Christine Lagarde, the French finance minster who looks like she stepped out of the pages of French Vogue, has thrown her hat in the ring to replace Dominique Strauss Kahn, the former head of the International Monetary Fund as he awaits his trial for an alleged rape in New York City. The wrangling for position is not only taking place outside of DSK's temporary residence where photographers are looking for a shot of the disgraced ex-IMF head -- economic leaders are eager to have a say on not only who runs the IMF but where they come from.
According to news reports, Lagarde does not wish to fill out DSK's 18-month term; instead she wants a five-year term of her own.
Her chief competition seems to be her main rival, the Mexican central bank governor Agustín Carstens and this raises a question: As the global economy becomes more, well, global emerging nations want to see themselves represented in international leadership positions. In short, the days of a European or an American automatically heading such an important agency -- one that decides on national bailouts, for example -- are over.
The NY Times reports:
Late Tuesday in Washington, the I.M.F. representatives from Brazil, Russia, India, China and South Africa issued a firmly worded statement condemning the "obsolete, unwritten convention" of reserving the top job for a European, saying that making a selection on the basis of nationality "undermines the legitimacy of the fund."
The statement stopped well short of rejecting Ms. Lagarde's candidacy but said technical background and political acumen, rather than nationality, should be the main factors in choosing future managing directors.
"Rather than nationality" is an interesting turn of phrase. Perhaps Ms. Lagarde should post her resume on LinkedIn for her critics.
Why is this matter of who runs a boring agency so important? Simple: Several nations have come close to defaulting recently and this has required bailouts from much stronger nations, namely Germany and France. Meanwhile, emerging nations want more clout because they are the financial hotspots. Finally, we live in an age where a single hedge fund can dwarf the economies of some third world nations. There's a lot at stake in the new global economy.
The NY Times adds:
Europeans are trying to hold on to the prestigious I.M.F. position as a debt crisis on the Continent shows signs of flaring up again. Fears are mounting that a debt restructuring in Greece may be unavoidable, the effects of which could ricochet across Europe.
And the rest of the world. Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio