Lagarde Offers Bigger Voice to Emerging Nations
Christine Lagarde, the frontrunner to become the next managing director of the International Monetary Fund, has sought to head off opposition from developing economies to her candidacy, promising they would be fairly represented at senior positions at the fund.
Ms Lagarde, who on Wednesday launched her campaign to become IMF chief, made the promise as she prepared for a tour of emerging market capitals to persuade them a European should once again hold the top job in global finance.
Earlier this week, Brazil, Russia, India, South Africa and China signed a joint declaration calling for an end “to the unwritten and obsolete convention that says the managing director of the IMF should be a European”. Since its foundation in 1947, the IMF has always been run by a European, many of whom have been French.
In an interview, Ms Lagarde acknowledged there had been complaints from many of the fund’s emerging market members about the lack of senior management from their countries.
“If that was the case, which it very well might be . . . I would certainly apply the principles that in my previous roles I applied to gender,” she said, referring to her long practice of choosing a woman over a man in appointments if they are equally qualified.
“I would want to remedy the situation,” she added. “We need appropriate representation of high-level staff based on merit from various nationalities and academic backgrounds.”
Ms Lagarde, who spent six years in Chicago running Baker & McKenzie, the US law firm, has rapidly emerged as the leading contender for the job, with developing countries still struggling to unite behind a single candidate.
Her main rival appears to be Agustín Carstens, governor of the Mexican central bank who trained at the University of Chicago. Mr Carstens has said he intends to carry “the flag of emerging markets”.
Ms Lagarde said she was aware that she would have to convince emerging markets she would not represent European interests if appointed.
But nor would she favour developing countries unless there was a clear need.
“I don’t think I should represent any particular constituency or region. I should serve the whole institution,” she said.
Nevertheless, there was a need to implement reforms, already under way, which would better reflect the economic weight of the IMF’s emerging market members.
“There is a formula used to calculate voting rights. That formula is under review and needs to be reviewed,” she said.
The French finance minister said that perhaps even more could be done. She intended to “explore what else is needed and how the fund can best serve their interests”.
Ms Lagarde’s first concern will be to address the concerns of the Brics which issued the declaration on Tuesday night, widely seen as a public slap after a junior French minister claimed China had given its support to her candidacy. “It is clear there was a certain frustration expressed,” she said. “I want to address that one to one. I have offered my availability as of Sunday.”
But she will also have to address the cloud of uncertainty hanging over her candidacy as a result of a possible judicial investigation into whether she overstepped her authority as minister in a legal dispute with Bernard Tapie, the businessman, in 2008.
Members of the opposition Socialist party, as well as the public prosecutor, have called for a full judicial inquiry into whether she was right to agree to binding arbitration, which saw the state pay €285m to Mr Tapie, a supporter of Nicolas Sarkozy, the president, who faces re-election next year.
Ms Lagarde shrugged off the risk of a full inquiry. “People here for all sorts of political reasons are trying to turn it into a major threat.
A few socialist members of parliament are engineering this and it is pre-election campaign stuff.”
A combative Ms Lagarde said she and the French government had taken legal opinion and were confident.
“The president is 100 per cent confident. I am 100 per cent confident,” she declared. “How big is the threat from this case? Zero.”