The Korea Herald


Europe, emerging powers face off over IMF job

By 박한나

Published : May 20, 2011 - 19:42

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BRUSSELS (AFP) ― Europe fought to retain leadership of the IMF on Thursday to help tackle its debt crisis as emerging nations launched a sharp counter-attack, saying it was time rising economies took the helm.

With the ink barely dry on Dominique Strauss-Kahn’s letter of resignation from a New York jail cell, European nations staked their claim to the top job at the world’s lender of last resort on the grounds of being the biggest contributor to the International Monetary Fund.

As Europeans sought to agree on a name, French Finance Minister Christine Lagarde emerged as a top contender, in what would be a first for a woman.

But signalling the global shift in economic power, Asian and Latin American countries and even former Soviet republics pressed strongly for an end to the post-World War II convention that the job be held by a European.

“The times are over when this important job was reserved for a European,” said Brazil’s Finance Minister Guido Mantegna.

But the eurozone nations stood “at the epicenter of a world crisis,” cautioned Luxembourg premier Jean-Claude Juncker, who heads the 17-nation single currency area. “We have good reasons to name another European.”

“The European Union, whose member states are together the top contributor to the Fund, is in a position to propose a high caliber candidate,” said French President Nicolas Sarkozy.

While several names were in the hat, including the outgoing head of the European Central Bank Jean-Claude Trichet, 55-year-old Lagarde picked up public support Thursday from Italy and Sweden.

Italian Prime Minister Silvio Berlusconi said Lagarde, the first woman finance minister of a G7 country, would be an “excellent choice” to replace Strauss-Kahn.
The logo of the International Monetary Fund is displayed outside the headquarters in Washington, D.C. (Bloomberg) The logo of the International Monetary Fund is displayed outside the headquarters in Washington, D.C. (Bloomberg)

Swedish Finance Minister Anders Borg said he was “very impressed” with Lagarde whom he said had been “a driving force” in Europe’s battle against the debt crisis.

Dutch central bank director Nout Wellink favored Trichet, whose ECB mandate ends in October, dubbing the 68-year-old Frenchman a “fantastic candidate.”

Germany, whose Chancellor Angela Merkel too has called for Europe to keep the IMF job, has offered no candidates of its own for the moment but is believed to be favorable to Lagarde, according to press reports.

Britain appears to have dismissed any idea of backing former premier Gordon Brown and a highly placed European official this week said London considered Lagarde “certainly a credible candidate.”

A former lawyer, Lagarde is known to have enjoyed her many years working in the United States but has not tipped her hand on a possible candidacy.

“Any candidacy, whoever’s it may be, should come from the Europeans, who unite, all together,” she said on Thursday.

Sarkozy did not mention Lagarde, who has served as his finance minister since 2007, in his comments on Thursday but said “Europe should be united in its choice.”

France has provided four of the 11 IMF chiefs since the institution was set up toward the end of World War II and that may prove Lagarde’s biggest drawback.

Lagarde is also facing a judicial investigation on whether she abused her ministerial power in playing a role in a case resulting in a substantial payment to controversial French businessman, Bernard Tapie.

Other possible candidates from Europe include former German central banker Axel Weber, although Berlin has yet officially to offer its backing.

Meanwhile, emerging powers are stepping loudly into the fray, saying it is time for Europe and the United States to reconsider the arrangement whereby they share leadership at the IMF and World Bank between them.

China, South Korea and Thailand called for the new head to come from an emerging economy, and Japan said the new IMF head should be chosen in an “open, transparent” way.

As Argentina, Mexico and South Africa too demanded a voice for the emerging economies, 12 former Soviet republics backed Kazakhstan central bank chief, Grigory Marchenko, for the job.

Other possible candidates from emerging economies include Turkish former UN official Kemal Dervis, Indian planner Montek Singh Ahluwalia and Mexican central banker Agustin Carstens.

“The make-up of top management should better reflect changes in the global economic structure and better represent emerging markets,” said China’s central bank chief Zhou Xiaochuan.

In Washington, U.S. Treasury Secretary Timothy Geithner said: “We want to see an open process that leads to a prompt succession for the Fund’s new managing director.”