Lagarde and Carstens Announce Candidacy for IMF Chief

05/27/11

Although Lagarde is viewed as the favored candidate, according to the May 25^th ft.com article, ''Lagarde launches IMF candidacy'', there is growing disagreement about whether or not the fund should be managed by a European - as has been done since the IMF’s inception following WWII. Per the article, the IMF executive directors for Brazil, Russia, India, China and South Africa said the ''obsolete unwritten convention'' of appointing a European as managing director undermined ''the legitimacy'' of the fund and called for a ''truly transparent, merit-based and competitive process''.

Also, although Lagarde has the formal support of the UK, Germany and the European Commission, and it appears she has the support of China and the United States, she may be faced with an investigation into the way she handled a lengthy legal dispute with Bernard Tapie. Tapie, a French businessman, politician, and sometimes actor, singer, and TV host, has faced numerous legal troubles, including tax fraud, and incarceration over the years. Essentially, the decision to use arbitration, versus the court system, resulted in, according to the ft.com article, the state paying €285m to a businessman who changed his support to Mr. Sarkozy during his campaign for the presidency in 2007.

A decision about whether the investigation will be launched must be made by June 10^th, the last day for potential IMF candidates to declare their interest in the position. Whether or not the investigation occurs, Lagarde will stand firm, and was quoted as saying in the ft.com article as saying: ''I have always acted in the interests of the state and in absolute respect of the law.''

U.S. Secretary of the Treasury Tim Geithner weighed in on the candidates, and was quoted as saying in a May 25^th reuters.com article: ''Geithner: Lagarde and Carstens ‘credible’ for IMF'': ''They're very talented people. Christine Lagarde is an exceptionally capable person, an excellent mix of financial, economic knowledge, talent, and the kind of political skills you need. Agustin has that as well. We want to see a process where we look to the candidate who can command the broadest support.''

According to information posted at its website, ''The International Monetary Fund (IMF) works to foster international monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Created in 1945, the IMF is governed by and accountable to the 187 countries that make up its near-global membership.''