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Business

France's Lagarde expected to launch IMF bid

©

Video by Yuka ROYER

Text by News Wires

Latest update : 2011-05-25

French Finance Minister Christine Lagarde is to announce her candidacy to be the new head of the International Monetary Fund (IMF) on Wednesday following Dominique Strauss-Kahn's resignation in the wake of sexual assault charges.

REUTERS - France’s finance minister is set to declare on Wednesday she wants to be the next head of the IMF even though big emerging economies have decried Europe’s “obsolete” grip on the top job.
 
Brazil, Russia, India, China and South Africa sharply criticized European officials in a joint statement for suggesting the next International Monetary Fund head should automatically be a European, a convention that dates back to the founding of the agency at the end of the Second World War.
 
However, the countries known as the BRICs did not suggest any alternative candidate to France’s Christine Lagarde, who appears to have enough support in Europe, the United States and China to handily defeat any potential challengers.
 
Diplomatic sources said Lagarde plans to formally announce her candidacy on Wednesday.
 
In the first joint statement issued by their directors at the Fund, the BRICs said the choice of who heads the IMF should be based on competence, not nationality.
 
They called for “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe.”
 
Hours before the BRIC statement was issued in Washington, France’s government said China would back Lagarde to succeed Dominique Strauss-Kahn, who quit after he was charged with sexually assaulting a hotel maid in New York.
 
China’s Foreign Ministry said it had no comment on whether Beijing would indeed endorse Lagarde, a 55-year-old former lawyer, for the job.
 
Emerging nations say it is time for Europe’s grip on the IMF to be loosened but no clear consensus candidate to represent them has emerged.
 
Some emerging market government officials say privately that although they are fed up with advanced economies controlling the selection process, they are not in a position to put forward a challenger who could stand up to Lagarde.
 
Mexico has nominated its central bank chief for the job and he said some countries had welcomed his decision to run. South Africa and Kazakhstan may put forward their own candidates.
 
‘European consensus’
 
Under a long-standing agreement between the United States and Europe, the top job at the IMF goes to a European while an American leads its sister organisation, the World Bank. The United States also fills the number two position at the IMF.
 
Following Strauss-Kahn’s resignation, Europe has made clear it wants to stay in charge of the multilateral lender at a time when it is helping to bail out Greece, Ireland and Portugal.
 
“It’s a European consensus,” Francois Baroin, France’s budget minister and government spokesman, told Europe 1 radio.
 
“The euro needs our attention. We need to have the Europeans (on board), the Chinese support the candidacy of Christine Lagarde,” he said.
 
The United States, who sources in Washington have said will back a European, and European nations have enough joint voting power at the IMF to decide who leads it.
 
Securing support from some emerging economies would defuse a potentially bitter row over the decision though.
 
In April 2009, the Group of 20 leading nations endorsed “an open, transparent and merit-based selection process” for heads of the global institutions.
 
France, which presides over the G20 this year, has made an effort to reach out to Beijing on key issues for developing countries like global monetary reform and speculation in commodity markets.
 
Last week, the head of China’s central bank, Zhou Xiaochuan, said the IMF’s leadership should reflect the growing stature of emerging economies. But he stopped short of saying its new boss should be from an emerging economy.
 
Wu Qing, a researcher with the Development Research Centre government think tank in Beijing, said it was plausible that China would support Lagarde as there weren’t many qualified candidates from China or Asia in general.
 
The IMF’s board will draw up a shortlist of three candidates and has a June 30 deadline for picking a successor. Nominations can be made until June 10.
 
‘Part of the process’
 
Mexico’s central bank chief, Agustin Carstens, told Reuters the United States welcomed his participation in the race for the IMF job but was neutral on whether to support his candidacy.
 
“They welcomed that I was participating and they thought it was an important part of the process,” Carstens said.
 
Brazil seemed reluctant to back Carstens, with government sources saying he is seen as a long shot for the job.
 
South African Finance Minister Trevor Manuel may also be a candidate to run the IMF, and Russia has said it would back Kazakhstan’s central bank chief, Grigory Marchenko.
 
A growing concern about Lagarde is a possible legal probe of her role in a 2008 payout to a prominent French businessman to settle a dispute with a state-owned bank.
 
Judges are due to rule on June 10 whether to launch an inquiry into the matter.
 
The race for the IMF’s top job was set off by the departure of Strauss-Kahn, who is under house arrest in New York. He denies the sexual assault charges and his wife has stood by him.
 
DNA found on his accuser’s shirt was a match to
Strauss-Kahn, a law enforcement source said. The source also said Strauss-Kahn made advances toward another employee at the same Sofitel hotel a day before the alleged attack.

Date created : 2011-05-24

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