Canada and Australia say they are backing Mexico’s Agustin Carstens to lead the International Monetary Fund because he has more relevant experience than the other candidate, French Finance Minister Christine Lagarde.
But what if there is more to it than that?
In the new world order, if you’re not the U.S., and you’re not Europe and you’re not a BRIC nation, who are you?
For the duration of the debate about who should become the next leader of the IMF, the answer to that question has been a disconcerting one: you’re no one.
European countries attempted to game the selection process by using their superior organization within the European Union to unify around Ms. Lagarde as their candidate before the nomination process had even ended.
Brazil, Russia, India and China – the big emerging powers are driving economic growth – pushed back, sending a joint statement that said the selection should be open and made on merit. Yet none of them put forward a candidate, nor did any do anything to bolster the candidacy of the only other individual in the race, Mexican central bank Governor Agustin Carstens.
All the while, everyone knew the United States would ultimately play king or queen maker because it is the only nation at the IMF with enough votes to veto major decisions.
So is this the future, a U.S. monopoly on fundamental global decisions replaced with an oligopoly of the Americans, the EU and four fast-growing emerging market countries?
The decision of Canada and Australia to endorse Mr. Carstens over Ms. Lagarde suggests the world’s middle powers aren’t about to let themselves get steamrolled in global economic affairs.
Finance Minister Jim Flaherty showed last year that the structure of the Group of 20 makes thwarting the ambitions of the bigger powers a possibility. Mr. Flaherty rounded up a posse of like-minded countries to block European nations and the U.S. from pushing through a bank tax.
Now, Canada and Australia are joining Mexico in backing Mr. Carstens, giving the Mexican at least three public backers on the IMF’s 24-member executive board. That’s significant, because if they had stayed silent, Ms. Lagarde could have been selected by “consensus,” which would have differed little from the gentleman’s agreement between Europe and the U.S. that has seen a European run the IMF since it was created after then Second World War.
Mr. Carstens still trails Ms. Lagarde by a wide margin.
Canada, Australia and Mexico represent only about 12 per cent of the IMF’s voting shares. (All three represent other nations at the executive board, and would have to convince their constituents to support their choice for managing director.)
Seven European countries control chairs at the executive board, accounting for about 31 per cent of the IMF’s voting shares.
An earlier intervention by Canada and Australia might have given Mr. Carstens more momentum. Their decision to make their announcement at 6 p.m. on a Friday in Ottawa suggests this might be little more than 11th-hour showboating.
Or it might be the start of a middle-power coalition that in the future will demand to be heard.