French government backs Lagarde IMF candidacy

France’s government has backed Finance Minister Christine Lagarde’s candidacy for the head of the International Monetary Fund (IMF) after the resignation of her compatriot, Dominique Strauss-Kahn. Several other European countries have backed her bid announced in Paris on Wednesday morning.

Reuters/Jacky Naegelen

President Nicolas Sarkozy’s government “fully supports” Lagarde’s bid for the job, said government spokesperson and budget minister François Baroin after Lagarde officially threw her hat into the ring.

Several European Union officials and member countries have backed Lagarde:

• Belgium’s Finance Minister Didier Reynolds declared Lagarde “an excellent candidate”, despite expressing some interest in the post himself earlier in the week;
• European Commission head Jose Manuel Barroso “fully endorsed” the bid, praising “her engagement on the strengthening of global economic governance”;
• Germany, Britain and the Netherlands have declared support for Lagarde, as has New Zealand.
• French officials say that China is ready to back her, although Beijing has declined to comment.
• The United States and Japan had not made their position known Wednesday.

The so-called Brics nations – Brazil, Russia, India, China and South Africa – have challenged the practice of Europe and the US dividing the leadership of the IMF and the World Bank between them and indicated that they might field a candidate.

South Africa’s Finance Minister Pravin Gordhan says that his predecessor, Trevor Manuel, could stand.

“Clearly there’s a recognition of the fact that he’s been a finance minister for 13 years, that he was chair of the developing committee of the World Bank and that he played a key role in formulating proposals on the reform of the IMF,” Gordhan told RFI. “And quite clearly he has the experience as well.”

The voice of emerging markets must be heard in the world’s financial institutions, Gordhan argues, because they are “the locomotive that are pulling and driving the engine of growth on a global basis”.

Continents like Africa need to have greater representation as well, and the issue of leadership needs to happen in an open and transparent way, based on merit.

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South African Finance Minister Pravin Gordhan

Alexandra Brangeon

“If these institutions are going to be credible and enjoy legitimacy across the world, as opposed to parts of the world, they need to be more inclusive, their representativity and voices within these institutions need to be upgraded,” Gordhan says. “Continents like Africa need to have greater representation as well, and the issue of leadership needs to happen in an open and transparent way, based on merit.”

But India’s IMF representative, Arvind Virmani, has conceded that the fund’s voting system would make it “extremely difficult” for a non-European candidate to win.

European nations hold nearly a third of votes, while the US has nearly 17 per cent and Asian countries have 20 per cent.

Being European “should not be a handicap”, Lagarde commented when announcing that she wanted to stand.

The only non-European candidates to have officially entered the fray are Kazakhstan’s central bank governor Grigory Marchenko and his Mexican counterpart, Agustin Carstens.

Lagarde’s declaration will overshadow the G8 summit which starts Thursday in the French resort of Deauville.

She is currently under threat of an investigation into alleged conflict of interest in a financial arbitration involving flamboyant businessman Bernard Tapie.

"I have every confidence in this (judicial) procedure and I have a perfectly clear conscience," she said on Wednesday.

Lagarde’s candidacy provoked mixed reactions in France:

• European Affairs Minister Laurent Wauquiez declared that “she is the best because she is the best and not because she is European”;
• Socialist Party MP Jérôme Cahuzac declared it “imprudent” because of the possible legal inquiry into the Tapie affair, although party leader Martine Aubry has indicated that she supported the move;
• Denouncing the IMF’s “dogma” of austerity, hard-left presidential candidate Jean-Luc Mélenchon declared that there is “no honour in a French citizen throttling the world and organising the pillage of countries like Greece”.