Lagarde likely to replace DSK at IMF

French Finance Minister Christine Lagarde (L) ...

Christine Lagarde with Dominique Strauss-Kahn

There’s been speculation for a week, but it looks like Europe is rallying around French finance minister Christine Lagarde as the successor to Dominique Strauss-Kahn at the head of the International Monetary Fund:

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.

It’s hard to believe the Europeans would let anyone outside of Europe take over the IMF post now that DSK is gone. There’s an unwritten agreement that an American gets to lead the World Bank and a European gets the IMF. If you look at the World Bank, the past two heads have been Robert Zoellick and Paul Wolfowitz, both Bush administration veterans.

There are a number of reasons the Europeans want control of the World Bank, but the most important is they don’t want anyone outside of their continent making decisions that will have a huge bearing on dealing with the current European economic crisis. IMF policies in Africa and South America have caused a lot of pain on those continents and have also led to anti-IMF riots. And after the 1997 Asian financial crisis, in which the IMF tied loans to major structural overhauls of the banking, currency and economic systems of affected Asian countries, the Europeans definitely don’t want someone from Asia, the continent most likely to provide a new leader for the organization, taking over the post. There must be a huge fear of payback among Europeans if someone outside the continent was making decisions on whether Greece, Ireland, Italy, Spain and Portugal would survive, not to mention the general economic problems facing the continent.

In terms of selecting a European to head the IMF, it is kind of surprising that Gordon Brown, the former U.K. prime minister, isn’t being seriously considered. Just a few years ago, when the world economy was collapsing, he was being praised as the world leader who kept his head and developed a viable recovery plan while the rest of the world was running in circles. But the rest of Europe really doesn’t trust anyone who comes from the U.K. Some, in fact, blame the Anglo-U.S. economic model for the current global financial mayhem. And in the U.K., surprisingly, there is a visceral hatred of Gordon Brown, something I never quite understood when I was there. The current U.K. chancellor of the exchequer (what we would call the Treasury secretary), George Osborne, despises Brown and absolutely refuses to support his candidacy as the IMF chief. So, Brown is out.

And it’s kind of ironic that Christine Lagarde is the front runner … a French woman replacing a Frenchman accused of a sex crime.

But Europe will rally behind one candidate to make sure Europe retains the IMF leadership. And right now, the rally is behind Lagarde.

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