Bloomberg News

Carstens in China Seeks Emerging-Market Backing for IMF Bid

June 16, 2011

June 16 (Bloomberg) -- Agustin Carstens, Mexico’s central bank chief, used a trip to China to call on emerging-market countries to rally behind his bid to become the first non- European to lead the International Monetary Fund.

“It’s a moment for emerging markets to join forces and to make the strong point that we don’t agree with the way the fund is being run,” Carstens told reporters in Beijing today. “It’s time to really express our point of view. I think I represent a strong option.”

Carstens came away from meetings with People’s Bank of China Governor Zhou Xiaochuan and Finance Minister Xie Xuren without a public endorsement. “I perceived complete neutrality,” he said. “They really are embracing the process of a merit-based election.”

Frontrunner Christine Lagarde, France’s finance minister, and Carstens have embarked on world tours to lobby for support of their bids to succeed Dominique Strauss-Kahn as the IMF’s managing director. Strauss-Kahn resigned in May after his arrest on charges of sexually assaulting and attempting to rape a New York hotel maid. He pled not guilty on June 6.

Carstens, 53, said he faces “an uphill battle” against Lagarde, because “regretfully this time around Europe didn’t embrace the spirit of having a merit-based process.” He reiterated criticism of European countries for backing Lagarde before all of the candidates were known.

‘High’ Chances

On June 14, Carstens said chances are “quite high” Lagarde will win the job, though he stressed today that this doesn’t mean he’s throwing in the towel. The IMF board aims to select a successor by June 30.

An IMF deputy managing director from 2003 to 2006, Carstens says emerging markets should have a greater voice in the management of the fund and supports the use of measures such as capital controls and accumulation of foreign reserves to fight excessive capital inflows to developing nations.

South Korea’s Finance Minister Bahk Jae Wan said today that he hopes an emerging-market candidate will head the IMF someday, according to Lee Jun Kyu, a senior adviser to the minister. Bahk’s predecessor, Yoon Jeung Hyun, said last month that he believed that Lagarde was a good candidate.

EU Support

Before arriving in China, Carstens met Indian Finance Minister Pranab Mukherjee and Prime Minister Manmohan Singh in New Delhi on June 10. He was in Washington this week before heading to China and Japan. Carstens says he’s backed by 12 Latin American nations, though not Argentina and Brazil.

Lagarde, 55, has also taken her campaign to India and China. She has the backing of European Union countries and Russian Prime Minister Vladimir Putin has voiced his support. Egypt, Bahrain and the United Arab Emirates lined up behind her on June 12.

Lagarde has benefited from the failure of emerging markets to coalesce around a candidate from their own ranks after calls 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.

--Kevin Hamlin, with assistance from Eunkyung Seo in Seoul, Sandrine Rastello in Washington, Jose Enrique Arrioja in Mexico City, Klaus Wille in Zurich, Iuri Dantas in Brasilia, Kartik Goyal in New Delhi, Nerys Avery in Beijing and Harry Maurer in Rio De Janeiro. Editors: Patrick G. Henry, Jones Hayden

To contact Bloomberg News staff for this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net


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