Two withdraw as Europe fights to keep IMF job

10th June 2011, Comments 0 comments

Two candidates to head the IMF backed out of the race Friday, denouncing Europe's bid to hold on to the job, but leaving French favorite Christine Lagarde facing just one challenger.

Hours ahead of the close of nominations to be managing director of the International Monetary Fund, dark horses Grigory Marchenko of Kazakhstan and Trevor Manuel of South Africa said they would not stand for the job.

"It's more or less obvious that Christine Lagarde is going to be elected," the Kazakh central bank chief told CNN.

"Quite a few people do have credentials... But again, it's not about a fair competition, it's about politics. And I think there, a political decision has been taken already," he said.

Earlier South African planning minister Manuel also declined to stand, praising Lagarde as "very competent" but criticizing Europe's 65 year hold on the position.

"A lot more should have been done to persuade Europeans that this birthright is not a birthright that should find a resonance in an institution as important as the International Monetary Fund," he said.

Lagarde, the French finance minister, and her remaining challenger, Agustin Carstens, Mexico's central bank chief, were both wooing potential supporters Friday, Carstens in emerging economic power India and Lagarde in Lisbon, where the African Development Bank was meeting.

Barring unlikely last-minute submissions, they were likely to be the only candidates when official nominations to lead the world's crucial crisis lender close at midnight Friday, Washington time (0400 GMT Saturday).

The managing director job opened unexpectedly after French IMF head Dominique Strauss-Kahn resigned on May 18 to fight sexual assault charges in New York.

Lagarde is a strong favorite, with the solid backing of Europe, which is struggling to keep the IMF-backed bailout of Greece on the rails.

Meanwhile Carstens, who was formerly the IMF deputy managing director, has strained to gather support from emerging economies and break Europe's hold on the position.

Europe's hold on the managing director's slot since the end of World War II -- in a pact with the United States, which controls the presidency of the World Bank -- was an issue in the race.

Global nervousness about the delicate financial situation in Europe's peripheral countries -- especially Greece -- also featured, a point favoring Lagarde.

But the perception of Europe's entitlement to the post did not sit well with some.

"The membership of the fund needs to assure us they will take a decision based on merit," Carstens told reporters in New Delhi.

"I presented my credentials, the international community knows me and I think I have the capacity to be the head of the fund."

Both Carstens and Lagarde have focused on wooing the huge emerging economies Brazil, Russia, India and China -- the so-called BRICs -- which could expand their shareholding in the Fund under the next director.

After starting in Brazil, Lagarde was in Beijing and then New Delhi this week. Carstens also launched his campaign in Brazil, and was disappointed to not get the endorsement of a fellow Latin American power.

Friday he was in New Delhi; he was to follow that with a stop in Washington Monday, and then head to Beijing.

The BRICs haven't tipped their hands, but "in private they have already conceded that they are mostly likely to back Lagarde," said Brookings Institution analyst Domenico Lombardi.

They see her "as an important backstop to the European crisis," he said.

The inability of developing countries to join hands has surprised some. On Friday Lagarde picked up support from a number of African countries at the meeting of the African Development Bank in Lisbon.

"At this stage they don't care enough about this position... to expend the political capital to want to change the status quo," explained Arvind Subramanian of the Peterson Institute for International Economics.

As strong as it is, Lagarde's candidacy is clouded by a pending investigation in France into her alleged abuse of authority, in a multi-million euro business dispute.

A court had been expected to rule on Friday on whether the investigation would go ahead or not. But instead it was postponed until June 9, after the IMF executive board is to make its decision.

Lagarde has said repeatedly that she did nothing wrong.

© 2011 AFP

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