The Financial Times reported that French Finance minister Christine Lagarde was the leading candidate for Managing Director of the International Monetary Fund (IMF). She would replace Dominique Strauss-Kahn, now charged with sexual assault in New York City. (Images: Wiki Commons)
Christine Lagarde, France’s finance minister, has emerged as the leading contender to run the International Monetary Fund after being strongly endorsed by her German and British counterparts, eager to extend Europe’s 65-year grip on the global financial institution. Financial Times May 22
With the UK, Germany, and France supporting Lagarde, a favorable nod from the Obama Administration would assure her the job.
Since its creation in 1945, IMF has had an unbroken string of European managing directors.
The fund describes its role in the global economy:
The IMF promotes international monetary cooperation and exchange rate stability, facilitates the balanced growth of international trade, and provides resources to help members in balance of payments difficulties or to assist with poverty reduction. IMF
Critics have another view:
The World Bank and the IMF often attach loan conditionalities based on what is termed the ‘Washington Consensus’, focusing on liberalisation—of trade, investment and the financial sector—, deregulation and privatisation of nationalised industries. Often the conditionalities are attached without due regard for the borrower countries’ individual circumstances..." The Bretton Woods Project
Reuters noted that Strauss-Kahn's resignation, "has started a tug of war between Europe and emerging economies, which argue it is time to end 65 years of European domination of the IMF post." Australia and South Africa said it's time to hire by qualification not geography.
The Mexican government put forward Bank of Mexico governor and economic consultant Augustin Carstens. Carstens worked with IMF after receiving his PhD in economics from the University of Chicago, where he served on the faculty for a period.
European Conservatives Put Up Candidate Under Scrutiny
French President Nicolas Sarkozy nominated for Lagarde the IMF post. The president has a 71% disapproval rating in a recent 1800 person poll. One of the many factors contributing to that broad based rejection by the French public involves Lagarde. As finance minister in 2007, she moved a court case involving a close associate of Sarkozy into binding arbitration. That resulted in a $400 million judgement for the president's friend, an outcome that many thought was excessive.
Other politicians questioned Sarkozy's friendship with Tapie. Daniel Cohn-Bendit, Joly's fellow MEP for the green party, Europe Ecologie Les Verts, told French TV, "What I know is that Lagarde's decision was pushed by Nicolas Sarkozy. It's Sarkozy's responsibility and his friendship with Bernard Tapie that's under discussion here." Guardian May 11
A three judge panel of the Court of Justice for the Republic will recommend for or against further investigation by mid June. A yes on investigating Lagarde would end her chances for the IMF position.
The nomination is backed by three conservative governments: prime minister David Cameron, United Kingdom; France's president Sarkozy; and conservative-lite German Chancellor Angela Merkel. Cameron's popularity is up and down, Sarkozy's is disastrous, and Merkel's Christian Democratic Party just lost a major state election to the Green Party.
This may be the last good opportunity for Europe's conservatives to deliver for their corporate and banking patrons. One has to wonder why they couldn't find a scandal free candidate.
If the European move fails, the alternative, Carstens, comes from a "free market" Mexican government that features the austerity and privatization policies of their European counterparts.
Plus ça change, plus c'est la même chose