Bank of Israel Governor Stanley Fischer, who helped the International Monetary Fund end crises in Mexico, Russia and Southeast Asia, faces the dual hurdles of age and nationality in his quest for the lender’s top job.
Fischer, 67, the IMF’s first deputy managing director from 1994-2001, joins French Finance Minister Christine Lagarde and Mexican central bank chief Agustin Carstens in the race to succeed Dominique Strauss-Kahn, who resigned last month after he was charged with attempted rape, as managing director. Strauss-Kahn has pleaded not guilty.
“An exceptional and unplanned opportunity has crossed my path, one that may never again present itself, to run for the head of the IMF,” Fischer said in an e-mailed statement yesterday. “After much deliberation, I have decided to pursue it, despite the fact that it is a complicated process and despite the possible obstacles.”
Israel’s central bank said in a statement that the IMF will have to decide whether to amend its by-laws, which stipulate that its managing director be less than 65 years at the time of selection, or reject his candidacy. The fund’s members would also have to end an informal agreement under which the head is always a European, while an American heads the World Bank.
Seen as American
Fischer is getting a late start in a race that has seen Lagarde lock up support among European Union nations. While the U.S., the fund’s single biggest shareholder, hasn’t announced backing for anyone, favoring a non-European could mean relinquishing control of the World Bank -- an outcome that members of Congress who decide on funding for development banks have said they oppose.
Fischer holds both U.S. and Israeli citizenship. He was born in an area of northern Rhodesia that is today part of Zambia and holds a Ph.D in economics from the Massachusetts Institute of Technology.
He “would be a fine candidate, but despite his African upbringing and Israeli experience, Fischer is seen first as a U.S. citizen because of his tenure as deputy managing director at the fund,” Bessma Momani, a professor at the University of Waterloo in Canada who specializes in the IMF, said by e-mail.
Fischer earned his undergraduate and master’s degrees at the London School of Economics. He then won a scholarship from MIT, in Cambridge, Massachusetts, where he studied under future Nobel laureate economists Paul Samuelson and Robert Solow. He later joined the faculty at MIT, serving as the thesis adviser to Ben S. Bernanke, now the Federal Reserve chairman.
‘Beyond All Else’
Lagarde has benefited from the failure of emerging markets to coalesce around a candidate from their own ranks after vowing to end a six-decade European lock on the position. She has tried to turn attention away from her nationality by focusing on her gender and her role in European efforts to head off a Greek sovereign-debt default.
Lagarde has secured Egypt’s backing for her candidacy to head the IMF, the Arab country’s state-run Middle East News Agency reported today, citing Foreign Minister Nabil El-Arabi.
Lagarde said today Bahrain supports her candidacy to run the International Monetary Fund. She said other Mideast nations also have expressed support for her bid, though she did not identify them by name, in speaking at a Cairo press conference today.
The fund has said it plans to make a choice by the end of the month.
“Fischer has already proven that when there are important challenges, he can meet them,” Jacob Frenkel, chairman of JPMorgan Chase International and a former Bank of Israel governor said in an interview with Army Radio today. “His integrity is above and beyond all else.”
Fischer, who emigrated from the U.S. to Israel in 2005 to take up the Bank of Israel governorship, described the top IMF position as a “terrific” job in a May 25 interview. He said the euro-region’s debt crisis doesn’t make it necessary for the fund to elect a European candidate. The IMF approved a record $91.7 billion in emergency loans last year and provides a third of bailout packages in Europe.
In August 2009, Fischer became the first central bank governor to reverse course in response to signs of a financial recovery when he raised the benchmark interest rate by a quarter point. He was given a second five-year term last year and was named central bank governor of the year for 2010 by Euromoney magazine in October.
In 2008, Fischer -- in an effort to save Israel’s export-driven economy -- ordered the Bank of Israel to buy dollars to drive down the value of the shekel. Since March 2008, he has more than doubled foreign currency reserves to $76.8 billion.
The purchase program helped weaken the shekel against the dollar by 22 percent during two quarters of economic contraction, assisting companies such as Petah Tikva, Israel-based Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic drugs. The currency weakened 0.7 percent against the dollar to 3.4080 on June 10.
Israeli Finance Minister Yuval Steinitz said that Fischer’s chances of getting the job “aren’t great” due to the age requirement.
“It’s a win-win situation for us,” Steinitz said in an interview with Army Radio. “If he wins, it brings honor to the State of Israel, and he will also be working on our behalf on an international level. And we would also welcome his remaining with us.”
Israel’s 10-year government bond yields climbed to the highest level in more than two weeks on bets inflation accelerated in May. The yield on the benchmark Mimshal Shiklit note due January 2020 rose one basis point to 5.1 percent at the 4:30 p.m. close in Tel Aviv.
The TA-25 benchmark slid 1.25 percent today to close at 1204.19, the lowest since September.
“Everyone is sitting on the fence and waiting for something to happen. It may be related to the fact that his chances of getting the job don’t look huge right now. They aren’t taking it seriously yet,” Uriel Goren, head of the international clients desk at DS Securities & Investments, said by phone.
Israel recovered from the global recession faster than many other developed economies, with growth of 4.7 percent in the first quarter of last year and 7.6 percent in the fourth. The economy is likely to expand 5.2 percent this year and 4.2 percent in 2012, the central bank said in a June 1 forecast.
Fischer’s father, Philip, migrated in 1926 to Northern Rhodesia, modern-day Zambia, and ran a general store in a small village. Fischer’s mother, Ann, was the daughter of Lithuanian immigrants who had moved to South Africa. The couple raised Stanley and his younger brother in Northern Rhodesia.
Fischer’s parents moved to Southern Rhodesia -- now Zimbabwe -- when he was 13, and he completed high school there. In the last year of high school, he switched his specialization to economics from science. Fischer also joined Habonim, a Zionist youth group, along with Rhoda Keet, his future wife, with whom he now has three sons.
In the early 1960s, Fischer spent six months on a kibbutz on Israel’s Mediterranean coast, where he combined learning Hebrew with manual labor. He now conducts his official business in Hebrew with an accent that divulges his upbringing in southern Africa.