Skip to main content

French Finance Minister Christine.


Prime Minister Stephen Harper left the Group of Eight summit with a guarded view on the race to head the International Monetary Fund. Either of the two declared candidates, France's Christine Lagarde and Mexico's Agustin Carstens, would do a bang-up job, he said.

For now, that's probably the safest approach.

Canada arguably has some incentive to throw its support behind Mr. Carstens, since the Harper government is seeking deeper ties with Latin America. Nonetheless, Ms. Lagarde increasingly looks to be the candidate to beat, even as Mr. Harper, U.S. President Barack Obama's administration and the world's biggest emerging-market nations insist the process for replacing Dominique Strauss-Kahn must be open and merit-based, instead of a glorified coronation of another European.

Story continues below advertisement

The widely respected French Finance Minister has the unofficial, personal endorsement of U.S. Secretary of State Hillary Clinton, and French President Nicolas Sarkozy could barely contain his glee when he told reporters that although Mr. Obama hasn't revealed whom the United States and its massive voting power at the Washington-based IMF will back, a decision has been made.

Furthering the notion that Europe will keep its 65-year hold on the job, Russian President Dmitry Medvedev told reporters that among G8 leaders, a "consensus has practically been reached" - which he said could include a consolation prize for emerging markets, such as the IMF's No. 2 job, which will also come open later this year.

That might be the best-case scenario for the new powerhouses, since despite Mr. Carstens' pledge to carry "the flag of emerging markets," the developing countries that now make up about 75 per cent of global growth haven't united around him.

Both Ms. Lagarde and Mr. Carstens plan to take their campaigns to Brazil this week, and Ms. Lagarde is also seeking meetings with other emerging powers, including China, as part of an effort to broaden her support beyond Europe.

It's possible the Harper government nominates a Canadian before the IMF executive board's June 10 deadline, such as Bank of Canada Governor Mark Carney, or even Finance Minister Jim Flaherty. If not, though, whether in public or in private, Canada will have to take a side. And that could be tricky, since the race as it stands pits the global economy circa 1946 against the global economy of today.

"I've met Mr. Carstens, I've obviously met Mme Lagarde also," Mr. Harper said Friday. ``These are highly capable, highly qualified individuals. What Canada is seeking is a proper process that will be based on an evaluation of merit and competence, and both these individuals would make outstanding choices in any number of positions."

The Harper government has played both sides of the Old World-New World coin.

Story continues below advertisement

Last year, Mr. Flaherty was instrumental in keeping the Group of Seven's gravitas on life support for a bit longer, hauling his counterparts up to Iqaluit for a meeting to lay the groundwork for the larger G20 gathering in Toronto instead of just letting the antiquated G7 club fade away. At the same time, Mr. Flaherty has rarely missed an opportunity to contrast the debt woes of Europe (or of the United States) with Canada's relatively sound fiscal footing, and he took on the old economic order by rallying countries like China and India to oppose a bank tax.

Mr. Flaherty has pointedly noted that the countries that have been most vocal about the need for an open, merit-based selection process at the IMF - Brazil, Russia, China, India and South Africa - are all in the G20, one of whose oft-stated goals is to give emerging powers more say in running the global economy.

Though Ms. Lagarde is a tough negotiator and extremely popular with her counterparts around the world, there's a strong case to be made that if nobody else emerges Canada should back Mr. Carstens, head of Mexico's central bank, a former top IMF official and - perhaps most important - an influential economist from a NAFTA partner.

"If Carstens and Lagarde remain the only two candidates, then they will need to be assessed against the background and experience needed to run a global economic institution and their ability to garner support from the broad membership," said Thomas Bernes, Canada's former executive director at the IMF. "I would hope that Mr. Carstens' much more extensive economics background and experience, and his coming from an important North American partner for Canada, would weigh heavily in the government's decision."

Indeed, backing Mr. Carstens could be symbolically important in building Canada's trade links with Latin America. At the same time, former Canadian diplomat Colin Robertson pointed out, the government is also trying to seal a free-trade deal with the European Union.

In other words, supporting either candidate could theoretically serve or thwart Canada's interests, which helps explain why most observers say staying neutral is the best course until it's clearer whether other candidates are going to come forward. Especially since the Americans haven't come out in favour of either Ms. Lagarde or Mr. Carstens.

Story continues below advertisement

"You don't have to always come out on things," Mr. Robertson said. "I think that's probably what Harper's thinking right now, that this is one where we don't have to pronounce, there's no percentage in going either way, so play it straight.''


Israel's Fischer may want IMF job

Israel's central bank chief, Stanley Fischer, is interested in the top job at the International Monetary Fund, a person familiar with the banker's thinking told the Associated Press on Sunday.

The person said Mr. Fischer has not decided whether to pursue the job and has no desire to leave his current post, but would have a hard time saying no to the IMF. "If the opportunity comes along, he will take it," said the person.

He spoke on condition of anonymity because Mr. Fischer is still weighing his options. He said he expects Mr. Fischer to make a decision within the next two weeks.

Mr. Fischer, an internationally respected economist, held the No. 2 position at the IMF during the 1990s and is well acquainted with the workings of the fund.

Born in Zambia and educated at the London School of Economics and Massachusetts Institute of Technology, he also has held top jobs at the World Bank and at Citigroup Corp.

Mr. Fischer came to Israel in 2005 to take the post of governor of the Bank of Israel. He has been widely credited with enabling the country to largely escape the global economic crisis. Unemployment in Israel is just over 6 per cent, and the real estate sector is booming.

Associated Press

Report an error Licensing Options
About the Author
Economics/business writer

Jeremy has covered Canadian and international economics at The Globe and Mail since late 2009. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.