Hopes that Kemal Dervis would become the first emerging market politician to head the IMF faded Thursday as Christine Lagarde emerged as frontrunner to succeed Dominique Strauss-Kahn
Senior policy officials consulted by Emerging Markets said they were backing the French finance minister in the wake of Strauss-Kahn’s dramatic resignation.
A key ally of former Turkish economy minister Kemal Dervis, a leading contender for the role, acknowledged that his chances of clinching the top job had receded.
Asked whether Dervis woud become managing director Homi Kharas, a deputy to the former Turkish finance minister now at the Brookings Institution in Washington, told Emerging Markets: “Unfortunately I think it’s unlikely.”
He said Lagarde’s appointment could undermine the IMF’s legitimacy if her candidacy is secured solely through a political deal among rich nations. “Major countries at the end of the day are prepared to forgo the principle of technocratic appointments for the short term expediency of having a politically trusted friend and that seems to be the way that the world is currently governed.”
The result will be a revolt against the Fund by developing countries, he added. “What we will see from the emerging nations is that they will vote with their feet.
“Developing nations can make [international financial institutions] less relevant as global institutions and restrict them to being essentially institutions that play in the arena of the spheres of influence of the rich countries. That is what is happening more and more.”
European finance ministers and central bankers appear to be uniting behind Lagarde to take over the IMF job, which has traditionally been taken by a European since the fund was founded six decades ago.
Marc Uzan, executive director of the Reinventing Bretton Woods Committee, told Emerging Markets that Lagarde was “Europe’s candidate”. “She’s competent and she’s the chair of the G20,” he said.
One well-placed senior European finance ministry official told Emerging Markets Europeans were not prepared to give up their right to the IMF position “at this particular time” given the number of IMF programmes underway on the continent.
“I can’t imagine [the leadership] going elsewhere,” he said. “I think Lagarde is highly qualified and acceptable to non-industrialised countries so she has the best chance.” Sweden’s finance minister Anders Borg said Lagarde had shown “very strong leadership”.
Speculation has circled around other European candidates but none has attracted huge support. Axel Weber, the former head of the Bundesbank who turned down the top job at the ECB, declined to comment when contacted by Emerging Markets.
Gordon Brown, the former UK Prime Minister who chaired the IMF’s policy committee for a decade, has been effectively blocked from the job by David Cameron, his successor as PM.
While several emerging economies have called for the process to be opened up to all candidates regardless of nationality, they have so far failed to unite around a single candidate.
As well as Dervis, Tharman Shanmugaratnam, the Singaporean finance minister who chairs the IMF’s main policy committee, and former South African finance minister Trevor Manuel, have been tipped for the job.
Asian policymakers are likely to back Lagarde, based on the strong levels of support for her candidacy garnered by Emerging Markets at the ADB meetings.
ADB President Haruhiko Kuroda said Lagarde would be the “perfect” candidate while Indonesian finance minister Agus Martowardojo said he would recommend her as a “very suitable” candidate.
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