Asia’s fast-rising economies set their sights on securing key appointments under newly named IMF managing director Christine Lagarde yesterday, hopeful she would be the one to make good on oft-heard pledges to swing more power to emerging markets.
Lagarde, 55, the first woman to head the IMF, succeeds former IMF managing director Dominique Strauss-Kahn, who resigned last month to defend himself against charges of sexual assault against a New York hotel maid. He denies the charges.
Her skills as a tough negotiator with a reputation for sealing deals under pressure will carry weight as she moves from defending France’s economic interests to overseeing a global institution that must be seen as a neutral player around the world.
The IMF board moved ahead despite lingering concerns about an unresolved legal case in France looking at Lagarde’s role in a 2008 arbitration payout to a French businessman.
Lagarde said on Tuesday she was “completely unconcerned” by the case. A top French court has put off a decision on the matter until July 8.
Lagarde begins her five-year term as managing director of the IMF on July 5, and will find herself immediately immersed in efforts to head off a Greek debt default that could spark an international crisis.
Lagarde said all the right things on her recent campaign-trail tour of Asia. She acknowledged that countries such as China and India deserve increased IMF voting power commensurate with their growing economic clout, and a fair shot at the institution’s top decision-making posts.
“Lagarde is a friend of India,” a senior Indian government source said. “We can’t get the IMF managing director’s chair for now, but at least India can get some high-level appointments in the IMF during her tenure and we will work towards that.”
High on her to-do list within the fund will be appointing a top leadership that fairly reflects global economic influence and shepherding through an already- agreed process to reallocate IMF voting rights to give emerging markets greater say.
China’s central bank said in a brief statement that it hoped Lagarde would push for reform and wanted to see the IMF play a positive role in promoting global financial stability “and to increase the representation of emerging economies in the IMF governance structure.”
Lagarde received support from many major Asian economies even though she perpetuates a pattern they despise of Europeans holding the top IMF job. No Asian candidate stepped forward to challenge Lagarde and Mexican central bank Governor Agustin Carstens.
“Lagarde has been more successful in consensus building to bridge relationships between advanced countries and emerging markets,” Indonesia’s central bank Deputy Governor Hartadi Sarwono said.
She will need those skills for the difficult personnel decisions. The US is already considering putting forward a Treasury Department official for the No. 2 role, which has traditionally been filled by an American. Breaking with that tradition might help convince Asian countries that Lagarde is serious about reforming the IMF, although there was no indication that she had made any promises to award the second-in-command role to someone from Asia.
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