Lagarde gets China nod ahead of IMF decision

27th June 2011, Comments 0 comments

France's Christine Lagarde picked up an endorsement from China Monday, raising her chances to become head of the International Monetary Fund despite grumbles from some nations over Europe's lock on the job.

The global crisis lender's executive board was expected to make the decision between Lagarde, France's finance minister, and Mexican central bank chief Agustin Carstens as early as Tuesday.

Since the race began in late May, 55-year-old Lagarde, put forward by Europe, has been the strong favorite, even though Washington, the IMF's key power, had not yet signaled its choice.

China's apparent confirmation of its backing for Lagarde showed that objections expressed by emerging economies to yet another European Fund executive director would probably have little effect on the final decision.

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 said.

Nevertheless, Carstens, 53, picked up endorsements from Australia and Canada on Friday, suggesting that the fight was not yet a "done deal," as Lagarde's backers have claimed since the outset.

The 187-nation Fund was left reeling after managing director Dominique Strauss-Kahn resigned on May 18, in the middle of tense negotiations over Greece's massive bailout and worries about the state of other economies in Europe.

Strauss-Kahn quit to fight charges in New York that he sexually assaulted a hotel maid, allegations which he denies.

His departure sparked a push by emerging economies for one of their own to head the Fund, after 65 years of Europeans under a tacit agreement with the United States, which locked up the presidency of the World Bank in return.

With their own crisis festering and the IMF's role crucial is addressing it, Europe's powers aggressively put forward Lagarde.

Despite his own strong qualifications, including a stint as the IMF number three, economist Carstens has failed to muster much concrete support from the developing world outside a bloc of smaller Latin American nations.

Other potential non-European candidates declined to stand, saying Lagarde had the job sewn up.

The IMF board said it wants to decide the position "by consensus" before the end of June.

If that cannot be achieved, the board would vote, and because they have by far the largest quotas in the Fund, Europe -- with 32 percent -- and the United States -- with 17 percent -- are the key players.

Carstens' endorsements from Australia and Canada, while significant, by comparison would add just 4.5 percent of the vote to whatever other support he could garner.

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

But she remained vulnerable on two points.

First, critics say she will be too biased toward Europe's bailouts of Greece, Ireland and Portugal when the IMF needs to be tougher.

Lagarde rejected any conflict of interest last week in her presentation to the IMF board.

"I am not here to represent the interest of any given region of the world, but rather the entire membership," she said.

She also remains subject of a legal investigation over alleged abuse of power in France, an issue that raised concerns by some IMF officials, though she has said the probe will find nothing.

© 2011 AFP

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