French finance minister Christine Lagarde emerged on Friday as Europe’s choice to lead the IMF, getting a boost when a Turkish favorite ruled out his candidacy for the powerful job.
Even as leaders in emerging economies clamored for one of their own to take a job monopolized by Europeans since 1946, analysts called Lagarde the odds-on favorite to replace Dominique Strauss-Kahn as IMF managing director, after Strauss-Kahn resigned to face sexual assault charges in New York.
Lagarde is “practically a shoo-in” as the European Union’s candidate to succeed Strauss-Kahn as IMF managing director, an EU source said.
“We should get such a signal at Deauville,” said the source, referring to the French resort where the world’s eight top industrialized powers will meet on Wednesday and Thursday. The G8 gathers Britain, Canada, France, Germany, Italy, Japan, Russia and the US.
Meanwhile respected Turkish economist and former UN Development Programme chief Kemal Dervis ruled out his candidacy on Friday.
Dervis had been widely perceived as acceptable both to the emerging economies and to the EU.
“I have not been, and will not be, a candidate. I am fully engaged in, happy with, and focused on my global work at the Brookings Institution and look forward to continuing my research and policy work, including work on Turkey,” he said in a statement.
That left Lagarde, who has not personally declared her interest, with no clear challengers.
“She’s the frontrunner at this stage, but the race has not yet begun,” said former IMF economist Michael Mussa, now at the Peterson Institute for International Economics.
Ahead of the formal nomination process, “it’s premature to say that it’s decided,” he said.
Emerging economic powers like China, India and Brazil are calling for an end to Europe’s lock on the position, the product of a 65-year-old gentleman’s agreement that allowed Washington to monopolize the World Bank presidency.
Angel Gurria, the Mexican head of the Organisation for Economic Co-operation and Development, said the time had come to change the European-biased tradition.
“I think that this time it is possible, but it must be done quickly,” he said.
Chilean finance minister Felipe Larrain said that “the current situation of the emerging world merits the consideration of someone from this region.”
However, with five European countries, including Ireland, Greece and now Portugal, currently under massive IMF bailouts, Europe wants someone who like Strauss-Kahn could take a central role in rescuing the troubled EU “periphery” economies.
“Europe owes it to itself to act quickly,” the EU source said.
The position is a crucial one in the world economy. The global lender of last resort, the IMF each year lends tens of billions of dollars to troubled countries to help right their economies when no others will help them.
It also lays down strict standards of fiscal and economic reform for its clients, which can upset political and social systems.
Developing countries have not coalesced behind one individual. Names mentioned include Indian planner Montek Singh Ahluwalia; Mexican central banker Agustin Carstens; Trevor Manuel, South Africa’s former finance minister; and Leszek Balcerowicz, the pioneer of Poland’s transition from communism to the free market.
However, they could have a tough time against Lagarde, who is widely respected in global financial circles and well liked by the US — which controls 16.8 percent of the voting power on the IMF executive board.