European support rising for Lagarde's IMF bid

May 20, 2011 - 8:45 AM
France IMF Future

France's Finance and Economy Minister Christine Lagarde visits a Parisian supermarket and goods retailer in Paris Thursday May 19, 2011. Lagarde has emerged as a potential candidate to replace IMF chief, Frenchman Dominique Strauss-Kahn who resigned Wednesday, saying he wants to devote

PARIS (AP) — France's frank, hard-working and chic finance minister, Christine Lagarde, emerged Friday as Europe's likely candidate to lead the International Monetary Fund.

The IMF insists that the departure of Dominique Strauss-Kahn has not hurt its day-to-day operations, but is clearly under pressure to find a successor fast to lead a body that provides billions of dollars of loans to stabilize the world economy. A new chief would also draw attention away from the seamy scandal surrounding Strauss-Kahn, who quit this week to face charges in New York that he tried to rape a hotel maid.

German Chancellor Angela Merkel said Friday that she "very much appreciates the French finance minister." She insisted she wasn't announcing Lagarde's candidacy, just sharing her views.

Merkel says the next IMF chief should be a European, since the fund is deeply involved in tackling the eurozone's sprawling debt crisis. Germany's view is critical, since as the continent's powerhouse it funds much of the bailouts to other eurozone nations.

The IMF may face a choice between choosing its first woman leader or its first leader from the developing world. Emerging economies see Europe's traditional stranglehold on the position as increasingly out of touch with the world economy, but have not yet united around a candidate.

Lagarde, 55, has a clean-cut image and has been praised for her acumen in helping steer Europe through the global financial crisis and its more recent debt woes. She speaks impeccable English and spent much of her career in the United States as a lawyer. One of the longest-serving ministers under French President Nicolas Sarkozy she eased French labor laws and helped France weather its worst recession since World War II better than many other developed countries.

A champion swimmer as a teen, Lagarde is known for her colorful language and a sense of humor, and for being vocally pro-market in a capitalism-wary nation. When she took over as finance minister, she urged compatriots to stop their endless ideological discussions and "roll up your sleeves."

Italian Prime Minister Silvio Berlusconi openly endorsed Lagarde for the job, saying she would make "a great choice."

Sarkozy has said a European should get the job but hasn't spoken publicly about Lagarde, possibly because that would feed domestic conspiracy theories that Strauss-Kahn's troubles are part of a plot by political rivals. Strauss-Kahn, a Socialist, had been seen as the strongest likely contender in France's presidential election next year, while the conservative Sarkozy's poll ratings are dismal.

French economist Nicolas Bouzou said Lagarde is "eminently competent" but the fact that she's French "could pose problems" and IMF directors could flinch at her potential legal troubles.

The IMF has already had four Frenchmen at its helm since its inception in the 1940s. Frenchmen also run the World Trade Organization, the European Central Bank, the London Stock Exchange and UEFA, the European soccer body.

Her gender "on the contrary, could help her," Bouzou said. The IMF has never had a woman managing director.

Questions have also surfaced about Lagarde's role in getting arbitration for maverick businessman Bernard Tapie, who won euro285 million ($449 million) as compensation for the mishandling of the 1990s sale of sportswear maker Adidas in 2008. Lagarde was finance minister at the time. No formal investigation has been announced, but prosecutors are looking into the matter.

Germany, Europe's biggest economy, appeared hard-pressed to offer any candidate who would combine major-league political clout with the necessary economic experience.

Former Bundesbank chief Axel Weber's political capital suffered badly when he resigned earlier this year, effectively ending Germany's chances of taking the European Central Bank's top job. Among other named mentioned, former Finance Minister Peer Steinbrueck is a member of an opposition party and eurozone bailout fund chief Klaus Regling lacks a high political profile.

John Lipsky, the IMF's acting managing director, said its 24-member executive board is seeking a new leader, but there is no indication yet when a decision will be made.

France hosts a meeting of the G-8 — a group of eight developed countries — next week in the seaside resort of Deauville, and all the major decision-makers will be there.

The United States, which has the largest share of votes for a single country in the IMF, has declined to publicly say which candidate it favors. "We haven't taken a position on any candidate," said Lael Brainard, U.S. Treasury undersecretary for international affairs.

A similarly ambiguous statement issued by U.S. Treasury Secretary Timothy Geithner left open the possibility the U.S. could support a candidate from either Europe or the developing world.

Together, the U.S. and Europe control more than 50 percent of the votes on the IMF's board. A simple majority is all that is required to select the group's leader.

Candidates from outside the EU include Turkey's former finance minister, Kemal Dervis, who has also spent decades at the IMF; Singapore's finance chief, Tharman Shanmugaratnam and Indian economist Montek Singh Ahluwalia.

Poland may propose its own candidate, former Finance Minister Leszek Balcerowicz, who turned Poland's post-communist economy into a market-driven one.

Gordon Brown, Britain's former Labour prime minister, said Friday he's not angling to run the IMF.

"No I am not pitching for the job," he said in Johannesburg as he visited a primary school in Soweto.

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Associated Press writers Christopher Rugaber in Washington, Alessandra Rizzo in Rome, Geir Moulson in Berlin and Ed Brown in Johannesburg contributed to this report.