s more, if you’ve info that he hasn’t, why not help him fill in the blanks?
As well as documenting their position he notes each member state’s voting percentage to give us an idea of how much sway they have. But remember, it’s not the country’s individual voting share that counts per se but rather that of their country representative on the board.
Whilst the US, UK, France, Japan and Germany have their own seats, the remaining 182 members are represented by 19 country directors.
So while Fischer will get the backing of Israel, and Marchenko had the support of the Ukraine and other CIS states, their votes are cast by the Netherlands who early on in the process said “Europe should retain its traditional right to name the IMF chief”.
With Lagarde gaining the vocal support of more countries by the day, the maths it seems, is also on her side…
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”