- Associated Press - Monday, June 13, 2011

Mexican central banker Agustin Carstens said Monday that the next leader of the International Monetary Fund should not be European because those nations are borrowing heavily from the lending organization.

Mr. Carstens pressed his long-shot candidacy to head the IMF during a speech at the Peterson Institute for International Economics, a Washington think tank.

European officials have closed ranks behind French Finance Minister Christine Lagarde, who has emerged as the front-runner.

Mrs. Lagarde’s candidacy would create “conflicts of interest,” Mr. Carsten said, because Greece, Ireland and Portugal are borrowing heavily from the IMF.

“We could have a situation where the borrowers dominate the institution,” he told an audience of more than 100 policymakers and economists. He also met with Treasury Secretary Timothy F. Geithner earlier in the day, but said Mr. Geithner did not endorse his candidacy.

Mr. Carstens is unlikely to pose a serious challenge to Mrs. Lagarde. Nor is Stanley Fischer, an Israeli central banker who declared his candidacy for the top job Saturday.

A European has traditionally headed the IMF and an American has led its sister organization, the World Bank. Developing countries have long complained about the arrangement, which dates to the end of World War II.

The IMF, which lends money to countries in financial difficulty, is seeking a new managing director to replace Dominique Strauss-Kahn. He resigned last month after his arrest on sexual assault charges. Mr. Strauss-Kahn has pleaded not guilty. The Fund’s 24-member executive board plans to make its selection by June 30.

Mrs. Lagarde consolidated her lead over the weekend by receiving endorsements from Indonesia and Egypt, a sign that her support extends beyond Europe.

“The writing is on the wall. I don’t see any plausible scenario where Carstens can rally enough support to get the job,” said Eswar Prasad, an economist at Cornell University and former IMF official.

Mr. Carstens acknowledged the steep challenge he faces. But he said it was important for developing countries to have a choice in the election. And while he may not succeed, he said he hoped his candidacy would pave the way for emerging market candidates in the future.

“If we want to have an open and unbiased process, we need to present candidates,” he said. “If we don’t start at some point we will never get there.”

In fact, some speculate that Mr. Carstens could be laying the groundwork for a future run at the job, or another top position.

“A credible run … would certainly raise his profile in global policy circles and improve his chances of heading other major international institutions,” Mr. Prasad said.

China, India and Brazil, three of the fastest-growing nations in the world, have also complained that the IMF process for choosing its leader should be more open. Still, none of those countries is backing Mr. Carstens.

In fact, China, India and Brazil have declined to publicly endorse any candidate so far. Analysts say cite several reasons why the three developing nations have resisted.

China and India are historical rivals and are without many commn interests, even though they are at similar stages of development.

And Brazil is vying to be an alternative to the U.S. and regards Mexico as a close U.S. ally, said Domenico Lombardi, a senior fellow at the Brookings Institution and former IMF official.

“Emerging countries have failed to coalesce as a unified group behind a candidate,” Mr. Lombardi said.

Copyright © 2016 The Washington Times, LLC.

blog comments powered by Disqus

 

Click to Read More

Click to Hide