France's Lagarde poised to win IMF job

28th June 2011, Comments 0 comments

French Finance Minister Christine Lagarde was poised Tuesday to be named the first-ever woman head of the International Monetary Fund after earning the decisive endorsement of Washington.

Despite grumblings from emerging economies over Europe's 65-year lock on the IMF's top job, the solid support of the United States, Europe and key emerging economies made it impossible for Mexican challenger Agustin Carstens to win the position.

Choosing Lagarde as IMF managing director was expected to ease concerns in Europe that the Fund's support for the fragile bailouts of Greece, Portugal and Ireland could weaken in the wake of the unexpected May 18 departure of Dominique Strauss-Kahn.

But violent protests in Athens Tuesday against tough IMF- and European Union-dictated austerity measures under their 110 billion euro bailout program made clear the immediate challenges facing the next Fund chief.

Analysts worried that if Greece cannot push through the measures, it could default on hundreds of billions of euros of debt and shatter Europe's already fragile financial system.

"Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy," US Treasury Secretary Timothy Geithner said in a statement.

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

The backing of the United States and Europe gave Lagarde the support of 49 percent of the voting quotas on the 24-member IMF executive board.

Added endorsements of China on Monday and Russia and Brazil on Tuesday ensured she would be over the 50 percent mark, although the board said it wants to decide by consensus rather than a vote.

The board was expected to announce their decision as early as Tuesday.

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 anxiety over other struggling European economies.

Strauss-Kahn, the IMF chief since 2007, was arrested in New York on allegations that he sexually assaulted a hotel chambermaid. He denies the charges, and remains under house arrest while preparing his defense.

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

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

"The big advantage of Christine Lagarde is representing a continuity in the cooperation between the Fund and the eurozone," said a source close to the IMF.

Nevertheless, Lagarde had to tour the world to convince emerging economic powers like China and India that she would not be too biased to take tough stances on the European bailouts.

"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.

Carstens, 53, who spent three years as the IMF's second deputy managing director, had acknowledged he was a long shot, and he picked up only a handful of endorsements despite an effort to assemble an emerging economy voting bloc.

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

On Friday some 30 non-governmental organizations 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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