The pullout of two dark-horse candidates left French Minister of Economic Affairs, Finances and Industry Christine Lagarde and Bank of Mexico Governor Agustin Carstens the only apparent competitors to head the IMF as nominations closed at midnight on Friday.
Now the IMF’s executive board faces a difficult political, rather than merit-based, decision when it meets tomorrow to begin hashing out who will become managing director of the world’s crisis lender.
In Lagarde, board members would have someone intimately up to speed on Europe’s crisis du jour, the crumbling Greek rescue, as well as a leader in the much-needed reform of the global financial system.
In Carstens, Mexico’s central bank chief, they would have someone who has already served three years as the IMF’s No. 3 and who could satisfy developing-country calls to break the Europeans’ 65-year hold on the job.
The pullout of two other potential candidates — National Bank of Kazakhstan Governor Grigory Marchenko and South African National Planning Commission head Trevor Manuel — underscored the widespread belief that Europe already has a done deal.
“It’s more or less obvious that Christine Lagarde is going to be elected,” Marchenko told CNN. “Quite a few people do have credentials ... But again, it’s not about a fair competition, it’s about politics. And I think there, a political decision has been taken already.”
Manuel praised Lagarde as “very competent,” but criticized Europe’s presumption of owning the post.
“A lot more should have been done to persuade Europeans that this birthright is not a birthright that should find a resonance in an institution as important as the International Monetary Fund,” he said.
Neither candidate was acting as if it was settled: Lagarde went to Lisbon to woo members of the African Development Bank, while Carstens was in New Delhi pitching for support.
The job opened unexpectedly after Frenchman Dominique Strauss-Kahn resigned on May 18 to fight sexual assault charges in New York.
The 24-member executive board, representing all the IMF’s members, has targeted the end of this month to reach a consensus on one of the candidates, the way it has been decided in the past.
However, that process has brought harsh criticism of non-transparency and backroom deals that always favor the Europeans — with IMF power Washington getting one of its own to head the World Bank in a longstanding transatlantic quid pro quo.
Europe has come out in force for Lagarde, as it struggles to keep the IMF-led bailouts of Greece, Ireland and Portugal on the rails.
The US and Japan, the IMF’s other power brokers, remain publicly uncommitted.
Carstens has meanwhile strained to gather endorsements, even in Latin America. An emerging economy bloc has not coalesced. “At this stage, they don’t care enough about this position ... to expend the political capital to want to change the status quo,” explained Arvind Subramanian of the Peterson Institute for International Economics.
Former Western Hemisphere director at the IMF Claudio Loser said: “The Europeans have a unified vision, while the emerging countries still have a nationalist vision.”
Both candidates have wooed Brazil, Russia, India and China — the so-called BRICS countries, minus South Africa — which could expand their shareholding in the Fund under the next director.