India Sees Little Chance for Emerging-Market Candidate to Become IMF Chief
A rush by European officials to maintain a 65-year lock on the International Monetary Fund’s top job leaves little hope for a candidate from an emerging economy, India’s representative to the institution said.
“I’m not totally pessimistic but I’m not at all optimistic,” Arvind Virmani, who represents India and three other countries on the IMF board, said in an interview yesterday in Washington. “There is no indication which suggests that the result will be any different this time.”
Officials including U.K. Chancellor of the Exchequer George Osborne and Italian Prime Minister Silvio Berlusconi have said French Finance Minister Christine Lagarde should replace countryman Dominique Strauss-Kahn, who resigned last week following his arrest on sexual assault charges in New York, as the IMF’s chief.
Virmani said the European stance contradicts calls by the Group of 20, which includes the advanced economies plus major emerging ones, for a selection process based on merit rather than geography.
Virmani and IMF representatives for Russia, China, South Africa and Brazil yesterday released a statement urging “abandoning the obsolete unwritten convention” by which the IMF leader is always a European and the head of the World Bank an American. Countries from the European Union hold about 31 percent of the votes at the agency and the U.S. 17 percent.
“If the Fund is to have credibility and legitimacy, its managing director should be selected after broad consultation with the membership,” the directors from the so-called BRICS nations wrote.
Virmani said he is consulting with his counterparts from Brazil, Russia and China about putting a candidate forward.
“At this point in time if I was advising my own friends, I would have to frankly tell them that ‘the probability of your winning is minuscule and you’re really competing for second place,’” he said. At the same time “there is still perhaps merit in saying that ‘we tried’ even though we knew that it would fail.”
Mexico is nominating its central bank governor, Agustin Carstens, who in an interview yesterday said it was too early to say which countries will back him.
Virmani objected to that logic.
“There was no discussion about who’s the best, there were statements, saying that ‘we have to have a European because there’s a European crisis,’” said Virmani, who also represents Bangladesh, Bhutan and Sri Lanka.
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