French Finance Minister Christine Lagarde joined the race to head the International Monetary Fund on Wednesday despite anger in big emerging economies over Europe’s “obsolete” lock on the job.
Lagarde announced her candidacy on the eve of a G8 leaders summit after securing the unanimous backing of the 27-nation European Union. Diplomats also said she has support from the United States and China, making her the overwhelming favorite to clinch the top job in global finance next month and replace Dominique Strauss-Kahn, who quit after being charged with attempted rape in New York.
At a news conference in Paris, Lagarde promised to serve a full five-year term if chosen, unlike her three predecessors, and to give top priority to completing reform of the IMF to give greater weight to emerging economies.
“The emergence of a number of big players like China, India, Brazil and Russia, for example, just to cite a few, forces us to ask ourselves about their representation at the heart of the institution,” Lagarde said.
The 55-year-old former corporate lawyer, who speaks fluent English, has been praised for her communication skills and deft chairing of the G20 finance ministers.
But unlike countryman Strauss-Kahn, Lagarde is not an economist and may struggle to match his thought leadership over the management of the world economy.
In New York, a spokesman for the New York State Courts said on Wednesday Strauss-Kahn will move to a new apartment, where he will remain under around-the-clock armed guard on charges he tried to rape a hotel maid.
Strauss-Kahn was released on $1 million cash bail and $5 million insurance bond last Friday and taken temporarily to an apartment in Lower Manhattan after attempts to rent a luxury apartment elsewhere in the city fell through. He denies the charges against him.
European Commission chief Jose Manuel Barroso said Lagarde had the “indispensable qualities to ensure the IMF’s mission and its vital contribution to international economic stability.”
The only other declared candidate is Mexican Central Bank Governor Agustin Carstens but he has not gathered the backing of the main emerging economies.
Lagarde raised the issue of her gender as a possible advantage, telling CNN that she has always worked to improve the situation of women in workplaces. “I’m not suggesting that I should have any special favor but I will certainly bring my skills as a woman, as well as a mother, too,” she said.
U.S. Treasury Secretary Timothy Geithner said both Lagarde and Carstens were very credible candidates. But he reserved the most praise for Lagarde, calling her “an exceptionally capable person, an excellent mix of financial, economic knowledge, talent and the kind of political skills you need.”
He said Lagarde’s strength was not her European origin but her experience and skills, adding that the United States, as the IMF’s largest single shareholder, ultimately will “play a significant role in not just making sure the process is fair but the outcome is good.”
Mexican Finance Minister Ernesto Cordero said Lagarde had “all the merits to be appointed at the top of the IMF” but Carstens’ best credential was the strength of the Mexican economy, which is growing at 5.5 percent a year.
Brazil, Russia, India, China and South Africa criticized EU officials for suggesting the next IMF head must be a European, a convention that dates to the founding of the global lender at the end of World War Two.
However, the countries known as the BRICS failed to unite behind a common alternative candidate, leaving the way clear for Lagarde unless she slips on a pending French legal case.
Diplomats said their joint statement seemed mostly aimed at securing a public commitment from developed countries to eliminate nationality as a criterion for future IMF chiefs.
Russia’s ambassador to France, Alexander Orlov, said Moscow was very positive toward Lagarde’s candidacy and suggested that in future there should be “a more just rotation” between Western Europe and representatives of BRIC countries.
Brazil’s Finance Minister Guido Mantega welcomed competition for the top job and said his country would seek commitments to give emerging markets more clout at the IMF.
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Europe is eager to keep the post at a time when the IMF is deeply involved in the euro zone’s debt crisis, with joint assistance programs for Greece, Ireland and Portugal. Lagarde underlined her hostility on principle to any debt restructuring in the 17-nation currency area.
She also said her conscience was clear and would remain a candidate even if judges at a special court for ministers decided on June 10 to fully investigate allegations she abused her authority in a 2008 arbitration case.
Hours before the BRICS’ statement was issued in Washington, France’s government said China would back Lagarde. The Chinese Foreign Ministry declined comment.
India’s representative to the IMF told Reuters that his Chinese counterpart had not signaled to him any support for Lagarde. But Arvind Virmani also said if no BRICS consensus candidate emerged, India would be open to supporting someone from outside the bloc based on their merit.
South Africa and Kazakhstan may put forward their own candidates. Asked about South Africa’s preferred candidate, Finance Minister Pravin Gordhan told Reuters Insider TV the country was still “applying its mind” to the process and would prefer a contender from an emerging market.
Under a long-standing agreement between the United States and Europe, the top job at the IMF goes to a European while an American leads its sister organization, the World Bank. The United States also fills the No. 2 position at the IMF.
European diplomats said Washington had asked the French government about the legal case hanging over Lagarde and had been told it would not be a show-stopper.
The EU and the United States, which sources in Washington have said will back a European, have enough joint voting power to decide who leads the IMF.
Securing support from some emerging economies would defuse a potentially bitter row over the decision though.
France, which presides over the G20 this year, has made an effort to work with China on key issues for developing nations like global monetary reform and commodity market speculation.
Last week, the head of China’s central bank, Zhou Xiaochuan, said the IMF’s leadership should reflect the growing stature of emerging economies. But he stopped short of saying its new boss should be from an emerging economy.
Wu Qing, a researcher with the Development Research Center
government think-tank in Beijing, said it was plausible that China would support Lagarde as there weren’t many qualified candidates from China or Asia in general.
The IMF’s board will draw up a shortlist of three candidates and has a June 30 deadline for picking a successor.