Bloomberg News

Lagarde Takes IMF Push to China as India Avoids Endorsement

June 08, 2011

(Updates with India visit by Carstens in 10th paragraph.)

June 8 (Bloomberg) -- Christine Lagarde arrived in China today to seek the government’s backing for her bid to become the next managing director of the International Monetary Fund after failing to secure public endorsement from India.

The French finance minister’s two-day trip, which will include a press briefing tomorrow in Beijing, is part of a tour that has also taken her to Brazil.

Emerging nations including China, India, South Africa and Brazil have urged an end to the convention of naming the IMF’s head from Europe and World Bank presidents from the U.S. Mexican central bank Governor Agustin Carstens is a candidate for the IMF job, which the organization aims to fill this month after Dominique Strauss-Kahn quit the post following his arrest in New York on sexual assault charges.

“I did not seek assurance,” Lagarde said of her India visit. “It would be premature and it would be arrogant on my part to expect assurance or reassurance.” She told reporters at a briefing in New Delhi yesterday that she was “here to present my candidacy and listen to the concerns of an emerging market economy as important as India.”

Lagarde said she had presented her plans for the 187-member fund during meetings with India’s Finance Minister Pranab Mukherjee and Prime Minister Manmohan Singh. The IMF was formed after World War II to help stabilize the currencies and economies of member countries and lends to countries that are in financial strife.

China’s View

The IMF’s management should be chosen on the basis of “impartiality” and “merit,” and developing nations should be represented, Jiang Yu, a spokeswoman for China’s foreign ministry, told reporters on May 19.

The No. 2 slot at the Washington-based agency is also up for grabs, with first deputy managing director John Lipsky due to retire in August. There are also two deputy managing directors, Naoyuki Shinohara and Nemat Shafik.

South African Finance Minister Pravin Gordhan said yesterday that Brazil, Russia, India, China and his country are still in talks to nominate a joint candidate to head the IMF. IMF executive directors representing those nations have protested a tradition dating back to the fund’s creation that its leader be a European.

‘Basis of Merit’

“We want the selection of the managing director of the IMF or that of the World Bank to be done on the basis of merit, competence and in a transparent manner,” India’s Mukherjee told reporters in New Delhi yesterday. He said Mexico’s Carstens is “a competent person,” adding that “we’ll also talk to them. Let’s see how it emerges.”

Nationality should not be an important factor, the Indian official said. Carstens will visit India on June 10, the Press Trust of India news agency reported today.

Carstens served as IMF deputy managing director from 2003 to 2006. He has a doctorate in economics from the University of Chicago and took the reins of Mexico’s central bank in January 2010 after serving as the country’s finance minister.

Colombia yesterday joined Uruguay as the second country to publicly back Carstens.

Russian Prime Minister Vladimir Putin on May 27 voiced his support for Lagarde, joining the U.K., Germany and Sweden. U.S. Treasury Secretary Timothy F. Geithner has praised Lagarde’s qualifications while refraining from endorsing her candidacy.

Countries from the European Union hold about 31 percent of the votes at the agency and the U.S. almost 17 percent. Emerging-market and developing countries saw their share of votes increase to 42 percent, from 40.5 percent, under Strauss- Kahn’s management.

Being French

The IMF, which provided a record $91.7 billion in emergency loans last year and accounts for one-third of the aid packages for euro-region countries such as Greece, has vowed transparency in the selection process.

Lagarde said last month that being French is neither an advantage nor a drawback to her candidacy.

Selection to top positions in these offices should be on the basis of “broad consensus,” India’s Mukherjee said. “India would like to be part of that consensus. We are working with other countries.”

--With assistance from Ben Richardson in Hong Kong. Editors: Ben Richardson, John Brinsley

To contact the reporters on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net; Kartik Goyal in New Delhi at kgoyal@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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