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.
Europe’s seven directors control 31.5 percent of the vote.
“She’s the odds-on favorite ... It would take someone very, very strong to defeat Lagarde,” Mussa said. “It is a plus that she’s a woman.”
Washington remained uncommitted publicly, while urging the issue be resolved quickly.
“We are prepared to support a candidate with the requisite, deep experience and leadership qualities, and who can command broad support among the fund’s membership,” US Secretary of the Treasury Timothy Geithner said on Friday.
See Stories on page 7
SEEKING CHANGE: A hospital worker said she did not vote in previous elections, but ‘now I can see that maybe my vote can change the system and the country’ Voting closed yesterday across the Solomon Islands in the south Pacific nation’s first general election since the government switched diplomatic allegiance from Taiwan to Beijing and struck a secret security pact that has raised fears of the Chinese navy gaining a foothold in the region. The Solomon Islands’ closer relationship with China and a troubled domestic economy weighed on voters’ minds as they cast their ballots. As many as 420,000 registered voters had their say across 50 national seats. For the first time, the national vote also coincided with elections for eight of the 10 local governments. Esther Maeluma cast her vote in the
Nearly half of China’s major cities are suffering “moderate to severe” levels of subsidence, putting millions of people at risk of flooding, especially as sea levels rise, according to a study of nationwide satellite data released yesterday. The authors of the paper, published by the journal Science, found that 45 percent of China’s urban land was sinking faster than 3mm per year, with 16 percent at more than 10mm per year, driven not only by declining water tables, but also the sheer weight of the built environment. With China’s urban population already in excess of 900 million people, “even a small portion
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
HYPOCRISY? The Chinese Ministry of Foreign Affairs yesterday asked whether Biden was talking about China or the US when he used the word ‘xenophobic’ US President Joe Biden on Wednesday called for a hike in steel tariffs on China, accusing Beijing of cheating as he spoke at a campaign event in Pennsylvania. Biden accused China of xenophobia, too, in a speech to union members in Pittsburgh. “They’re not competing, they’re cheating. They’re cheating and we’ve seen the damage here in America,” Biden said. Chinese steel companies “don’t need to worry about making a profit because the Chinese government is subsidizing them so heavily,” he said. Biden said he had called for the US Trade Representative to triple the tariff rates for Chinese steel and aluminum if Beijing was