In the news

• U.S. Mnuchin sees some ‘very good’ European candidates to lead IMF, Reuters
• The choice of the IMF’s next boss could be a coronation, the Economist
• Europe is at odds over who will replace Christine Lagarde at the IMF, CNBC
• [Ashoka Mody] Let’s choose the best person to lead the IMF, Bloomberg
• The International Monetary Fund leadership is not a bargaining counter, Social Europe
• A reform opportunity for the IMF, Project Syndicate
• Europe Wants to Keep the IMF. Here’s How Its Likely Picks Fare, Bloomberg
• Lagarde’s exit, fresh beginning for IMF?, Leadership
• After Christine Lagarde, who will lead the world’s most important economic job?, Financial Express
• Why Europe should give up the IMF, Politico
• IMF prospects fade for Dijsselbloem, Carney, Politico
• Raghuram Rajan to replace Christine Lagarde? Former RBI governor among top picks for IMF chief role, Business Today
• France urges IMF age-cap rethink in hunt for Lagarde successor, Financial Times
• Spain will propose economy minister as new IMF chief if backed by EU, el Pais

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Lagarde’s first press conference, a lot of wait and see

Lagarde gave her first press conference as managing director of the IMF yesterday, a transcript and video are both available online.

She started by outlining the three C’s, a manifesto of sorts, focusing on the Fund’s connectedness, credibility, comprehensiveness and talked on increasing diversity at the Fund. Diversity in membership and the workforce in terms of gender, ethnicity and academic background so that “people are not clones of each other”.  Perhaps this to avoid further criticism of group think that is said to have hindered the Fund at the time of the last financial crisis.

As expected she faced a barrage of questions on the Eurozone crisis, particularly the possibility of a Greek default and restructuring the role of the ECB and the political and social factors at play. Lagarde gave no direct answers saying:

“I’m afraid that I’m going to disappoint you because you are going to point a lot of questions on Greece and I’m going to either elude the responses, or be very sanitized in my responses, simply because the matter is under review.” The board is due to meet on Friday to consider the next tranche of lending so perhaps some illumination will be provided then?

Not 1, but 3 flawed appointments – US and China dividing up the spoils

According to Reuters the IMF is making great progress in filling out its senior management team. It also seems to be setting new records for the number of appointment processes in a single month that can violate the international agreements for all senior management to be appointed through open, transparent, and merit-based processes. It likes like the US and China are already dividing up the spoils.

The US first, with an update on yesterday’s post about Meg Lundsager’s non-appearance for the Lagarde interview with the board. Sources inside the IMF have said that indeed Lundsager, the US executive director, did not attend the board’s interview with Christine Lagarde. We are told she was instead at a meeting at the US Treasury with IMF staff who are conducting the IMF’s annual Article IV consultation – a check up on economic policy that all IMF members undertake. Is that justifiable? Or does it show that really the US had already made up its mind to continue backing the gentleman’s agreement than lets them appoint the World Bank president in exchange for backing a European for the head of the Fund, and so attendance at the interview was optional?

Lagarde signs on the dotted line, gears up for first press conference

On the day of her appointment the IMF made public Lagarde’s contract, it’s interesting to examine the differences between hers’ and the one signed by her predecessor DSK…

Most are expected and unremarkable, some changes to language regarding parter/spouse and an updated salary. But papers were quick to pick up on the additional clause committing Lagarde to observe rules regarding her ethical conduct:

As managing director, you are expected to observe the highest standards of ethical conduct, consistent with the values of integrity, impartiality and discretion. You shall strive to avoid even the appearance of impropriety in your conduct.

This includes taking part in the Fund’s ethics training programme. The clause also deals more explicitly with conflicts of interest, both internal and external.

In the performance of your duties as Managing Director, you have an exclusive duty of loyalty to the Fund and shall avoid any conflict of interest or the appearance of such a conflict.

Interestingly, given that it was known by all that DSK intended to run for the French presidency, clause 2 (d) is extended to clarify:

you will not, in your personal capacity, attend political party meetings, assume any leadership role within a political party, or otherwise engage in partisan political activity.

As Alan Beattie comments, it is hard not to see these changes as a response to DSKs indiscretions and political aspirations. On the latter, Beattie mentions a proposal that “IMF MDs should sign a pledge to stay out of elected office for the first five years after they leave the Fund”.

Interview with 24 men: little white lie or the US doesn’t care who runs the IMF?

As Christine Lagarde takes office this week she has been playing up the angle that, because she is a woman, change is coming to the IMF. Of course, Lagarde is the first woman to head the Fund, but she is also the 11th white European (out of 11 total) to have the role, and the 5th French national to head the institution. Since 1978, the IMF has been run by a French national for 26 of the last 33 years. I don’t think we can be sure how much change Lagarde will bring to an institution badly in need of a complete overhaul.

After her selection but before taking office Lagarde spoke to French television, saying (as quoted in a widely run Associated Press article):

“While I was being questioned for three hours by 24 men, I thought, ‘It’s good that things are changing a little.'”

Any journalist with any sense of the IMF structures, or the ability to use the Internet to fact check should have been a bit surprised at this statement.