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Will Israeli Role Count Against Fischer?

In the race to become head of the International Monetary Fund, nationality is one of many factors that can help or hinder candidates.

The International Monetary Fund (IMF) headquarters building is seen in Washington, DC.
Yuri Gripas | Getty Images
The International Monetary Fund (IMF) headquarters building is seen in Washington, DC.

A number of European countries have already declared their backing for Christine Lagarde, currently France’s Finance Minister, in an effort to ensure a European holds the job yet again.

The job is up for grabs after previous incumbent, Dominique Strauss-Kahn, was accused of sexual assault. He has denied the allegations.

Stanley Fischer, currently governor of Israel’s central bank put himself forward on Saturday. The former deputy managing director of the World Bank - who has dual US and Israeli citizenship - certainly has the economics credentials to lead the IMF.

However, some observers believe, being based in Israel – although he was born in Zambia and has been a US citizen for most of his life – may cause certain countries to oppose his candidacy.

“Despite the likelihood that his experience and understanding of the region would greatly benefit the Mid East region, it could definitely be an issue with some Arab countries for a number of reasons,” Professor Rory Miller, Director of Middle East & Mediterranean Studies at King's College London, told CNBC.com.

"First, Turkey has shown interest in its own candidate at a time when Turkish-Arab relations are strong and Israeli-Turkish relations are poor. So there may be dissatisfaction that a regional non-Arab candidate comes from Israel not Turkey," he said, referring to the former Turkish finance minister Kemal Dervis, who has ruled himself out of the running.

"Second, the current turbulence in the region has left governments with a general 'wait and see' approach to major issues and it unlikely that any Arab leader would be willing to back an Israeli to head of IMF in this context," he added.

"Third, the Netanyahu government is not very popular and this is unlikely to help his cause, even though the Governor of the Central Bank is a non-political figure, appointed long before the current government came to office."

During Fischer’s tenure at Israel’s central bank, he has been praised for his handling of Israeli-Palestine relationships, and has won the support of at least one political figure in the region.

The Palestinian Prime Minister Salam Fayyad, himself a former IMF official, told the Associated Press on Sunday that Fischer would make a "great managing director" for the world financial body and is a "superb human being".

Conspiracy Theories

There is still a danger that conspiracy theorists would view Fischer’s appointment negatively, experts believe.

“Anti-Semitic conspiracy theorists will carry on regardless of Fischer's IMF candidacy, but no doubt it will give them one more thing to obsess over.” Miller said.

“I think delegates from some states will be reluctant to vote for him because he’s Israeli,” David Hirsh, Lecturer in Sociology at Goldsmiths College, University of London, told CNBC.com.

"It would key into all sorts of unpleasant ways of thinking, some elements of which are apparently respectable, others clearly less so. It is common to see Israel as the keystone of a global system of imperialism or western power; the IMF is symbolic, for some, of the same system of domination; the Israel lobby is thought to be powerful enough to get its man elected; some will connect those stereotypes with the fact that the previous guy, Strauss-Kahn, was Jewish.”

One pregnable point in Lagarde’s formidable armour is that her background is in law rather than economics.

Third candidate Agustin Carstens, the Mexican Central Bank chief, has stressed his credentials both as an economist and as a voice for the developing world.

European Union countries control 32 percent of the votes for the IMF top job, while the US holds 17.7 percent and the Middle East and North Africa have 7.5 percent. The hefty proportion of votes controlled by the US and Europe led the BRICS' representatives to the fund to make a rare joint statement deploring the domination of Europeans at the top of the IMF.

Fischer has spent much more of his life in the US than in Israel, so he may be seen as an American candidate rather than a voice for the developed world.

"He may be seen as a 'Western' candidate both because of his dual US-Israeli citizenship, and because for many Israel is seen as a Western nation in the Middle East," Miller said.

"On the other hand, Israel is one of the few economic success stories of the last few years and Fischer is a highly capable figure who has been intimately involved in fostering Israel's economic stability at a time of global turbulence."

The Israeli card is less important to the economic world than to the world of politics, Miller believes.

"There is undoubtedly less anti-Israeli sentiment on the economic than the political stage globally," he said.

"Firstly, business leaders are not answering to a public constituency that in many parts of the world is preoccupied with the politics of the Palestine question. Second, Israel is a big-hitter in a lot of economic areas, notably in the high-technology sphere, and this has resulted over recent years not only in companies looking actively to work with their Israeli counterparts, but governments who in the political sphere are openly critical of some Israeli policies are also keen to work with Israel in the R&D or high-technology areas."