August 18, 2022

On Global Charm Offensive, Lagarde Promises Support to Developing Countries

NEW DELHI — French Finance Minister Christine Lagarde promised Tuesday to support emerging markets so wholeheartedly that a little part of her “would turn Indian” if she were elected head of the International Monetary Fund.

Ms. Lagarde appeared in India’s capital as part of a global campaign to win support from developing nations for her candidacy. In late May she visited Brazil, and on Wednesday she is slated to meet officials in Beijing.

The IMF “does not belong to anybody,” but to all 187 member nations, she told reporters at the French Embassy in New Delhi.

Developing nations have been agitating for one of their own to fill the top slot at the International Monetary Fund since the post became vacant in May, when France’s Dominique Strauss-Kahn stepped down amid accusations of sexual assault.

If elected, Ms. Lagarde said Tuesday, she would “stand on my feet as a woman,” adding that she would stand “with a level of testosterone that would be lower.”

She also said she would continue reforms that have given emerging markets more weight in the fund’s decision-making process.

Ms. Lagarde met earlier Tuesday with the prime minister of India, Manmohan Singh, and Finance Minister Pranab Mukherjee. Mr. Mukherjee told reporters after the meeting that India had not yet decided to back Ms. Lagarde, and that India would like to be part of a consensus of nations that chooses a new managing director for the fund.

During the press conference Tuesday evening, Ms. Lagarde said she was not in town to ask for Indian officials’ backing because that would be premature. Instead, she said, she was in India to present her candidacy and listen to concerns.

Indian officials expressed the “unanimous view” on Tuesday that “nationality is not the criteria — the criteria should be the merit of the candidate on its own rights,” she said.

Developing countries, which emerged relatively unscathed from the financial crises in recent years, are seeking a larger voice in international institutions as Europe and America continue to struggle with debt, unemployment and uncertain economic futures.

Ms. Lagarde said Tuesday that her experience dealing with the financial crisis was “an experience I would never forget” and one that taught her the value of coordination with other I.M.F. members.

Since the I.M.F. was created after World War II to promote global economic stability, it has always had a European as its elected managing director.

Mexico’s central bank governor, Agustín Carstens, is so far Ms. Lagarde’s only real challenger, but he has yet to win the open support of the largest developing nations. He will visit India later this week and China and Japan next week.

A lack of unity among emerging markets may mean their chance to head the fund this time is slipping away, some experts said.

“There is consensus on the principle that their candidates should be given a fair chance but no consensus on a particular candidate,” said Eswar Prasad, Cornell University’s senior professor of trade policy and the former head of research in the IMF’s financial studies division. “This effectively seals the deal in favor of Lagarde.”

Although nominations for the managing director slot do not close until Friday, some economists say the battle is already lost.

“Emerging countries have no chance and clearly are now backing Ms. Lagarde so that they can get some benefit out of the European powers during her term,” said Surendra L. Rao, an economist based in Bangalore.

Europe and the United States retain 45 percent of the voting rights in the IMF, but emerging market countries’ shares have been increasing as their economies grow. India carries a 2.35 percent voting share, the third largest of the major emerging market countries, after China’s 3.82 percent stake and just behind Russia’s 2.4 percent stake. Brazil trails with a 1.72 percent vote.

On May 24, the world’s leading emerging market nations voiced their desire for a more authority to choose a leader for the fund. In a joint statement, Brazil, Russia, India and China advocated “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe.”

In India’s case, top officials stopped short of endorsing Lagarde but still indicated they consider her an ally.

On May 27, India’s minister of commerce and industry, Anand Sharma, met with Ms. Lagarde on the sidelines of an international trade meeting in Paris. “India has high regard for her record as chair of the G-20 and sees her as a friend,” Mr. Sharma’s office said in a statement about their discussion.

Rather than rallying behind an emerging market candidate during this election, “each of the key emerging markets is using the opportunity to position itself better for the next round and extract what it can from this round,” Mr. Prasad said.

Ms. Lagarde should demonstrate that “she is well aware that the world has changed, and that India, China, Brazil, South America or one of the other economies could provide the next president,” Mr. Prasad said.

Nida Najar contributed reporting.

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