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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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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Exit poll: What if we got to vote?

June 28, 2011 by Leave a comment

Our poll on who you think the worst candidate nominated for head of the Fund has the favourite bringing up the rear. Lagarde recieved 33.71% of the vote with Carstens on 24.72%. The rest was split between the no-runner and Mr Early Retirement

Though the end result is by now all too clear, the Board will likely keep us waiting until June 30th before putting out an official press release announcing Lagarde as the new IMF boss.

All in all a rather malagrugrous state of affairs. I’d say!

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Drawing straws, Australia and Canada back Carstens, China (probably) back Lagarde

June 27, 2011 by 1 Comment

The IMF board is due to convene tomorrow to discuss the merits of each candidate. Reports suggest that today they are to take a straw poll of member governments to see whether any candidate has a clear majority. This chart gives you a pretty good idea of what the results might look like…

The US has in the past said it would support the candidate with broad geographic support, the outcome of the straw poll then, is likely to give them the justification to support Lagarde and skirt around accusations that a motivating factor is control of the IMF deputy MD post and of course the World Bank presidency.

In the past couple days a number of nations have jumped off the fence and are publically putting their support behind a candidate. Joining the Carstens camp are Canada and Australia who released a joint statement of Friday. After reiterating the need for an open, transparent and merit based process they go on to say:

Agustín Carstens’ previous experience in the IMF, combined with his background as Finance Minister of Mexico and his current position as Governor of the Mexican central bank, equip him very well to understand and address, on a collaborative and inclusive basis with IMF member countries, the challenges faced by the global economy. Accordingly, after due consideration of the candidates and the IMF selection criteria, we have decided to support him for the position of IMF Managing Director.

Lagarde it seems may at last have the support of China, though the tone suggests they are more resigned to the inevitably of her appointment. China’s central bank chief said “of course we still do not know what the final situation will be. Currently, there doesn’t seem to be anything unclear about it”.

So is that a known unkown or an unkown known?

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Acceptance speech dry run? Lagarde meets the board, gets crowned

June 24, 2011 by Leave a comment

Queen Lagarde with her European handlersThe IMF has released Christine Lagarde’s statement to the board for your reading pleasure. Like Carstens’, she mentions a letter of candidacy, although hers it seems is not publicly available. She covers most issues with broad brush strokes, opting for a focus on steering and managerial duties rather than presenting technical positions.

On the same day campaigners in Washington held a mock coronation of Lagarde to emphasise their disastifaction with the process and particularly the way European countries have acted since the DSK scandal broke. Sarah Wynn-Williams of Oxfam said: “The backroom deal that has pushed Lagarde forward makes a mockery of the appointment process. The new IMF chief should be elected openly, not crowned by Europe.”

In Lagarde’s statement, she outlined five key principles that she feels should guide the IMF over the next five years: Relevance; Responsiveness and surveillance for better crisis prevention; Sufficient resources and adequate tools; Increased legitimacy; and Diversity and team work. Many of the points here were touched on in an exclusive interview she gave last week.

It reads a bit like a management self-help book. None of it addresses in detail the policy questions set out by civil society organisations last week. Read more of this post

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Jubilee Debt Campaign UK launch online action demanding public hearing

June 24, 2011 by 1 Comment

Jubilee Debt Campaign have launched an action calling for Christine Lagarde and Agustín Carstens to commit to a public hearing with people affected by the IMF around the world. They say:

Millions of people around the world are affected by the impact of the IMF’s loan conditions and economic ‘advice’, yet there’s been no opportunity for anyone outside the global financial elite to question them in detail and in public … It’s time those on the receiving end had a chance to ask the questions in a public hearing

As well as refering to questions already set out by civil society, the action focuses particularly on the following two questions:

First, I believe it is outdated, undemocratic and illegitimate for senior management at international financial institutions to be nominated and chosen on the basis of their nationality. Powerful countries must stop undermining multilateral institutions by maintaining their stranglehold over certain positions. Will you commit to appointing your deputy managing directors through a genuinely open, merit-based and transparent process?

Second, IMF-sanctioned austerity policies are causing irreparable social, and economic damage in many countries across the world.  Will you commit to reviewing and reversing these policies, to support instead sustainable job creation and prevent the poorest from being the victims of global economic problems?

Go here to TAKE ACTION!

 

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In the news: Lagarde limbers up, Brazil backs Carstens (maybe)

June 23, 2011 by Leave a comment

Today Lagarde meets with the IMF board following meetings with IMF officials and US Treasury Secretary Timothy Geithner yesterday. Although still a long-shot, Carstens may be buoyed somewhat by the news that Brazil may back him after all. Paulo Nogueira-Batista, Brazil’s executive director at the Fund was quoted as saying “Brazil may well decide to support Carstens”. More symbolic than anything (their chair commands 2.79% of the vote) it at least shows a willingness to express their grievances at the process with deeds as well as words and saves Carstens the embarrassment of not having the support of leaders from his own region. Nogueira-Batista continues, “this institution has a long way to go in undoing problematic governance structures … this [campaign] process has helped somewhat by highlighting the weaknesses”.

Domenico Lombardi, a former IMF board member pointed to the dilemma faced by many nations in voting for anyone else but Lagarde, saying that “in the end this person is going to be the managing director of the institution. There is really no sense in voting for somebody else when it’s clear who will win”.

Still looming is the French courts’ decision on whether to pursue legal action against Lagarde for accusations of abuse of office over a settlement between businessman Bernard Tapie and the French government. Recent reports suggest that an official under her ministry’s authority is too under investigation.

The IMF board will meet on June 28 to discuss the candidates, announcing the victor by June 30.

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Carstens states his case for the top job

June 22, 2011 by 1 Comment

Carstens’ presentation to the IMF board reads like a power play in challenging the legitimacy of the Fund and their commitment to a transparent and merit-based selection process.

Lagarde will no doubt benefit from Carstens’ statement being made public before she meets with the board on Thursday. Still, Carstens sure to have the Lagarde camp working overtime produce a convincing declaration of her suitability for the post.

It started in May with an eight page curriculum vitae of sorts in which he spelled out why he should get the job, starting:

To facilitate the transparent and merit-based selection process, I hereby offer an overview of my professional background; economic policymaking record; managerial and diplomatic skills, with particular attention to multilateral cooperation; understanding of the Fund and the policy challenges facing the Fund´s diverse membership; and, in closing, my strategic vision for the institution.

Long-time readers of the blog will no doubt be interested to see how it compares to the candidate assessments offered by some of his critics…

Throughout there are digs at the European stitch up such as: “we need a Managing Director who can best serve all of the member countries, not merely those experiencing challenges at one particular point in time.”

Read more of this post

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Candidates ready themselves to face the panel

June 21, 2011 by Leave a comment

We had a pretty good idea already but yesterday the IMF board made public the interview dates for each candidate. Carstens will meet the Board today whilst Lagarde will have her interview on Thursday the 23 June. The statement reads:

During their informal meetings with the Board, each candidate will present their views on issues facing the Fund and the membership, and the Executive Directors will be able to exchange views with the candidates. Candidates’ statements will be published on the Fund’s website following these meetings.

We look forward to reading them.

The Board will review each candidate next week and make a final decision by June 30.

Lagarde left for Washington with a box chocolates and best wishes from her European counterparts. Not that she needs the luck, I mean, they’ll be voting for her either way, right?

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In the news: Yes, but what will they do? Did you hear the one about the economist and the lawyer?

June 20, 2011 by 1 Comment

Sunday’s Financial Times Editorial offered some thoughts on what the next IMF recruitment process should look like and what should be expected of future candidates. The focus, it argues, should be on what the prospective candidate would do as managing director, not their support base or geographical origins, i.e. their plans and policy positions should be made clear. It claims “a better recruitment process for the top IMF leadership will be one of the many things the next managing director will owe to poor and middle-income countries, especially if it is Ms Lagarde.” Amongst others is the deputy managing director position, which by convention is held by the US; and a reform of the Fund’s governance structure.

Hinting throughout at the conflict of interest that would meet a European head given the current eurozone crisis it asks that the next MD “devise a gradual exit strategy from the eurozone” and that the Fund be reinvented “so it can do its part in managing the shift of economic power to the emerging world.” It ends by stating: “Its next boss should make clear that the IMF will be more useful to all its members the less beholden it is to any one of them.”

The New York Times too opines that “we need to know more to decide who would make the best IMF leader at this critical juncture.”

Read more of this post

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