IMF shake-up
June 13, 2011
Executives at the International Monetary Fund, charged with choosing a new managing director by the end of June, are now unexpectedly face with the choice of three candidates after Israel's Stanley Fischer threw his hat into the ring.
Fischer's bid, which came after the close of nominations on Friday, puts him in the running with France's Christine Lagarde and Mexico's Agustin Carstens. The post became free in May after former managing director, Dominique Strauss-Kahn, was accused of sexually assaulting a hotel maid in New York.
With support from Europe and endorsements from Egypt, the United Arab Emirates and Indonesia, Lagarde is the likely front-runner. But she faces a pending investigation in France into alleged abuse of authority.
Meanwhile, Fischer faces the prospect of being disqualified because of his advanced age. His dual US-Israeli citizenship could also prove to be a problem, as Carstens has been betting on an opportunity to break the tradition of having a European IMF head and an American World Bank head.
US-educated Mexican
Carstens. 53, leads Mexico's central bank and has also served as the country's finance minister. He spent three years as the IMF's deputy managing director and has in part based his candidacy on being a non-European. That is "something that emerging countries have advocated and which we have to continue to work for," he said in a recent interview.
Carstens' critics are quick to point out that the specialist in emerging economies earned his masters and doctorate degrees at the University of Chicago, linking him to US-style free market principles.
Still, the economist rose through the ranks of Mexican technocrats during the 1990s, when the country received a bailout package from the IMF and the US. Carstens' proponents say that gives him a detailed understanding of the IMF's inner workings during a national bailout.
Carstens has said he could put that experience to work in helping Europe's troubled economies.
"Why shouldn't a Latin American be put in charge of helping resolve the economic problems of Europe?" he asked.
Fred Bergsten, of the Peterson Institute for International Economics in Washington, said Carstens has "been in the game" much longer than Lagarde.
"By the nature of his career, Governor Carstens has had more widespread and more lasting experience dealing with the range of issues that the IMF handles," he said.
Controversial front-runner
With Europe struggling to keep a lid on fallout from the IMF's bailouts of Greece, Ireland and Portugal, the continent has consistently backed 55-year-old Lagarde. But she is under pressure in her home country of France, where she faces allegations of abusing her authority as finance minister.
A French court has put on hold until July 8 an investigation into whether Lagarde mishandled a highly public dispute between tycoon Bernard Tapie and Credit Lyonnais, which was then publicly owned. After Lagarde's intervention, Tapie received 240 million euros ($345 million) in taxpayer money.
At the same time, Lagarde is the first female to be finance minister of a G7 country and would be the first female to head up the IMF. Known for displaying grace under pressure, she was instrumental in Europe's response to the 2008 financial crisis, during which time she was head of the eurozone finance ministers.
Former IMF chief economist Kenneth Rogoff told the New York Times that Lagarde was "treated practically like a rock star" at finance meetings.
After studying law and political science in Paris, Lagarde worked on labor and anti-trust issues along with takeovers for Baker & McKenzie, a Chicago-based international corporate law firm.
She returned to France in 2005 to join the government of Jacques Chirac as trade minister. Appointed to her current post in 2007, she is now France's longest-serving finance minister.
Dark-horse candidate
Israel's central bank chief Fischer has sought to undermine Lagarde's efforts by pointing out that she is a lawyer by training, not an economist.
Fischer has been credited with protecting Israel's economy from the worst effects of the recession: the country boasts a 5 percent growth rate and $77.4 billion in foreign reserves. Fischer had advocated increasing foreign reserves to limit the strength of the shekel and boost exports.
Born in Northern Rhodesia, now Zambia, Fischer studied in Britain and the United States, graduating from Massachusetts Institute of Technology and becoming a US citizen. He became an Israeli in 2005 under the nation's Law of Return for Jews.
Although Israel doesn't permit its senior officials to hold a second nationality, an exception was made in Fischer's case. He became governor of the Bank of Israel in 2005.
Fischer would need to be granted a second exception to become managing director of the IMF. At 67 years of age, he exceeds the IMF's usual age limit of 65 for applications to the top job.
His experience on the global economic scene is unparalleled amongst the candidates, though. He was vice president and chief economist of the World Bank from 1988 to 1990, and held the IMF's number two job from 1994 to 2001.
Fischer also held peak positions at Citigroup from 2002 to 2005, and worked with US Treasury Secretary Timothy Geithner on the Asia crisis during his time at the IMF.
The IMF's 24-member executive board is expected to reach a consensus by the end of June.
Author: Gerhard Schneibel (AFP)
Editor: Martin Kuebler