The silence surrounding the choice of the next IMF chief is curious to say the least. Nominations were open a week ago and yet only two names have been mentioned. Next week (10 June), the IMF committee (whoever they are) intend to announce three candidates. If the job has the clout that it is supposed to have, then one might have expected at least half-a-dozen well-qualified candidates by now. But no, only two have turned up so far.
One of them, Christine Lagarde, has been nominated by France and has the strong backing of most European countries. With 35% of the votes in her hand already, she is by far the leading candidate. The problem with her—articulate and personable as she is—is that she has relatively little financial or banking experience. For most of her career, she has been a practising lawyer—and in America, too, which doesn’t go down all that well with half of the votes of IMF members around the world (those countries outside America and Europe). With the Eurozone crumbling from week to week, she would hardly have any time or energy for the rest of the world during her term of office.
The other candidate so far is Agustin Carstens, presently the Governor of the central bank of Mexico. His qualifications could hardly be bettered. His experience and current positions at the highest levels of international finance and banking fill a page in Wikipedia. A more able chief at the IMF is difficult to imagine. His problem is that . . . well . . . he’s rather plump. Obese, in fact. He’s hardly the sort of handsome figure that is required for people in high places in these televisual days. The job is as much a political one as a techno-financial one. Besides, I’d rate him as a decided health risk already, even though he’s only 52.
He would walk into the job if he had both America and the emergent countries supporting him. America’s backing is extremely unlikely, however, because Cartsten has already shown his hand earlier this year by buying large quantities of gold for his central bank rather than US Treasury bonds. It very much depends whether he has the votes of China, Brazil and other countries with fast-growing economies.
My candidate is Justin Yifu Lin, 58 (and, incidentally, slim and telegenic!). He was the first post-revolution Chinese to receive a PhD in economics from an American university (Chicago, 1958) and was the main influence in China in the 1980s and ’90s in deflecting the country away from investing in heavy industry and towards the production of consumer goods. He is currently the Chief Economist at the World Bank and is probably highly influential in the views of Robert Zoellick, the President of the WB in calling for the free-market price of gold to become the basis for a world trading currency.
If the Chinese government is supporting Mr. Lin then this might explain the unnatural silence that is now surrounding the IMF candidates. Premier Wen is going to have to work hard to persuade President Obama (with 16% of the IMF vote), considering Lin’s likely views concerning gold versus the dollar as the future world’s reserve currency. Lin’s candidacy will be fiercely resisted by Ben Bernanke, America’s central banker, and Tim Geithner, US Treasury Secretary who still want the American dollar to dominate the world’s trade. It may well be that resistance in Washington is working in Mr. Lin’s favour, as China works the leaders of the emergent nations. China might also have the votes of Greece, Spain and Portugal because it has been trying to help them by buying their bonds recently. Germany also depends a great deal on China as a considerable part of its export market of its luxury cars and machine tools.
My guess is that there are fierce arguments going on between the Chinese and Americans in Washington and that Christine Lagarde is already out of the frame. The fact that Agustin Carstens has not yet been invited to visit by either America or China probably means that he will have few votes also. IMHO, to use the jargon, Justin Yifu Lin or some other hitherto unknown candidate from China or the emergent countries will be the one that will emerge as the third candidate on 10 June and probably get the job.