Closing time

July 8, 2011 by Leave a comment

After following the IMF leadership selection process over 8 weeks and 92 posts we are closing the doors on imfboss.org.

Thank you to all those who have been involved and made this blog what is was. We’d like to thank all the partner organisations and our fellow bloggers.

Finally, a big thank you to our readers and followers.

Of course we’ll be flicking through the papers on August 4 to see what the French courts of justice say. If their decision jeopardises Lagarde’s position as IMF boss, well, I guess we’ll be back…

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French court delays decision on Lagarde…again

July 8, 2011 by 1 Comment

The French Court of Justice has once again delayed their decision on whether to proceed with an inquiry into allegations of Lagarde’s abuse of authority when French finance minister. It concerns her approval of a settlement to Bernard Tapie, businessman and friend of Sarkozy. A decision that was submitted to a private arbitration panel, and whose ruling was not appealed despite doubts over their independence.

The new decision date is 4 August. Court official Gerard Palisse revealed that one judge had “declared himself incompetent”, requiring a replacement who would need time to familiarise himself with the case. No indication was given as to how this incompetency arose, if it was a sudden affliction or a longstanding ailment. Either way, it seems he left it to the last possible moment to declare it.

Even if courts do decide to proceed with the investigation when they next convene, the process could take years to make its way through the courts and might not even result in a trial.

Perhaps they didn’t want to distract from the other big news of the day? Yes there’s that, but also this. The IMF meets today to discuss the next loan to Greece and is expected to approve over 3 billion euros worth of assistance. Jacob Kirkegaard of the Peterson Institute argues that “as a good lawyer, she should recuse herself from directly participating in an evaluation of something she was part of less than a week ago”. But maybe Lagarde will want to use this opportunity to convince us that she can indeed distance herself from the EU?

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Lagarde’s first press conference, a lot of wait and see

July 7, 2011 by Leave a comment

Lagarde gave her first press conference as managing director of the IMF yesterday, a transcript and video are both available online.

She started by outlining the three C’s, a manifesto of sorts, focusing on the Fund’s connectedness, credibility, comprehensiveness and talked on increasing diversity at the Fund. Diversity in membership and the workforce in terms of gender, ethnicity and academic background so that “people are not clones of each other”.  Perhaps this to avoid further criticism of group think that is said to have hindered the Fund at the time of the last financial crisis.

As expected she faced a barrage of questions on the Eurozone crisis, particularly the possibility of a Greek default and restructuring the role of the ECB and the political and social factors at play. Lagarde gave no direct answers saying:

“I’m afraid that I’m going to disappoint you because you are going to point a lot of questions on Greece and I’m going to either elude the responses, or be very sanitized in my responses, simply because the matter is under review.” The board is due to meet on Friday to consider the next tranche of lending so perhaps some illumination will be provided then?

Still, she identified the sovereign debt crisis faced by periphery European Union countries as being one of the major challenges faced by the Fund, also acknowledging that the problem extends to the advanced economies of the world.

The other challenge was that of ‘overheating’ in emerging markets, “particularly in the low-income countries, the risk of imported inflation that results from the high prices of commodities.” On this point she mentions tackling capital flows but didn’t go so far as to back the use of capital controls.

Apart from the DSK case which she, unsurprisingly, chose not to comment on, Fund governance was the other main talking point. On country representation she gave no details on a timeframe for giving more power to emerging markets beyond continuing the current process in shifting board votes in that direction. In her first day interview she stressed that it is indeed something the Fund needs to deliver on but that it requires each and every member to deliver. Well, an unmovable United States and some stubborn European governments.

In August the first deputy managing director position is up for grabs as John Lipsky steps down. She gave no word on the selection process for this post, avoiding a comment on the fact that as with her job traditionally being held by a European, the first deputy MD is always an American. Instead she talked about the addition of a fourth deputy MD role as being “not a bad idea, and i’m going to consult in the next few days on this matter.” Most expect this position to be created and to go to Zhu Min, former China central bank governor and special advisor to the MD.

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Not 1, but 3 flawed appointments – US and China dividing up the spoils

July 7, 2011 by 1 Comment

According to Reuters the IMF is making great progress in filling out its senior management team. It also seems to be setting new records for the number of appointment processes in a single month that can violate the international agreements for all senior management to be appointed through open, transparent, and merit-based processes. It likes like the US and China are already dividing up the spoils.

The US first, with an update on yesterday’s post about Meg Lundsager’s non-appearance for the Lagarde interview with the board. Sources inside the IMF have said that indeed Lundsager, the US executive director, did not attend the board’s interview with Christine Lagarde. We are told she was instead at a meeting at the US Treasury with IMF staff who are conducting the IMF’s annual Article IV consultation – a check up on economic policy that all IMF members undertake. Is that justifiable? Or does it show that really the US had already made up its mind to continue backing the gentleman’s agreement than lets them appoint the World Bank president in exchange for backing a European for the head of the Fund, and so attendance at the interview was optional?

Read more of this post

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Lagarde signs on the dotted line, gears up for first press conference

July 6, 2011 by Leave a comment

On the day of her appointment the IMF made public Lagarde’s contract, it’s interesting to examine the differences between hers’ and the one signed by her predecessor DSK…

Most are expected and unremarkable, some changes to language regarding parter/spouse and an updated salary. But papers were quick to pick up on the additional clause committing Lagarde to observe rules regarding her ethical conduct:

As managing director, you are expected to observe the highest standards of ethical conduct, consistent with the values of integrity, impartiality and discretion. You shall strive to avoid even the appearance of impropriety in your conduct.

This includes taking part in the Fund’s ethics training programme. The clause also deals more explicitly with conflicts of interest, both internal and external.

In the performance of your duties as Managing Director, you have an exclusive duty of loyalty to the Fund and shall avoid any conflict of interest or the appearance of such a conflict.

Interestingly, given that it was known by all that DSK intended to run for the French presidency, clause 2 (d) is extended to clarify:

you will not, in your personal capacity, attend political party meetings, assume any leadership role within a political party, or otherwise engage in partisan political activity.

As Alan Beattie comments, it is hard not to see these changes as a response to DSKs indiscretions and political aspirations. On the latter, Beattie mentions a proposal that “IMF MDs should sign a pledge to stay out of elected office for the first five years after they leave the Fund”.

Read more of this post

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Interview with 24 men: little white lie or the US doesn’t care who runs the IMF?

July 6, 2011 by 1 Comment

As Christine Lagarde takes office this week she has been playing up the angle that, because she is a woman, change is coming to the IMF. Of course, Lagarde is the first woman to head the Fund, but she is also the 11th white European (out of 11 total) to have the role, and the 5th French national to head the institution. Since 1978, the IMF has been run by a French national for 26 of the last 33 years. I don’t think we can be sure how much change Lagarde will bring to an institution badly in need of a complete overhaul.

After her selection but before taking office Lagarde spoke to French television, saying (as quoted in a widely run Associated Press article):

“While I was being questioned for three hours by 24 men, I thought, ‘It’s good that things are changing a little.’”

Any journalist with any sense of the IMF structures, or the ability to use the Internet to fact check should have been a bit surprised at this statement. Read more of this post

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After the European stitch up of the IMF top job, the case for major reform is clearer than ever

July 1, 2011 by Leave a comment

First published on the World Development Movement blog on 30 June 2011

As Christine Lagarde is briefed on her new job as the managing director of the IMF (the World Bank’s sister organisation, set up post-war to promote economic stability) we are left to reflect on the rigged selection process and sad inevitability of her appointment. The legitimacy of the Fund, already in pieces, was dealt a further blow by this debacle.

Lagarde was crowned long before the formal selection process had even begun. European leaders brazenly ignored their previous commitments to an open, merit-based and transparent process. Using the Eurozone crisis as an excuse both for the speed of the process (cut from ten weeks to six), and the need for a European head, they praised and promoted Lagarde’s candidacy, openly undermining the selection process. This necessity for local knowledge and understanding clearly wasn’t the case when Africa, Asia and Latin America were in crisis.

Full article available here

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Christine Lagarde as IMF chief? This is a gift to the fund’s critics

June 29, 2011 by Leave a comment

 She may be the first woman boss but she’s no reformer, and won’t address wider equalities to rebalance the global economy

First published by the Guardian on 29 June 2011.

By Peter Chowla

After the last three years of financial crises and bailouts, no one can deny that leadership of an international institution like the International Monetary Fund matters. Previous leaders brought some significant changes to the IMF but did not go nearly far enough. The fund is still giving bad advice to European countries, such as supporting the fantasy that Greece can recover without restructuring its debt, and is continuing to force damaging spending cuts in times of recession. The question now is whether Christine Lagarde’s tenure as managing director of the fund will be any better.

The signs are not good.

Read the rest of the article on the Guardian.

 

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Consensus 101

June 29, 2011 by Leave a comment

Many of us thought that the leadership would be decided by vote. What with a number of countries, and crucially countries holding board seats, coming out in support of Cartens. But according to the official press release, the decision was made by consensus. Now consensus isn’t the same as unanimity, still I find it a little curious that it was reached so quickly. How might it have happened?

Assume that they follow the standard consensus process which looks a little like this:

 

Lets break it down step by step

Discussion: So here’s where they consider the merits of each candidate on paper and in person, no doubt scrutinising answers to their list of questions and scoring against the agreed criteria. These questions haven’t yet been made public but we hope that, in the interest of transparency, they will surface soon enough.

Proposal: After letting opposing sides argue it out for a piece, John Lipsky hushes the crowd. Sucks a thumb and tests the air to see which way the mood lay, clears his throat and sets out a proposal: “Lagarde to head the Fund”

Test for consensus: No. I’m sure the countries backing Carstens would stand their ground for a little while longer yet…Cue eye-rolling, foot tapping and impatient sighs from the US and European board members.

Concerns raised: Mexico got on the soap box? UK puts the kettle on.

Modification to proposal: Did they modify the proposal? Well, seeing as no modifications could realistically have been made, probably not. Unless there was an under the table promise of the deputy MD post (fat chance) or a high-level IMF appointment (time will tell).

Stand Aside: It is more likely that some members, if not for turning, simply backed down.

Test for consensus take two: Why not.

Consensus Achieved: So there you have it, pencils down and Lagarde on speed-dial

Ok, well I for one doubt it was anything like that. Still I’m curious as to how the debate, if there was one, played out. Did board members representing groups of countries have a clear battle plan? How long to stand their ground? What demands or concessions to make?

Perhaps a board member will tell all in days to come? We’ll keep an ear to the ground.

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Press release: Reaction to the appointment of Christine Lagarde as head of the IMF

June 29, 2011 by 1 Comment

In response to the news that the IMF has selected Christine Lagarde to replace Dominique Strauss-Kahn as Managing Director of the IMF, Jesse Griffiths, Coordinator of the Bretton Woods Project has said:

“The Europeans have shamefully held onto control of the Fund in a well orchestrated stitch-up. Unfortunately, the outcome was clear long before the selection process officially started, once the Europeans decided to use their unfair over-representation at the Fund to force through their candidate.”

“There was a shocking lack of transparency to the whole process with no public interviews held and Board decisions once again made behind closed doors.”

Nick Dearden, Director of the Jubilee Debt Campaign adds:

“The nature of Lagarde;s selection shows once again how out of touch the IMF is. This further tarnishes the IMF’s legitimacy in a rapidly changing world.”

“This decision is bad news for European countries in crisis: the key architect of disastrous austerity policies in Greece is now at the helm of the Fund and she has already made clear to Greek legislators that they should listen to Northern Europe’s interests, rather than the interests of their own people. The IMF has learnt nothing from the debt crises of the past.”

For information: Jesse Griffiths + 44 (0) 7968 041 747 / jgriffiths@brettonwoodsproject.org

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