U.S. treasury secretary Tim Geithner announced today that the United States will back French Finance Minister Christine Lagarde to head the International Monetary Fund, effectively sealing the race for the organization’s top job.
The race seemed tilted towards Lagarde’s candidacy from the beginning. When former Fund chief Dominique Strauss-Kahn resigned in May to defend himself against sex assault charges, Europe immediately rallied behind Lagarde, eager to substitute a European national with another one. And although the U.S. has been cagey about its stance in the race, few doubted it would eventually also nod at the French minister, continuing the unspoken convention of having a European heading the IMF and an American the World Bank.
So why did Canada opt instead to back Agustín Carstens, Mexico’s central bank chief and Lagarde’s rival in the race? Even with Canuck and Australian endorsements, he stood no real chance of winning against a French political celebrity who, besides the expected backing of the West, also quickly pocketed the support of an IMF heavyweight like Egypt, francophone Africa, and South Korea. Notably, even Latin American giants Argentina and Brazil avoided publicly supporting Mexico’s candidate.
Activists and policy experts have long been advocating the need for more non-Western leaders, like Carstens, to head international organizations in a global economy increasingly dominated by the BRICS. But in the IMF’s case there was a solid argument to be made in favour of having a European lead the world’s lender of last resort. It’s the Old Continent, in fact, that’s currently the epicenter of financial instability, while developing countries generally weathered the global economic crisis quite well. In any case, Ottawa never showed a particular concern with propelling a developing world candidate to the top of the IMF.
Admittedly, Canada shares some important economic interests with Mexico, a big trade partner and fellow NAFTA member. But Canada’s endorsement is mostly likely an anti-France statement. In the aftermath of the global economic meltdown, France and Canada have taken opposite views of how to run the world’s economy, with Paris championing more financial sector regulation and a global bank tax, and Ottawa vigorously rallying against anything that could tie down its healthy financial institutions. Canada’s vote stands a warning shot to Lagarde.