Mexico's Carstens loses IMF bid

28 June 2011 Last updated at 20:57 GMT Christine Lagarde will start her five-year term at the IMF on 5 July France's Finance Minister Christine Lagarde, 55, has been named the first woman to head the International Monetary Fund (IMF).

Ms Lagarde fought off Mexico's Agustin Carstens for the job, although an IMF statement said that both candidates "were well qualified".

She received backing from America and Europe and key emerging market nations, including China, India and Brazil.

The post became vacant following the resignation of Dominique Strauss-Kahn.

"The results are in: I am honoured and delighted that the board has entrusted me with the position of MD of the IMF!" Ms Lagarde said via Twitter minutes after the announcement.

In a statement, the IMF said that its 24-member board regarded both candidates as highly suitable for the job, but had decided on Ms Lagarde "by consensus".

'Leadership'

Messages of support poured in, with UK Chancellor of the Exchequer George Osborne saying he was "delighted" and French President Nicolas Sarkozy calling it "a victory for France".

Mr Carstens said he had sent Ms Lagarde his "best wishes and full support", adding that he hoped she would "make meaningful progress in strengthening the governance of the institution".

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I will make it my overriding goal that our institution continues to serve its entire membership”

End Quote Christine Lagarde IMF Managing Director US Treasury Secretary Timothy Geithner said: "Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy."

Although Ms Lagarde is the first woman to become managing director since the IMF was created in 1944, she maintains the tradition that the post is held by a European.

It has been convention that Europe gets the IMF, while an American gets the top job at the World Bank.

Mr Carstens, Mexico's central bank governor, campaigned on a platform that this time the IMF chief should reflect the emergence of developing nations as an economic force.

However, Ms Lagarde toured the world drumming up powerful support in the Middle East, Asia and South America.

Her appointment looked effectively sealed on Tuesday when America and Russia came out in her favour.

Immediate task

In a signal to IMF members who fear she will be overly-focused on Europe, Ms Lagarde said in a statement: "I will make it my overriding goal that our institution continues to serve its entire membership.

The IMF's David Hawley announces Christine Lagarde's appointment

"As I have had the opportunity to say to the IMF board during the selection process, the IMF must be relevant, responsive, effective and legitimate, to achieve stronger and sustainable growth, macroeconomic stability and a better future for all."

However, when Ms Lagarde begins her five-year term on 5 July, her immediate task will be to deal with the efforts of the IMF and European Union to resolve the Greek debt crisis and prevent contagion to other eurozone economies.

In a television interview minutes after her appointment, Ms Lagarde pressed Greece to move quickly to push through unpopular austerity measures that the IMF and EU have said are a prerequisite for further aid.

On a day of riots and protests throughout Greece, she said: "If I have one message tonight about Greece, it is to call on the Greek political opposition to support the party that is currently in power in a spirit of national unity."

Meeting Strauss-Kahn

Mr Strauss-Kahn resigned abruptly on 18 May after being arrested in New York for an alleged sexual assault. He denies the charges.

Ms Lagarde said that following the turmoil of his arrest, she wanted to unify the IMF's staff of 2,500 employees and 800 economists and restore their confidence in the organisation.

She also said she wanted to meet Mr Strauss-Kahn, if permitted to by the US government.

"I want to have a long talk with him, because a successor should talk with their predecessor," Ms Lagarde said during an interview on French television channel TF1.

"I can learn things from what he has to say about the IMF and its teams," she said.

Before becoming France's finance minister in June 2007, she was minister for foreign trade for two years.

Prior to moving into politics, Ms Lagarde, a former champion swimmer, was an anti-trust and employment lawyer in the US.

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Carstens IMF campaign hits China

16 June 2011 Last updated at 02:17 GMT Mr Carstens is banking on the support of emerging economies in a bid to to head the IMF Agustin Carstens, the Governor of Bank of Mexico is visiting China in a bid to drum up support for his bid to head the International Monetary Fund (IMF).

Mr Carstens is hoping Asian countries will follow Latin American nations in backing him.

Mr Carstens and the French Finance Minister Christine Lagarde are the two candidates shortlisted by the IMF to take over as the managing director.

Mr Carstens is expected to arrive in China at 1300 local time on Thursday.

Leading Asian and Latin American countries have said a candidate from outside Europe should be considered for the post.

Mr Carstens said that his experience in working with the emerging economies made him an ideal candidate for the job.

"For the last several years the economies who have been contributing to world economic growth and stability are emerging markets," Mr Carstens said.

"We're doing something right," he added.

'Over-represented' All 10 of the IMF's managing directors since its inception have been European.

However, the balance of economic power has shifted drastically in the past two to three years.

While the financial crisis took a heavy toll on the US and countries in the European Union, emerging economies, especially in Asia, have witnessed robust growth during the period.

"Europe is over-represented in the fund, with more voice and representation that Europe has in the world economy," Mr Carstens said.

Mr Carstens has also voiced concerns, that given the debt-crisis in some European countries, there may be a conflict of interest if a candidate from the region were to head the fund.

Difficult not impossible

Despite all the talk about a non-European candidate taking over the reins, the French Finance minister Ms Lagarde is being touted as the clear favourite.

She has the backing of the European nations, which hold almost 30% of voting power.

Mr Carstens, may have the support of 12 Latin American nations but so far Brazil and Argentina have not backed him openly.

Also, the US remains tight lipped about who they are supporting, though even Mr Carstens admitted that it is unlikely that they will go against Europe.

"So far it hasn't happened, hopefully there will be a first," Mr Carstens said.

However, despite the odds stacked up against him Mr Carstens said he will fight it out till the very end.

"It's difficult but not impossible," he said.

"As they say in baseball games, it's not over till it's over," Mr Carstens added.

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IMF chooses Carstens and Lagarde

14 June 2011 Last updated at 02:56 GMT Mexico's Agustin Carstens 'would be better' for IMF, says former IMF official Charles Adams

The International Monetary Fund (IMF) has shortlisted two candidates to take over as its managing director.

French Finance Minister Christine Lagarde and Governor of the Bank of Mexico Agustin Carstens will fight it out for the top job.

The post became available after the former head of the IMF Dominique Strauss-Kahn resigned.

Mr Strauss-Kahn was arrested in the US last month on charges of an alleged sexual assault.

He has denied the charges.

Football score

The IMF said it expects to complete the selection process by 30 June.

"The Executive Board will meet with the candidates in Washington DC and, thereafter, meet to discuss the strengths of the candidates and make a selection," the fund said.

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I'm not fooling myself. It's like starting a soccer game with a 5-0 score”

End Quote Agustin Carstens Governor, Bank of Mexico Ms Lagarde is considered by many as the front runner for the post.

She is backed by the European Union and in recent days she has also won the support of Egypt, Indonesia, and the United Arab Emirates.

Mr Carstens has the support of Latin American countries.

However, he acknowledged that his rival had the edge in the race.

"I'm not fooling myself. It's like starting a soccer game with a 5-0 score," Mr Carstens said during an appearance at the Peterson Institute for International Economics on Monday.

Conflict of interest

However, Mr Carstens said that if a European candidate is appointed to the post, it may result in a conflict of interest, given the ongoing debt-crisis in some of the European countries.

"We could have a situation where borrowers dominate the institution," he said.

Mr Carstens said that the European debt-crisis had snowballed into a big problem over the years and the region needed a fresh perspective in order to solve the problem.

"What will help me is precisely to have a fresh pair of eyes," he said.

"Also someone coming from the outside can in a way speak of their mind more frankly and I think that will be an advantage," he added.

Ricardo Ochoa, head of international affairs at Mexico's finance ministry, said that Mr Carstens' experience as the head of the country's central bank, would allow him to be more sensitive to the problems of countries which needed IMF aid.

"He has been on the other side of the table," Mr Ochoa told the BBC.

"Mexico already has been in the situation where important reforms have to be implemented, and I think that puts him in a situation - to have a more understanding and more sensitive IMF," Mr Ochoa added.

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