France's Lagarde poised to win IMF job

28th June 2011, Comments 0 comments

French Finance Minister Christine Lagarde was poised to be named head of the International Monetary Fund Tuesday when the global crisis lender's board meets to replace Dominique Strauss-Kahn.

Despite grumblings from emerging economies over Europe's 65-year lock on the executive director job, there was little doubt that the key IMF power, the United States, would support Lagarde, making it nearly impossible for Mexican challenger Agustin Carstens to win the position.

Choosing Lagarde would ease European concerns that the Fund's crucial bailouts of Greece, Portugal and Ireland could be disrupted by the unexpected departure of Strauss-Kahn, who resigned May 18 to fight sexual assault charges.

Lagarde picked up an endorsement from China Monday, confirmation that efforts to construct an emerging economy bloc to end Europe's monopoly on the job had failed.

Speaking in London, China's central bank chief Zhou Xiaochuan said Beijing had already expressed "quite full support" for Lagarde's candidacy, according to Dow Jones Newswires.

"Of course we still do not know what the final situation will be. Currently, there doesn't seem to be anything unclear about it," he was quoted as saying.

Since the race began in late May, 55-year-old Lagarde has been the strong favorite over Carstens, Mexico's central bank chief, despite his formidable resume.

Few expected Washington to break the tacit pact, dating to the founding of the Fund and sister institution the World Bank, that an American would run the Bank while a European headed the Fund.

On Monday US Treasury Secretary Timothy Geithner remained coy, while he praised what he called "an open, contested process" with "two excellent candidates".

"I'm sure we're on the verge of having somebody emerge that will come in very well-supported," he said.

"And that's very important because this institution faces a lot of challenges, not least in Europe, and it's a time we need strong leadership."

The 187-nation Fund, which plays a crucial but often controversial role aiding countries in financial straits, was left reeling after Strauss-Kahn resigned in the middle of tense negotiations over Greece's massive bailout and tensions over other struggling European economies.

Strauss-Kahn, whose arrest in May sent shock waves across his native France's political landscape and the financial world, is accused of attempting to rape a Manhattan hotel maid. He has denied all charges against him.

With their crisis festering, Europe's powers aggressively put forward Lagarde.

Though not an economist, she has gained wide respect as France's point-woman during its leadership of the G20 as well as in European debt talks.

Despite her strong suit, Lagarde toured the world to convince emerging economic powers like China and India that she would not be too biased to take tough stances on Europe's bailouts of Greece, Ireland and Portugal.

"I am not here to represent the interest of any given region of the world, but rather the entire membership," she told the IMF board last week.

Europe's push frightened off at least two other potential non-European candidates, who declined to stand, saying Lagarde had the job sewn up.

Carstenss, 53, at first only getting an endorsement from a bloc of Latin American countries that notably did not include regional powers Brazil or Argentina.

But on Friday he picked up surprise endorsements from Australia and Canada, which usually line up with Europe and Washington.

Carstens's previous positions, including a stint in the number-three position as IMF deputy managing director, "equip him very well to understand and address, on a collaborative and inclusive basis with IMF member countries, the challenges faced by the global economy," the two countries' finance ministers said in a joint statement.

But Carstens himself said he was a long shot, acknowledging that underlying the IMF board's stated goal of deciding "by consensus" was the hard fact that Europe has 32 percent of the voting power while Washington has 17 percent.

The IMF's claims of the process being more transparent than ever have drawn sharp criticism.

On Friday some 30 non-governmental organisations issued a letter saying Lagarde's expected selection "has laid bare the hypocrisy of a selection process which was neither truly fair and open, nor merit-based."

© 2011 AFP

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