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Business

Rivals tackle IMF frontrunner Lagarde

Text by News Wires

Latest update : 2011-06-13

French Finance Minister Christine Lagarde faced criticism Monday from rival candidates to head the IMF, with Mexico’s Agustin Carstens claiming her candidacy could pose a conflict of interest.

AFP - Rivals to lead the IMF lit into French favorite Christine Lagarde Monday, with one suggesting she had conflicting interests, as the race to head the world's crisis lender heated up.

Mexican central bank chief Agustin Carstens said Europe's dependence on the International Monetary Fund to bail out several of its members could challenge the French finance minister's ability to take a cold hard stance as the Fund's managing director.

"I also think there could be a conflict of interest," Carstens told an audience in Washington.

"We'd have a situation where the borrowers dominate a creditor institution. I think that's an issue we should consider," he said.

Meanwhile fellow contender Stanley Fischer, the head of Israel's central bank, questioned her lack of credentials as an economist.

"In normal times, you can probably rely on intuition," Fischer told The Wall Street Journal in an interview.

But with "serious economic issues" that need to be addressed, IMF staffers often offer conflicting advice.

"Without having that (economic) training, it's very hard to know who's right and who's wrong. You have to have a framework to think through the problems," he told the newspaper.

The 24-member IMF executive board was to begin weighing the three declared candidates Monday with an eye toward filling the crucial job by the end of June, six weeks after former head Dominique Strauss-Kahn resigned to deal with his arrest on sexual assault charges in New York.

All three have strong credentials, but only Lagarde, 55, has picked up major endorsements, first and foremost from the powerful European bloc, where she has been deeply involved in dealing with fiscal crises.

She gained momentum in recent days with official support from Egypt, Indonesia, and a number of African countries.

Carstens has only garnered the expressed support of a dozen Latin American countries, which, notably, do not including Brazil or Argentina.

Meanwhile Fischer faced his own difficulties: at 67, he would have to obtain a variance on IMF rules which set a limit of 65 for an incoming managing director.

Moreover, with dual US-Israeli citizenship, he would complicate the 65-year-old arrangement that a European leads the IMF, an American serves as the IMF number two, and an American leads the World Bank.

Carstens criticized the longstanding process that has favored Europeans.

"The chances of Christine Lagarde getting elected are quite high. I'm sure that she will make a good managing director," he said at the Peterson Institute for International Economics.

"It would have been better if she had been elected in a transparent process."

"But it has to be legitimate in the sense that even-handedness among members prevails, there are no regional biases, and country representation is well-balanced," he said.

Carstens earlier met US Treasury Secretary Timothy Geithner to lobby for support.

Geithner remained uncommitted but "thinks Governor Carstens has a strong mix of financial talent and political skills, making him an exceptionally capable candidate to head the IMF," said a Treasury spokeswoman.

Lagarde's candidacy also faced a new wrinkle Friday, when a French court delayed a decision on whether to investigate her role in an alleged abuse-of-power scandal until July 8 -- after the target date for deciding the next IMF head.

That could become an opening for either Carstens or Fischer, according to analysts.

"Lagarde's legal entanglements could throw her candidacy off track, opening up the race," Eswar Shanker Prasad, a Cornell University professor and former IMF researcher, told AFP.

Both Carstens and Lagarde have been touring the world, pitching their candidacies, with Lagarde stressing her independence.

Fischer, who only jumped into the race at the last minute, also called for a more transparent process.

"I believe the case needs to be looked on its merits and not on political factors," Fischer told the Journal. "We'll have a far more reasonable contest that way than if just left it to who can travel around the world most often."

 

Date created : 2011-06-13

  • DIPLOMACY

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  • FINANCE

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