Prime Minister Manmohan Singh on Wednesday urged developing nations to stay united in wresting control of global institutions, such as the IMF, as France’s Christine Lagarde announced her candidacy for the top job at the fund. “Today, I would like to declare my intention to stand for the position of managing director of IMF,” Lagarde said in Paris. The only other candidate is Mexico’s central bank chief Agustin Carstens.
But Lagarde’s candidacy is more contentious as India, with its BRICS partners Brazil, China, South Africa and Russia, sees it as an attempt to perpetuate the hold of developed countries on these institutions. Singh’s call for unity is being seen as an attempt to keep the flock together. Brazil had said a few days ago the best candidate could be from Europe. And China was seen backing Lagarde, or so the French claimed. “I do recognise the struggle for the transformation of global institutions is a long process in which all developing countries will have to stand united,” Singh said. He added that he didn’t know what exactly was happening at the IMF.
The drumbeat for a European to succeed Dominique Strauss-Kahn, a Frenchman, started even before he quit after being charged with sexually assaulting a New York hotel housekeeper. That’s the convention, ran their argument sublimely.
In a joint statement issued Tuesday, the BRICS countries’ IMF executive directors called for “abandoning the obsolete unwritten convention that requires the head of the IMF be necessarily from Europe”. To the other argument made by Europe — that a European is best suited for dealing with the ongoing financial crisis in Europe — BRICS said the crisis in developed countries underscores the need for giving developing countries a bigger role.
With 35% of IMF votes, a united Europe is a formidable block, but not invincible. It still needs to find allies to put Lagarde’s candidacy out of reach for any challenger. Will the US, with over 16% of the votes, back the French finance minister? It has not shown its hand yet. US treasury secretary Tim Geithner called for an open and transparent selection process recently, adding consultations were on with everyone including emerging markets.
The battle has begun.