As the IMF board prepares to meet today to try to make the decision, Reuters is reporting that US Treasury Secretary has confirmed it – `Mr. Geithner said Lagarde’s “exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy.”
No hint that they’ll just ask her to finish out the remaining year of DSK’s term – this looks like a 5-year appointment.
A big thank you to the US government from IMFboss for keeping the suspense alive for so long. It also created the illusion of deliberation, maybe even a bit of democracy.
The Financial Times today reports that in a surprise move on Saturday, Stanley Fischer, the former Deputy Managing Director of the IMF, nominated himself to become the next Managing Director. He has been mentioned by many as a formidable possible candidate, but at this point his nomination seems mostly a chance to embarrass himself. As a U.S. citizen working as the Governor of the Central Bank of Israel, Fischer has two nationalities that will count against him with large blocs of voters. And as the smiling enforcer for M.D. Michel Camdessus during the 1990s, he will call to mind some unpleasant memories both in the developing countries where he was instrumental in imposing dozens of structural adjustment programs and the East Asian countries where the IMF led the stringent bailouts resulting from the regional financial crisis.
He did nonetheless have a way of winning the respect, even affection, of the people whose countries the IMF was overseeing, and was nominated in a symbolic move during the 2000 decision-making process when Camdessus finally resigned after 13 years at the helm. His chances seem little better this time around. Mohammed el-Erian, the CEO of Pimco and himself a symbolic nominee for the post in 2004, is described in the FT article saying Fischer “‘would likely prevail in an open, transparent and merit-based selection process’, but questioned whether European attempts to maintain one of their own as IMF managing director could be overcome.”
In a sign that the race may be winding up anyway, the FT in the same article reports that Egypt and Indonesia have announced they will support French finance minister Christine Lagarde, the front-runner, and her main challenger Agustin Carstens, is getting slightly more personal in his campaigning (pointing out that he’s an economist and she isn’t).
Christine LaGarde paid a visit to Lisbon yesterday for the annual meeting of the African Development Bank (yes, it’s based in Tunis, not Lisbon, but has its meetings in a different member country each year). The Washington Post reports that the finance minister of Congo-Brazzaville, Matata Mapon, indicated that the French-speaking African countries that make up the smallest constituency on the IMF board would support her candidacy. “‘We are encouraged by your vision,’ Mapon said to Lagarde, according to wire service reports from Portugal, adding that he thought she would be “benevolent” toward African countries.” The endorsement obviously does not add much numerically to Lagarde’s vote total (the 22 countries control just 1.55% of the board votes; for comparison the U.S. alone controls 16.78%), but it is very important symbolically for her to win African support. Cynics might say that it would mean more to get anglophone Africa, since the francophone countries still often follow France’s lead.
In another tidbit, the article mentions that the court decision expected yesterday on whether Lagarde would face a formal investigation for overstepping authority in a case in which her decision led to a €450m government liability was delayed until July 8. Since the IMF says it wants the decision on the new Managing Director made by June 30, that means those voting will not know if the potential new M.D. will be facing an immediate court case in France.
A civil society organization has nominated a very alternative candidate for IMF Managing Director. ATTAC France has nominated its co-president, Aurélie Trouvé, an economist who specializes in agricultural markets.
ATTAC France is best known for its longtime advocacy for financial transaction taxes as a way to control excessive speculation and raise funds for global public goods. Indeed, part of Trouvé’s platform is to eliminate austerity plans and instead introduce FTTs (if my rusty French is not deceiving me).
Continue reading “Alternative Candidate Nominated: Aurélie Trouvé”
Simon Johnson, Chief Economist at the IMF in 2007-08, has emerged as one of the most insightful and amusing commentators on the institution since he left it. AFP reports that on his blog, “The Baseline Scenario,” Johnson argues that Lagarde has taken an aggressive position on the fate of the euro that should be disagreeable for most IMF members.
Johnson says Lagarde “personifies the strategy of gambling for eurozone resurrection with other people’s money. Why would taxpayers in US and elsewhere want to support her on this basis?”
The article concludes with a prediction from Johnson: “As IMF chief, he said, `she will most likely continue to throw loans at the eurozone problems,’ — referring to the possibility of preventive loan facilities for Spain, Italy, or Belgium. That, he said, could require the IMF to tap its shareholders for `at least another $1 trillion’ in credit lines.”