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Summers Pulls Name From Consideration for Fed Chief

September 15, 2013 by

After weeks of opposition to his candidacy from an array of progressives, the president’s inability to rally Congressional Democrats on Syria persuaded Mr. Summers that his most important audience — the Senate, which must confirm a Fed chairman — probably could not be won over.

He concluded that the White House was also unlikely to overcome opposition to his candidacy from many of the same Democrats, who view him as an opponent of stronger financial regulation, according to supporters who insisted on anonymity to describe confidential conversations with him.

“Clearly Obama couldn’t bring his own most enthusiastic supporters to back him on an issue of national security,” one supporter said. “How was he going to corral them for Larry?”

Mr. Summers’s decision, which he shared with the president in a phone call Sunday followed by a letter, was described as reluctantly made and reluctantly accepted. Mr. Summers wanted the job and Mr. Obama wanted to pick him. But the public opposition of three Democrats on the Senate banking committee, the first step in the confirmation process, surprised the White House and forced a calculation that this was a battle the administration could not afford to fight.

The embarrassing setback reveals an administration increasingly hamstrung by occasional opposition of liberal Democrats, not just its familiar Republican opponents. It adds to the rocky nature of Mr. Obama’s fifth year, following the failure of a gun-rights bill, the stalling of an immigration overhaul and the lack of progress on a budget deal, on top of the back-and-forth over whether to conduct airstrikes in Syria to punish the Assad regime for a poison gas attack that killed hundreds of civilians.

The withdrawal of Mr. Summers also leaves great uncertainty around the selection of a new Fed chairman, one of the most important economic policy decisions Mr. Obama will make in his second term. The successor to Ben S. Bernanke, the current chair, will shape how much longer and harder the Fed pushes to boost economic growth and reduce unemployment. The next Fed chairman will play a leading role in determining how forcefully the government seeks to constrain the financial industry.

White House officials have described Janet Yellen, the current vice chairwoman, as a finalist, and her candidacy has received widespread attention, but it remains unclear how seriously Mr. Obama is considering her. He does not know her well and White House aides have seemed unenthusiastic about her, despite the substantial support she enjoys from Democrats and outside economists.

If Mr. Obama does not name her — or Timothy F. Geithner, the former Treasury Secretary and Fed official who is well-liked by the president but said to be uninterested in the job — many Fed watchers say they are uncertain where the president will turn.

Mr. Bernanke plans to step down at the end of January, leaving ample time for the Senate to confirm a replacement, but the uncertainty has unsettled financial markets just as the Fed, which is beginning to retreat from its stimulus campaign, tries to assure investors that it will not move too quickly

In a statement released by the White House on Sunday afternoon, Mr. Obama said he had accepted the decision by his friend, whom he praised for helping to rescue the country from the financial crisis that peaked in 2008.

“Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today,” Mr. Obama said in the statement.

He added: “I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future.”

The withdrawal ends an unusually public and contentious debate that began when the president declared in a televised interview in June that Mr. Bernanke would depart, opening the replacement process to public scrutiny before a nominee was even named.

Mr. Summers had long been viewed by Mr. Obama and his economic advisers as Mr. Bernanke’s presumptive replacement.

Article source: http://www.nytimes.com/2013/09/16/business/economy/summers-pulls-name-from-consideration-for-fed-chief.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Brazilian Tapped to Lead World Trade Organization

May 7, 2013 by Leave a Comment

PARIS — Roberto Carvalho de Azevêdo of Brazil will be the next leader of the World Trade Organization, a Brazilian official said Tuesday, and will take the reins at a time when the group is fighting to remain relevant.

Representatives of the 159 W.T.O. member states, meeting in Geneva, reached consensus on Mr. Azevêdo late Tuesday afternoon, a spokeswoman for the Brazilian foreign ministry said. The organization was scheduled to make an official announcement on Wednesday.

Mr. Azevêdo, a career diplomat and Brazil’s permanent representative to the W.T.O., would be the sixth person and the first Latin American to lead the global trade body since its creation in 1995. He beat out seven other candidates for the position, including the other finalist, the former Mexican trade minister Herminio Blanco Mendoza, who had the backing of the European Union.

Mr. Azevêdo has said that his goal at the organization is “to build bridges among my peers in Geneva.” In the end, his candidacy appealed to a number of developing countries, which saw his final opponent, Mr. Blanco — who holds a Ph.D. in economics from the University of Chicago — as a favorite of the United States and other wealthy nations.

The current chief, Pascal Lamy, took office in 2005 and will step down after his second four-year term expires Sept. 1.

Petros Mavroidis, a professor of trade law at Columbia University in New York, noted that Mr. Azevêdo had an insider’s knowledge of how the W.T.O. worked, something he said might help him work out “a face-saving compromise” over the deadlocked Doha round of trade negotiations. But Mr. Mavroidis also said he was surprised that the group, facing existential doubts, had not chosen someone with more political weight, “someone like Bill Clinton.”

“They haven’t delivered anything for years,” Mr. Mavroidis said. “Mr. Azevêdo is a skillful ambassador, but I think you need someone to shake the place up. And I don’t know if he’s the one to do it.”

Mr. Azevêdo takes over at a time when the W.T.O. — established as a forum for setting global trade rules, reducing barriers to commerce and settling disputes — appears to have lost its way. Early optimism about the Doha round, which began in 2001 and which many had hoped would be the organization’s crowning achievement, has long since faded.

Mr. Lamy, a Frenchman, initially earned high marks for his efforts on the Doha round, but nations’ disagreements on agricultural subsidies, tariffs on manufactured goods and developing countries’ access to global markets, coupled with the onset of the global financial crisis, effectively killed the appetite for a global pact. Instead, major trading nations have been bargaining over deals at the regional and bilateral levels.

One of the most ambitious regional proposals is the Trans-Pacific Partnership, to link the United States, Australia, Canada, Mexico, Japan and others. More recently, the United States and the European Union have also signaled interest in a free trade agreement.

The technical complexity of both proposals, as well as opposition from numerous special interests, probably means that years of negotiations lie ahead before either yields fruit.

Some economists argue that the rapid growth of developing nations like China, Brazil and India has left the W.T.O. hopelessly out of date.

Michael Punke, the U.S. ambassador to the W.T.O., called last month for its members to make an all-out effort to take at least a small step toward regaining momentum for a multilateral deal at a trade ministers’ meeting set for Bali in December.

“Absent a course correction, the current path of talks would lead directly to failure at Bali,” Mr. Punke warned. “And if Bali fails, it is hard to imagine how Doha can succeed.”

Article source: http://www.nytimes.com/2013/05/08/business/global/08iht-wto08.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Chief of Israel’s Central Bank in Bid to Lead I.M.F.

June 12, 2011 by Leave a Comment

Ms. Lagarde, the French finance minister, told her Saudi Arabian counterpart earlier in the day that tackling sovereign debt troubles would be a priority of the I.M.F. if she led the organization.

Mr. Fischer, also competing with Agustin Carstens, the chief of Mexico’s central bank, had said the I.M.F. post was one of the best jobs in the international financial system but was noncommittal on a bid until Saturday.

“There arose an extraordinary and unplanned opportunity — perhaps one that will never happen again — to compete for the head of the I.M.F., which after much deliberation I decided I wish to follow through on,” Mr. Fischer said in a statement.

Yuval Steinitz, Israel’s finance minister and representative at the I.M.F., said he would support and aid Mr. Fischer’s candidacy.

The job has been vacated by Dominique Strauss-Kahn of France, who resigned after his arrest on May 14 on charges of attempted rape.

Mr. Fischer, 67, would be a significant contender to Ms. Lagarde. But the I.M.F. would have to change its rules that no one should be appointed to the post over the age of 65 and that no one should hold the post beyond the age of 70.

Mr. Fischer, a former deputy managing director of the I.M.F. and former vice chairman of Citigroup, was born in what is now Zambia but holds Israeli citizenship, which could pose a problem for Arab countries.

“I believe I can contribute to the I.M.F., the central entity of the global economy, and contribute to the global economy after the crisis,” he said.

The economist Nouriel Roubini said Mr. Fischer had the qualifications to run the I.M.F. but would not be able to knock Ms. Lagarde off course.

“Stan Fischer would make an excellent I.M.F. managing director. But, at this late stage, he does not have enough support to succeed,” Mr. Roubini, co-founder of Roubini Global Economics, said in an e-mail.

Mohamed El-Erian, co-chief investment officer at the world’s largest bond fund company, Pimco, said Mr. Fischer would be a popular choice within the Fund, having served as its No. 2.

“He is extremely well liked by the staff of the I.M.F., well known and genuinely respected by the member countries of the institution,” Mr. El-Erian said.

Ms. Lagarde was in Saudi Arabia on Saturday as part of a world tour to drum up support among emerging market economies.

“There are specific issues to deal with and clearly some of the sovereign debt crisis issues are one of the priorities at the moment,” Ms. Lagarde said on the sidelines of a meeting with Ibrahim Alassaf, the Saudi finance minister, in Jeddah.

“I will certainly look at one of the purposes of the fund, which is to restore stability.”

Ms. Lagarde is backed by the European Union and a handful of smaller countries. Paris is hopeful that Washington and Beijing will also stand behind her.

Mr. Fischer, though, is popular in the United States and was the thesis adviser to Ben S. Bernanke, now the Federal Reserve chairman.

Brazil, the biggest economy in Latin America, is leaning toward supporting Ms. Lagarde but has not yet made up its mind, officials said Friday.

A Reuters poll of economists, published in May, found 32 of 56 saw Ms. Lagarde as the favorite, although Mr. Fischer won the most votes as “best suited” for the job.

Mr. Fischer, who just started his second year of a second five-year term as Israel’s central bank chief, has been widely credited with helping Israel’s economy weather the global financial crisis by starting to lower Israeli interest rates sharply in 2008. He has since raised rates 10 times to contain inflation.

One potential pitfall for Ms. Lagarde is a legal investigation into her role in a 2008 arbitration payout to a French businessman.

A top French court on Friday put off until July 8 its decision on whether to open a formal inquiry into allegations by opposition left-wing deputies that she abused her authority in approving a 285 million euro payout to a businessman friend of President Nicolas Sarkozy.

Article source: http://feeds.nytimes.com/click.phdo?i=8e67d51eb6117fec53963f304fb75066

Filed Under: Economy News Tagged With: , ,

Economic Scene: One Person, One Vote? Not Exactly

June 1, 2011 by Leave a Comment

Two economists, Brian Knight and Nathan Schiff, set out a few years ago to determine how much Iowa, New Hampshire and other early-voting states affected presidential nominations.

Mr. Knight and Mr. Schiff analyzed daily polls in other states before and after an early state had held a contest. The polls tended to change immediately after the contest, and the changes tended to last, which suggested that the early states were even more important than many people realized. The economists estimated that an Iowa or New Hampshire voter had the same impact as five Super Tuesday voters put together.

This system, the two men drily noted in a Journal of Political Economy paper, “represents a deviation from the democratic ideal of ‘one person, one vote.’ ”

A presidential campaign is once again upon us, and Iowa and New Hampshire are again at the center of it all. On Thursday, Mitt Romney will announce his candidacy in Stratham, N.H. Last week, Tim Pawlenty opened his campaign in Des Moines. The two states have dominated the nominating process for so long that it’s easy to think of their role as natural.

But it is not natural. It’s undemocratic, in fact. It is unfair to voters in the other 48 states. And it distorts economic policy in several damaging ways.

Most obviously, the federal government has lavished subsidies on ethanol, even though those subsidies drive up food prices and do little to solve the climate problem, partly because candidates pander to the Iowa corn industry. (Mr. Pawlenty, who now says the subsidies must end, is an admirable exception.) Beyond ethanol, a recent peer-reviewed study found that early-voting states received more federal dollars after a competitive election — so long as they supported the winning candidate.

Pork is hardly the only problem with the voting calendar. In the long run-up to the first votes, Iowa and New Hampshire also distort the national conversation because they are so unrepresentative. They are not better or worse than other states, to be clear. But they are different.

Their populations are growing more slowly than the rest of the country’s. Residents of Iowa and New Hampshire are more likely to have health insurance. They are older than average. They are more likely to work in manufacturing.

Above all, Iowa and New Hampshire lack a single big city, at a time when large metropolitan areas are crucial to lifting economic growth. Big metro areas are where big ideas most often take shape and great new companies are most often born. The country’s 25 largest areas are responsible for 52 percent of the country’s economic output, according to the Brookings Institution, and are home to 42 percent of the population.

Yet metro areas are also struggling with major problems. The quality of schools is spotty. Commutes last longer than ever. Roads, bridges, tunnels and transit systems are aging.

You don’t hear much about these issues in the first year of a presidential campaign, though. No wonder. Iowa, New Hampshire and the next two states to vote, Nevada and South Carolina, do not have a single city among the country’s 25 largest. Las Vegas, the 30th-largest metro area, and the Boston suburbs that stretch into New Hampshire are the closest these states come.

So the presidential calendar becomes another cause of what Edward Glaeser, a conservative-leaning Harvard economist, calls our “anti-urban policy bias.” Suburbs and rural areas receive vastly more per-person federal largess than cities. One big reason, of course, is the structure of the Senate: the 12 million residents of Iowa, New Hampshire, Nevada and South Carolina have eight United States senators among them, while the 81 million residents of California, New York and Texas have only six.

Bruce Katz, a Brookings vice president and veteran of Democratic administrations, points out that the world’s other economic powers take their cities more seriously. China, in particular, has made urban planning a central part of its economic strategy.

“The United States stands apart as an anti-urban nation in an urbanizing world,” Mr. Katz told me. “Our political tilt toward small states and small towns, in presidential campaigns and the governing that follows, is not only a quaint relic of an earlier era but a dangerous distraction at a time when national prosperity depends on urban prosperity.”

The typical defense from Iowa and New Hampshire is that they care more about politics than the rest of us and therefore do a better job vetting candidates. But the intense 2008 race between Barack Obama and Hillary Clinton showed that if Iowa and New Hampshire care more, it’s only because of their privileged status. In 2008, turnout soared in states that finally had a primary that mattered, be it Indiana or Texas, North Carolina or Rhode Island.

A more democratic system would allow more voters to see the candidates up close for months at a time. The early states could rotate each year, so that all kinds — big states and small, younger and older, rural and urban — had a turn. In 2016, the first wave could include states that have voted near the end recently, like Indiana, North Carolina, Oregon and South Dakota.

A rotation along these lines would enliven the political debate. Investments in science and education, which are the lifeblood of future economic growth, might play a bigger role in the campaign. You could even imagine — optimistically, I know — that the deficit might prove easier to address if Medicare and Social Security recipients did not make up such a disproportionate share of early voters.

The issues particular to small-town America would still receive extra attention because so many of the 50 states are rural and sparsely populated. It’s just that Iowa and New Hampshire would no longer receive the extreme special treatment they now do.

And that special treatment is a nice thing, indeed. It focuses the entire country, and its next leader, on the concerns of only 1 percent of the population, as if democracy were supposed to work that way.

At a recent candidates’ forum in Des Moines, The Wall Street Journal reported, the moderator did something that seemed perfectly normal: She chided Mr. Romney for not having spent enough time in Iowa lately. “Where have you been?” she asked.

How do you think the rest of us feel?

E-mail: leonhardt@nytimes.com; twitter.com/DLeonhardt

Article source: http://feeds.nytimes.com/click.phdo?i=e7dfe7ee0a43955373ebea35563ab013

Filed Under: Business News Tagged With: , ,

You’re the Boss: Newt Gingrich, Small-Business Owner

May 29, 2011 by Leave a Comment

Newt Gingrich on “Face the Nation.”Chris Usher/CBS-TV, via Associated PressNewt Gingrich on “Face the Nation.”
The Agenda

Last Sunday, Newt Gingrich, the former House speaker and current Republican presidential candidate, told America that he was a small-business owner. The revelation came on CBS’s “Face the Nation,” as the candidate tried to deflect questions (PDF) from Bob Schieffer, the host, about his recently revealed debts to Tiffany and Company.

After Mr. Schieffer posited that the debt “just sticks out like a sore thumb,” Mr. Gingrich responded: “If the U.S. government was debt-free as I am, everybody in America would be celebrating. I think I have proven I can manage money. As a small-business man, I run four small businesses. They have been profitable. They’ve employed people. You know, this is the opposite of the Obama model.”

It turns out that Mr. Gingrich — whose interest in small businesses has been previously noted in this blog — has operated at least five companies, according to his spokesman, Rick Tyler. The companies, with one notable exception, mostly appear to be in the business of marketing Newt Gingrich.

For example, Gingrich Communications was responsible for promoting Mr. Gingrich’s public appearances, said Mr. Tyler, including his Fox News contract (canceled when Mr. Gingrich declared his candidacy) and his Web site, newt.org. “It was built on Newt as a brand,” he said. At its height, the company employed 15 people, Mr. Tyler said. However, the company was dissolved once Mr. Gingrich began his campaign. “You can’t have a company manage a brand while you have a campaign manage a brand,” Mr. Tyler said. The campaign has taken over the Web site.

Some of the Gingrich Communications employees went to the campaign, others to a separate company, Gingrich Productions. According to the company’s Web site, it is “a performance and production company featuring the work of Newt and Callista Gingrich. Newt and Callista host and produce historical and public policy documentaries, write books, record audio books and voiceovers, produce photographic essays, and make television and radio appearances.”

Gingrich Productions, Mr. Tyler said, is largely about Callista Gingrich. “It was her company, her vision,” he said. It was originally formed in 2007 as a subsidiary of Gingrich Communications, and today has about five employees. Another former Gingrich Communications subsidiary, FGH Publications, was “responsible for production of historical and fictional novels,” Mr. Tyler said in an e-mail.

Gingrich Holdings, with about three employees, provided back-office support for the other companies in the Gingrich portfolio. Mr. Tyler said that the campaign had not paid the Gingrich companies for anything, including the Web site.

Yet the oldest Gingrich business doesn’t fit this mold — or any other. When Mr. Gingrich organized the Gingrich Group, in 1999, it was a standard-issue ex-legislator consultancy with a diverse roster of corporate clients. (Technically, it was not a lobbying firm.) But eventually Mr. Gingrich became interested in health care reform and “in having an organization that could attract those kinds of cutting edge companies that were providing solutions to some of the biggest problems in health care,” said David Merritt, Gingrich Group executive vice president. “Over time, those nonhealth clients were dropped, and then the Gingrich Group became the Center for Health Transformation.” (Mr. Gingrich sold his interest in the business to his partners when he became a presidential candidate.)

The Center for Health Transformation is now, as Mr. Tyler described it, a “for-profit membership organization” that seeks to foster an innovative, intelligent, and, above all, free-market health care system. About 80 to 90 member companies and organizations pay $5,000 to $200,000 to help shape the debate and, as Mr. Merritt put it, “to participate in developing some of the solutions that we think will transform the system.” A handful of companies remain consulting clients.

It’s an innovative proposition in a couple respects. As a post-Congressional career, Mr. Merritt said, it’s unusual for being “solutions-based and not based on lobbying for a particular company or carrying somebody’s water.” Similarly, he noted, it stands apart from many member-based organizations, which typically take direction from the membership. Finally, it’s a novel model for a public policy organization, since most are nonprofit and tax-exempt.

Mr. Tyler agreed. “I think we invented it,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=9f4a2c6f322d9f438f2c93ee66c64d52

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Economix: The Problem With Christine Lagarde

May 26, 2011 by Leave a Comment

Today's Economist

Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

Finance Minister Christine Lagarde of France is regarded as Europe's leading candidate to lead the International Monetary Fund.Pool photo by Lionel Bonaventure/ReutersFinance Minister Christine Lagarde of France is regarded as Europe’s leading candidate to lead the International Monetary Fund.

Christine Lagarde, France’s finance minister and the presumptive nominee of the European Union for the recently vacated position of managing director at the International Monetary Fund, formally declared her candidacy on Wednesday. The E.U. has just over 30 percent of the votes in this quasi-election; the United States has 16 percent and seems willing to keep a European at the fund if an American can remain head of the World Bank — an arrangement that has stood since the early years of the organizations.

It is likely that Ms. Lagarde will now travel around the world engaging in some old-fashioned horse trading, as her predecessors and no doubt leaders of other international organizations have done, seeking support and promising not to forget it.

But Ms. Lagarde has a serious problem that may still derail her candidacy, if there is any substantive, open or transparent discussion of her merits: There is major design flaw in the euro zone, and Ms. Lagarde is the last person that non-European governments should want to put in charge of helping sort that out. (In my time as chief economist at I.M.F., from March 2007 until August 2008, I did not deal directly with Ms. Lagarde.)

In a statement on Tuesday, the I.M.F. representatives of Brazil, China, India, Russia and South Africa called for a “truly transparent, merit-based and competitive process” and said that choosing a leader on “on the basis of nationality undermines the legitimacy of the fund.”

Ms. Lagarde is explicitly being put forward as someone who can represent the interests of the euro zone at a time when it needs help. And it is indeed the zone as a whole — including France — that needs help, not just the errant countries (Greece, Ireland, Portugal and whichever country might be next in line for market fears about its government debt and growth prospects).

The founding assumption for the euro zone in 1999, which became enshrined as a mantra in the early 2000s, is that its countries would converge in terms of productivity levels — to put it starkly, that Greece would become very much like Germany. In that view of Europe, it did not much matter if some countries within the euro zone ran current account surpluses while others ran large deficits.

The deficit countries could finance themselves with loans from the surplus countries, the reasoning went, because they would use the money for productive investments and economic growth would allow them to keep their debt levels relative to gross domestic product under control.

None of this happened.

The productivity gains were seen more in Germany and some other northern European countries. Unit labor costs, reflecting the net effect of productivity gains and real wage increases, rose sharply in Mediterranean Europe. French, German and other core banks facilitated this divergence with a surge in lending both to consumers and governments in the periphery — convincing themselves, shareholders and regulators that this was low risk.

Most of this is not Ms. Lagarde’s fault, of course, as she became France’s finance minister in 2007. Yet she has certainly played a leading role in denying that Europe had any serious issues as the global financial crisis began to brew in 2007 and early 2008.

The bigger issue is that more recently she and the French authorities in general have been at the forefront of efforts to deny there is any deep problem and to resist a systematic solution.

France worked long and hard to prevent increases in bank capital during the recently concluded Basel III negotiations. Bank capital is a buffer against losses; as long as this remains as low as the French government wants, there is no safe way for any euro zone country to restructure its debts. Low bank capital creates serious systemic financial risk for Europe and the world.

In a similar vein, Ms. Lagarde has led the “no restructuring” school of thought in recent months with regard to Greece — and presumably other euro zone countries, as well. Debt restructuring is no panacea, but to take the option completely off the table is not smart — unless you really think there is no deeper issue that must be addressed.

The euro zone in its first iteration has failed to operate as intended. Unless you think Greece can experience a miraculous productivity transformation, the euro zone leadership needs to make a choice. Do they integrate more, including generous fiscal transfers to poorer, less dynamic member countries where people do not like to pay taxes, or do they ease some countries out of the integrated financial system, creating two tiers of participation in the euro currency area — in which some euro zone countries cannot borrow from the European Central Bank?

Either way, the International Monetary Fund could potentially help with loans and with technical advice. But such money belongs to the international community — the 187 member countries.

And such help would take a lot of money. If Ms. Lagarde becomes head of the I.M.F., she is most likely to continue to throw loans at the euro zone problems. If there are preventive programs even for Spain, Italy or Belgium, the I.M.F. will need to tap its shareholders for at least another $1 trillion in credit lines.

Ms. Lagarde personifies the strategy of gambling for euro zone resurrection with other people’s money. Why would taxpayers in the United States and elsewhere want to support her?

Article source: http://feeds.nytimes.com/click.phdo?i=d3fd6494933bea5edbddcc587a68f526

Filed Under: Economy News Tagged With: , ,

Europeans Focus on Retaining Leadership of I.M.F.

May 23, 2011 by Leave a Comment

Ms. Lagarde’s candidacy gained momentum after the British   chancellor of the Exchequer,  George Osborne, backed her Saturday over the former prime minister, Gordon Brown, effectively ending Mr. Brown’s bid for the post.

Calling Ms. Lagarde an “outstanding” choice, Mr. Osborne said he thought it would be “a very good thing to see the first female managing director of the I.M.F. in its 60-year history.”

Following endorsements by Germany, Italy and other European countries, Mr. Osborne’s decision thrust Ms. Lagarde to the forefront of Europe’s efforts to keep a European in a post the Continent has held for more than 40 years.

The job, one of the most prestigious among multinational institutions, is up for grabs since Mr. Strauss-Kahn resigned last week to fight charges that he sexually assaulted a maid in a New York hotel May 14. Ms. Lagarde is widely respected in the world of international finance, although she is facing some scrutiny in France over allegations that she may have overstepped her authority in two cases during her early days as finance minister.

No European leaders have raised similar concerns. But other countries are taking a dark view of the aggressive European push.

Australia and South Africa issued an unusual joint statement Sunday criticizing a long-standing arrangement between Europe and the United States in which a European typically heads the I.M.F. and an American leads the World Bank.

“In order to maintain trust, credibility and legitimacy,” the statement said, “there must be an open and transparent selection process which results in the most competent person being appointed as managing director, regardless of their nationality.”

Leaders of Brazil, Mexico, China and other fast-growing emerging markets want a more open process that could see an official from one of their countries appointed to the position for the first time. These economies are gaining influence in the world as debt crises and economic downturns plague Western economies. Unlike Europe, however, the emerging-market countries are not speaking with a unified voice or throwing their weight behind a main candidate.

Names mentioned over the weekend included Agustín Carstens, central bank governor in Mexico; Montek Singh Ahluwalia, the deputy chairman of the planning commission in India;  a former finance minister of South Africa, Trevor Manuel; and Leszek Balcerowicz, who helped oversee Poland’s transition to a free market economy from communism.

Kemal Dervis, a former finance minister of Turkey whose name was widely circulated last week, took himself out of the running Friday.

President Barack Obama, Chancellor Angela Merkel of Germany and other leaders of the Group of 8 industrialized economies are expected to consider the issue when they gather this week in Deauville, France, to discuss major political and economic issues.

The I.M.F. wants to pick a new leader by June 30, a rapid timetable that would help get the organization back on track to deal with a growing debt crisis in Europe. Fears are mounting that another meltdown in Greece may be unavoidable and could ricochet through other troubled European countries.

Since Greece received its €110 billion, or $156 billion, bailout, the country has been unable to resolve its financial crisis, sending European leaders and the I.M.F. scrambling for a way to keep Greece from default.

On Friday, Ms. Lagarde suggested that France could support a rescheduling of Greece’s debts if banks that owned the debt agreed to extend the amount of time for repayment, an apparent shift in position that aligns France and Germany against the European Central Bank, which opposes any restructuring of Greece’s debt.

Article source: http://www.nytimes.com/2011/05/23/business/global/23imf.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Europeans Focus on Keeping I.M.F. Leadership

May 22, 2011 by Leave a Comment

PARIS — As the International Monetary Fund prepared to accept nominations Monday to replace Dominique Strauss-Kahn at its helm, European officials rallied over the weekend around Christine Lagarde, France’s finance minister, as their top choice for the post, despite fresh warnings from leaders of emerging markets and other countries that simply handing the job to another European could undermine the fund’s legitimacy.

Ms. Lagarde’s candidacy gained momentum after the British   chancellor of the Exchequer,  George Osborne, backed her Saturday over the former prime minister, Gordon Brown, effectively ending Mr. Brown’s bid for the post.

Calling Ms. Lagarde an “outstanding” choice, Mr. Osborne said he thought it would be “a very good thing to see the first female managing director of the I.M.F. in its 60-year history.”

Following endorsements by Germany, Italy and other European countries, Mr. Osborne’s decision thrust Ms. Lagarde to the forefront of Europe’s efforts to keep a European in a post the Continent has held for more than 40 years.

The job, one of the most prestigious among multinational institutions, is up for grabs since Mr. Strauss-Kahn resigned last week to fight charges that he sexually assaulted a maid in a New York hotel May 14. Ms. Lagarde is widely respected in the world of international finance, although she is facing some scrutiny in France over allegations that she may have overstepped her authority in two cases during her early days as finance minister.

No European leaders have raised similar concerns. But other countries are taking a dark view of the aggressive European push.

Australia and South Africa issued an unusual joint statement Sunday criticizing a long-standing arrangement between Europe and the United States in which a European typically heads the I.M.F. and an American leads the World Bank.

“In order to maintain trust, credibility and legitimacy,” the statement said, “there must be an open and transparent selection process which results in the most competent person being appointed as managing director, regardless of their nationality.”

Leaders of Brazil, Mexico, China and other fast-growing emerging markets want a more open process that could see an official from one of their countries appointed to the position for the first time. These economies are gaining influence in the world as debt crises and economic downturns plague Western economies. Unlike Europe, however, the emerging-market countries are not speaking with a unified voice or throwing their weight behind a main candidate.

Names mentioned over the weekend included Agustín Carstens, central bank governor in Mexico; Montek Singh Ahluwalia, the deputy chairman of the planning commission in India;  a former finance minister of South Africa, Trevor Manuel; and Leszek Balcerowicz, who helped oversee Poland’s transition to a free market economy from communism.

Kemal Dervis, a former finance minister of Turkey whose name was widely circulated last week, took himself out of the running Friday.

President Barack Obama, Chancellor Angela Merkel of Germany and other leaders of the Group of 8 industrialized economies are expected to consider the issue when they gather this week in Deauville, France, to discuss major political and economic issues.

The I.M.F. wants to pick a new leader by June 30, a rapid timetable that would help get the organization back on track to deal with a growing debt crisis in Europe. Fears are mounting that another meltdown in Greece may be unavoidable and could ricochet through other troubled European countries.

Since Greece received its €110 billion, or $156 billion, bailout, the country has been unable to resolve its financial crisis, sending European leaders and the I.M.F. scrambling for a way to keep Greece from default.

On Friday, Ms. Lagarde suggested that France could support a rescheduling of Greece’s debts if banks that owned the debt agreed to extend the amount of time for repayment, an apparent shift in position that aligns France and Germany against the European Central Bank, which opposes any restructuring of Greece’s debt.

Article source: http://www.nytimes.com/2011/05/23/business/global/23imf.html?partner=rss&emc=rss

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