France’s Lagarde poised to become next IMF chief

By Lesley Wroughton
WASHINGTON — French Finance Minister Christine Lagarde on Tuesday will likely be named the next head of the International Monetary Fund despite a strong challenge to Europe’s traditional hold on the job.
An informal survey by Reuters of voting countries indicated Lagarde should easily get the majority support needed over Mexico’s central bank governor, Agustin Carstens, to become the next managing director of the global lender.
Carstens picked up endorsements from Canada and Australia late on Friday in a significant challenge to Europe’s grip on the post, but it is unlikely to change the outcome.
The 24-strong IMF board of member countries will meet on Tuesday to try to reach a decision, and will aim to reach a consensus without driving the matter to a formal vote.
On Monday, board officials were in consultations in an effort to determine whether either candidate had a clear majority, according to IMF board and European officials.
The race has been one of the most hotly contested in IMF history. Developing countries have aggressively urged that the process be based on qualifications and not on nationality, despite Europe’s large voting bloc.
The determining voice will be the United States, which has been silent on who it supports. The Obama administration is widely expected to back the 55-year-old Lagarde to preserve the long-standing convention with Europe under which Americans hold both the IMF No. 2 spot and the presidency of the World Bank.
Japan and China, which rank second and third behind the United States in voting influence, have also refrained from publicly supporting any candidate. However, IMF board officials said both countries are likely to vote for Lagarde, and the head of China’s central bank told Dow Jones Newswire on Monday that China had expressed “quite full support” for Lagarde.
Washington holds close to 17 percent of the vote, while European nations account for somewhere between 40 to 47 percent.
Countries such as Egypt, Indonesia, South Korea and French-speaking African nations early on declared their support for Lagarde, but have only marginal voting power.
The IMF job became vacant in May after the resignation of Dominique Strauss-Kahn, who has been charged with sexually assaulting a hotel maid in New York. He denies the charges.
Although a self-proclaimed long-shot candidate, Carstens has vigorously campaigned on his experience as a former IMF official, as well as dealing with developing world economic crises.
He has won wide backing in Latin America, with Peru and Chile endorsing him on Friday. While Brazil has been silent on whether it supports him or not, IMF board officials expect Brazil to join the rest of the region.
Supporters of Lagarde cite her political and economic credentials throughout Europe, which is the focal point of IMF efforts to head off another global economic downturn.

Both candidates have committed to hand more IMF voting power to emerging economies and have promised even-handed advice to both advanced and developing countries.
Developing nations want their growing clout in the global economy reflected at the IMF, but have won only modest increases in voting power so far.
Israel’s central bank governor, Stanley Fischer, another favorite among developing countries, was disqualified as a candidate because he is over the 65 age limit for first time managing directors.
The continuing inability to mount a serious challenge to Europe’s dominance in the IMF caused two potential contenders — former Turkish Economy Minister Kemal Dervis and ex-South African Finance Minister Trevor Manuel — to decide against running.
Before his downfall in May, Strauss-Kahn oversaw a shift in voting power that gave emerging markets greater say. He also named a Chinese to an IMF special adviser post, a step short of giving Beijing a coveted top IMF job.
© Thomson Reuters 2011