Lagarde – another IMF scandal in the making?

Put Friday 10th June in your calendar. Not just because it’s the closing date for nominations for IMF MD candidates. But also because, in one of those coincidences of fate that seem too delicious to be purely accidental, it’s also the deadline for the French legal system to decide whether to launch a full scale investigation into Christine Lagarde over allegations of abuse of office.

The charges and backstory are a bit complicated – and I’ll do my best to explain it in a moment – but here’s the thing. We could end up in the farcical situation where the leading candidate for IMF head is defending herself against charges that could land her in prison for up to five years – coincidentally also the length of the IMF MD’s term of office.

You have to love the short-sighted European leaders who are pushing her forward – not caring about the damage caused by trampling roughshod over past commitments to fair, open processes, they seem determined to add a high stakes gamble for a two-in-a -row shot at French IMF heads booted out in the same year. You couldn’t make this stuff up.

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What’s driving Brazil??

One of the enigmatic cases in the process is Brazil. A developing economy with hefty economic weight, but also a raucous democratic process and loud civil society. While China broke its long time silence on the process and demanded something open, Brazil’s government has been noisy on this for a decade.

Yes, its the process! It is also the IMF’s policies

Thanks to Nancy Birdsall at Center for Global Development in Washington for expressing things with characteristic American forthrightness: “IMF Leader Selection: It’s the Process, Stupid”. She references the Heading for the right choice? briefing paper published by over 20 NGOs in April, and asks “Would [Lagarde] not seem to be biased even if she wasn’t – beholden to Sarkozy and Merkel generating immoral hazard for the IMF (or the euro or Greece. . . )?  Won’t she represent, whether she wants to or not, the stench of colonialism wafting around the IMF?” Indeed.

Oops, they did it again: EU leaders push for European head of IMF

Time and again European Union leaders have made overbearing political commitments to conduct an “open, transparent and merit-based process”  to select the IMF Managing Director (MD). However, at the moment of truth now that former MD Dominique Strauss-Khan has resigned, they are taking back every word they said and holding on to their outdated privilege to head the institution that will – whether we like it or not – determine the fate of the world economies.

The selection process of the new IMF head has managed to achieve what three long years of deep financial and economic crisis in Europe never managed to do: to reach agreement among Member States of the European Union. This week “a European consensus is being elaborated. We must have a European [IMF managing director],” said French Minister Francois Baroin. Even “the Chinese are favorable to the appointment of Christine Lagarde [current French Finance Minister],” he added.

Both amnesia and backtracking are common features amongst European decision-makers regarding IMF governance. Let’s remind them what they promised to deliver:

Candidate assessment: Is Manuel the man to manage the IMF by Patrick Bond

imfboss has invited candidate assessments from civil society voices in the home countries of the candidates to head the IMF. Throughout the process we will be posting these here for your benefit.

By Patrick Bond, University of KwaZulu-Natal Centre for Civil Society, South Africa

The world’s most predatory financial institution had until last Thursday a managing director nicknamed “The Seducer,” who talked left, evoking John Maynard Keynes, and walked right, imposing austerity on the Third World, including now Ireland, Greece and Portugal.

Useful though that was to world financial elites, Dominique Strauss-Kahn’s notorious misogyny allowed the powers behind the International Monetary Fund (IMF) to ditch him with little hesitation once rape charges by a vulnerable hotel cleaner last Saturday began to stick. Raising the prospect of a consensual-sex defense worthy of Jacob Zuma, superstar lawyer Benjamin Brafman stupidly remarked, “The forensic evidence, we believe, are not consistent with forcible encounter.”

South Africa’s Trevor Manuel is apparently being seriously considered as Strauss-Kahn’s replacement, in competition with conservative French finance minister Christine Lagarde, British political failure Gordon Brown and other emerging-markets personalities. (A “Europeans Only” sign always graced the IMF director’s door, but surely that can change?)