There are, to be sure, a number of surprising developments surrounding the race to succeed Dominique Strauss-Kahn at the IMF helm. The first is that it hasn’t turned out to be a one-horse race as many anticipated.

Banco de México governor Agustín Carstens is truly giving the frontrunner, France’s Christine Lagarde, a run for her money. The effort will fall short, however, for despite the numerical support Carstens has garnered for his candidacy, at the IMF numbers don’t matter as much as voting power, vested in the money amount of contributions.

Another surprising factor is that even if he loses out to Lagarde, which he probably will, Carstens has had the huge merit of marking the beginning of the end of the gentleman’s agreement of 1946, stipulating that the IMF helm goes to a European and the World Bank to an American.

So, regardless of the outcome of the final tally this time around, it is now a virtual certainty that the next time the IMF seat is up for grabs it will go to a non-European, probably one from an emerging country. Currently 52, Carstens would most certainly be eligible five years from now.

Another surprise was that shortly before last Friday’s deadline for filing candidacies, Stanley Fischer, the Israeli central bank governor, threw his hat in the IMF ring, just as Lagarde and Carstens were actively engaged in world promotional tours to boost their credibility with emerging market countries.

Fischer, previously a second-in-command at the IMF, made public his decision on Saturday shortly after nominations closed, to the surprise of several emerging markets. His last-minute candidacy could hurt Carstens more than Lagarde, taking away votes from major emerging countries like India and Brazil.

Former IMF officials claim that while Fischer is widely admired as a technocrat and liked by IMF staff, he might struggle to overcome the European bloc vote in favor of Lagarde.

Fischer’s late entry into the race came as Carstens questioned Lagarde’s suitability. In an interview with the Financial Times following meetings with the Indian government in New Delhi, Carstens said that as an economist from an emerging market, he offered a far deeper understanding than Lagarde of the difficulties that emerging markets face, such as destabilizing inflows of highly speculative capital and large fluctuations in commodity prices.

In Europe, commodities don’t represent such a large challenge, he said. It’s not such a pressing issue.

Carstens did not mention the fact that Mexico has received large amounts of such flows, currently estimated at over US$40 billion, thanks largely to attractive yields, nor did he say what Mexico will do when those maverick capitals decide to fly the coop.

Lagarde, who has the European countries solidly behind her and is promising to increase emerging markets’ influence at the IMF, has a background in law and politics rather than in economics or finance. On Sunday, ministers from Indonesia and Egypt said they backed her candidacy.

Carstens, who some say he’s handicapped because he’s a Chicago Boy (a graduate of the University of Chicago), has sought to allay suspicions that he would be an instinctive free-marketeer of the type many emerging market ministers associate with U.S. policymakers.

The main challenge that emerging markets are facing is that they are getting a lot of growth. But is it good quality growth that is being reflected in more employment and alleviating poverty? he said.

Indicating a clear willingness to embrace unorthodox policies, Carstens said that dealing with capital and commodity volatility would require using a wide range of policies, potentially including controls on capital and subsidies to cushion the impact of commodity price changes. It requires a lot of flexibility, he said.

Yet, as central bank governor, he flatly rejected controls on volatile capitals, saying the Mexican economy is perfectly capable of handling those volumes and more.

In announcing his candidacy Saturday, Fischer said: There arose an extraordinary and unplanned opportunity, perhaps one that will never happen again, to compete for the head of the IMF. In that sense, he is in total agreement with Carstens.

Born in Zambia, Fischer became a U.S. citizen before becoming the IMF’s deputy managing director in 1994, a position he held until 2001. He guided the Fund through some of its most active but also controversial rescue lending programs, including the string of bail-outs during the Asian and Russian financial crisis of 1997-1998.

Eswar Prasad, a former IMF official, said that while Fischer is respected as a technocrat (a description that also fits Carstens to a T), it was hard to see where his votes would come from. He is likely to be seen as essentially an American candidate, which endears him neither to Europe nor to the emerging markets.

Prasad said. There is little love lost between Fischer and the Asian emerging markets, who view him as the IMF’s battering ram during the Asian financial crisis.

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