Tuesday, June 14, 2011

The Great IMF Race

With the sudden and unexplained exit of the Governor of the Bank of Israel, the race for the top spot at the International Monetary Fund is set for a showdown between the West and the emerging world. On one side is French candidate and running favourite Christine Lagarde, fresh from a visit to the emerging nations that matter (the BRICS grouping). Her opponent is Agustin Carstens, a former IMF deputy director and Governor of the Mexican central bank.

One striking difference between the two is their professional training: Ms. Lagarde is a lawyer by training whereas Mr. Carstens is a trained economist. Both are well-versed in politics, which is a key affair for the IMF. So, based on merit, the Mexican candidate seems to be best-suited for the top job.

But we all know who's going to win - for the mere reason that she is European. Despite the tall claims made when DSK was appointed, the Europeans have no intention of letting go of their hold on the position. And, in order to ensure that their hold on the World Bank faces no danger, the US is sure to support Mr. Lagarde as well. But that's not all, several developing countries outside the BRICS have gone ahead and supported her as well. In fact, Ms. Lagarde's tour-of-the-world was pretty much a success if you discount the non-committal remarks she got from the BRICS.

Contrast that with the response the Mexican candidate got outside the BRICS and it would be no surprise if Ms. Lagarde walks away with the post. And that is exactly what is going to happen.

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