Finally, the Mexican government decided to launch the candidacy of central bank boss Agustín Carstens to the IMF helm. By itself, the candidacy has little chance of winning, because Mexico like most of the developing world doesnt seem to grasp the sheer weight of regional alliances.
Europe, led by Germany, Great Britain and obviously France, has come out as a single, indivisible and thus unbeatable block in favor of French Finance Minister Christine Lagarde, and she will get the nod unless something truly catastrophic happens, like U.S. opposition.
Despite IMF claims of transparency and merit-based elements in the selection process, the name of the game is geopolitics. While some analysts naively assert that another European should not be elected this time around because there would conflicts of interest with the pending bailouts of European countries, the fact is that this war is far too important to be left in the hands of generals, and thus another European will be picked.
Its all in the numbers. In a breakdown of funding contributions to the IMF, Washington boasts 17%, by far the most of any single country. But a united Europe has 25.4%, and if you add Britains 4.3%, that is basically a winning combination.
Yet, Mexicos and Carstens chances would have been greatly enhanced if the Calderón government had pursued a regional alliance, which more than likely would not have included Brazil, since it has its own candidate. Its not the same to put forth Mexicos 1.79% than to have 30+ Latin American and Caribbean nations with 8%.
And, since dreaming doesnt cost anything, why not add China, which does not have a viable candidate but could chip in 6%, and even Russia, with nearly 3%.
Im not saying that Carstens lacks the necessary merits. In an op-ed piece in a major Mexico City daily this morning, former Finance Secretary Francisco Gil Díaz lists an endless array of points in favor of Carstens. What Gil does not mention, however, is that for all his technical skills, Carstens, a former number two guy at the IMF, has never proven to be adept at the geopolitical game, while Lagarde certainly has.
The point is that the 2,600 folks who work at 19th and H streets in Washington have a colonial mentality. Thinking that theyll easily give up IMF control would be like believing that King Leopold II of Belgium would have voluntarily relinquished his Congo rule. As we will soon see, this colonial mentality will taint the process of selecting an heir to DSK.
Such an IMF legacy is the result of an antiquated, post-World War II bargain struck at Bretton Woods among the worlds richest countries, and basically means that only a European can become the new managing director of the IMF, an institution owned by 187 member nations. This arrangement, which effectively discriminates against 93 percent of humanity, has enjoyed the support of the United States.
In its everyday endeavors, the IMF suggests that the governments that seek its financial assistance adopt market principles of efficiency, transparency and meritocracy in exchange for its help.
On the other hand, the IMF selects its own leader through a process completely at odds with those values. According to the agreement between Western Europe and the United States, the IMFs top job always goes to a European, while the presidency of the World Bank, currently held by Robert Zoellick, is reserved for a U.S. national. While the deal might have reflected the worlds realpolitik at the time, it is now obsolete, unacceptable and counterproductive to the cause of global economic stability.
Its worth noting that even the leaders of the Group of 20, which accounts for more than 80 percent of the worlds economy and two-thirds of its population, recognize that leadership selection at these institutions must change. When they met in early 2009 in London on the heels of the financial crisis, the G-20 leaders asserted that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent and merit-based selection process. Nothing much has happened since.
Didier Reynders, Belgiums finance minister, offered the prevailing European view when he said that it would be preferable if we continued to hold these posts. German Chancellor Angela Merkel has stressed that a person from the developing world can indeed ascend to the IMFs top job, but only in the medium term. For now, she asserts, it should be a European, and this time around the frontrunner is Lagarde.
At the Financial Times, influential columnist Wolfgang Munchau claims that only someone with vast political contacts in Europe can operate effectively there. I wonder to what extent a highly competent Mexican central banker, for example, would be able to fulfill this role?