August 15, 2022

Israeli Economist Enters Race to Lead I.M.F.

A globally renowned economist who is credited with stabilizing the Israeli shekel during his six years as head of the country’s central bank, Mr. Fischer also spent seven years as first deputy managing director of the I.M.F., and knows the organization well.

“It was because of this experience that I decided to stand,” Mr. Fischer said in a statement Saturday.

But despite Mr. Fischer’s qualifications, even he seemed to acknowledge that he has only a slim chance of being chosen over the front-runner, Christine Lagarde, the French finance minister. Agustín G. Carstens, the governor of Mexico’s central bank, is also campaigning for the job.

“An extraordinary and unplanned opportunity has come up, possibly one that will not come again,” Mr. Fischer said in his statement. He decided to pursue the I.M.F. job, he said, “despite the process being complicated and despite the possible barriers.”

Mr. Fischer had a distinguished academic career before entering public service, writing numerous economics textbooks and serving as head of the economics department at the Massachusetts Institute of Technology. He was also chief economist at the World Bank from 1988 to 1990. He has private sector experience as a vice chairman of Citigroup from 2002 to 2005, when he became governor of the Bank of Israel.

“On the basis of his qualifications he is as serious as either of the other two candidates,” said Carl B. Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. “The work he has done in stabilizing the Israeli economy and stabilizing prices is viewed as a textbook application of monetary policy.”

Still, the obstacles to Mr. Fischer’s candidacy are formidable. As he acknowledged in his statement, at 67 he already exceeds the age limit of 65 for candidates for managing director, meaning a change in I.M.F. rules would be necessary for him to be elected by the 187 countries that participate in the selection.

With joint United States and Israeli citizenship, Mr. Fischer’s passports work against him. By informal arrangement, the United States has supplied the head of the World Bank, while the head of the I.M.F. has come from Europe. In addition, Arab countries might object to an Israeli in the I.M.F. post.

“Stan Fischer would make an excellent I.M.F. managing director. But, at this late stage, he does not have enough support to succeed,” the economist Nouriel Roubini told Reuters. Mr. Fischer was voted most suited to run the I.M.F. in a Reuters poll of economists.

Its executive board has set a June 30 deadline for selecting a successor to Dominique Strauss-Kahn, who resigned as I.M.F. managing director last month after being accused of sexually assaulting a hotel maid in New York.

Ms. Lagarde is highly regarded for her negotiating skills, and has the strong support of Germany, where she enjoys a warm working relationship with Wolfgang Schäuble, the finance minister. The fact that she is a woman might also help restore the reputation of the I.M.F. after the arrest of Mr. Strauss-Kahn, who denies the charges against him.

Though she is the front-runner, Ms. Lagarde faces abuse of power charges for her intervention in a court case involving a French tycoon. A French court moved on Friday to postpone a decision on the investigation, removing an immediate hurdle to Ms. Lagarde’s candidacy but leaving her open to possible future legal proceedings.

Ms. Lagarde has been on a worldwide tour of countries including Brazil, India and China in what appears to be a successful campaign to win support from developing nations, some of which had said it was time for someone from a poorer country to manage the I.M.F.

“Everybody is free to file a candidacy,” Ms. Lagarde told reporters in Cairo on Sunday, after meeting with the Egyptian finance minister, Samir Mohamed Radwan, about her own bid, Bloomberg News reported. She noted that Mr. Fischer is experienced, Bloomberg said.

Russia has also nominated Grigori A. Martchenko, Kazakhstan’s central bank president.

The deadline for nominations was Friday. Mr. Fischer did not say when he had submitted his name.

The I.M.F. assists countries in overcoming financial crises, but typically makes loans contingent on harsh austerity measures.

Strong political skills are crucial for the I.M.F. managing director, which would seem to be another factor in Ms. Lagarde’s favor. However, Mr. Weinberg of High Frequency Economics noted that Mr. Fischer was able to cope with Israel’s fractious politics while pushing for fiscal discipline and cutting inflation.

In Israel, Yuval Steinitz, the finance minister, on Sunday said that the country would back Mr. Fischer’s candidacy, but also gave him little chance of being chosen.

“First there is the age obstacle,” Mr. Steinitz told Israel’s Army Radio during an interview Sunday. “And the choice is very much political. Were it purely professional it would be hard-pressed to find a better person than Fischer.”

In a 1987 paper with parallels to the current debt crisis in some European nations, Mr. Fischer argued in favor of debt relief for countries in Africa and Latin America. The overly indebted countries had “performed miracles” to try to service their debts, he wrote in The American Economic Review.

“But the price in terms of growth has been heavy,” he said. “The time for debt relief has arrived.”

Judy Dempsey and Caroline Brothers contributed reporting.

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