Comment by Mike Foster
eFinancialNews.com
27 May 2011
French finance minister Christine Lagarde has
many of the credentials traditionally required of individuals who want to be
managing director of the International Monetary Fund.
She is capable, organized and European. The French likes
the fact she is French. The English like the fact that she is not Gordon Brown.
She can speak fluent English. She can fight her corner with confidence. And she
was confident enough of success to put her IMF candidacy forward this week.
Frankly, none of this is good enough, according to
Vincent Truglia, saying it is condescending for supporters of Lagarde to argue
she deserves it on the back of her European networking skills.
Truglia’s view is important because he is former head of
credit rating agency Moody’s sovereign risk unit. In his latest blog for New
York-based Granite Springs Asset Management, he argues Augustin Carstens,
governor of the Mexican Central Bank, is the better candidate by a country
mile.
Truglia explains: “At Moody’s I was in the fortunate
position of meeting with most of the world’s leading financial minds, both
within and outside government. He ranks among the most competent international
people I have ever met.”
He argues the IMF needs a central banker who has
experience in dealing with sovereign debt crises, as well as broader banking
issues. Mexico,
in case you have forgotten, has suffered quite a few of financial crises over
the years, and come out of them more prosperous.
Carstens has been deputy director of the IMF for three
years. He can also bring political experience to the table as Mexico’s former
finance director. He is untainted by scandal – quite important following the
Dominic Strauss Kahn affair – whereas Lagarde has had to deny she overstepped
her authority as a minister during official dealings with a businessman in
2007.
In contrast, Lagarde’s background as a former lawyer and
French politician is narrow. She has pledged to surround herself with “high
quality staff based on merit from various nationalities” but she would probably
need them.
Last week, Financial News argued the debate on who should
run the IMF had become too focused on nationalities and whether the IMF should
stick to its tradition of appointing a European to the top post. Truglia goes
further, arguing that a bit of positive discrimination away from Europe would
make sense: “Within Europe there are ethnic
and political tensions, which may inhibit any single European acting as a fair
broker, never mind being able to coalesce around a pan-European solution.”
It is also worth noting that the battered economies of
Europe and the US
can't afford to be as generous donors to the the IMF as in the past. Relatively
prosperous future economies – China,
India, Brazil, South
Africa and, yes, Mexico – will need to step up the
plate instead, for the IMF to maintain its profile.
Their willingness to do so, with a European running the
show, yet again, is likely to be tested.