Had impressed counterparts, a plus in tumult on a new IMF chief
When French finance minister Christine Lagarde arrived in Hanoi early this month for the Asian Development Bank’s annual meeting, she wouldn’t have known she’d be leading the race for the top job at the International Monetary Fund (IMF) in three weeks.
Indeed, the fall from grace of Dominique Strauss-Kahn, the IMF’s former chief and one of Lagarde’s predecessors, has been dramatic and swift.
But the Frenchwoman’s recent visit to Vietnam, where she held court with a bevy of Asian finance ministers, including India’s Pranab Mukherjee, may have unwittingly helped her win some support from a region that has thrown up its own contenders to replace Strauss-Kahn.
Apart from Planning Commission deputy chairman Montek Singh Ahluwalia, there is Singapore’s finance minister, Tharman Shanmugaratnam, who was also recently appointed as one of two deputy prime ministers of the city-state. Both have publicly denied being in the race.
While Ahluwalia has said he is “quite happy” with what he is doing and is “not looking for a change”, Shanmugaratnam told reporters here that his new appointment had “put paid to such rumours”.
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In an interview with Business Standard earlier this year, Shanmugaratnam said “Regardless of the nationality of the person or the region he or she comes from, the challenges are going to be one that requires a certain neutrality and the ability to listen to what is now a very broad constituency of equal stakeholders, not unequal stakeholders.”
“Asia is now a major player in the world and its voice has to be heard, listened to and engaged with,” he had said days before being appointed the chairman of the IMF’s policy steering committee.
Worthwhile day At Hanoi, Lagarde did all that. Albeit as a representative of G-20, currently chaired by France. In a single day, she first shared the table with Mukherjee, Japan’s parliamentary secretary for finance Motoyuki Odachi, Chinese deputy finance minister Li Yong, Vietnam’s central bank governor Nguyen Van Giau, Bangladeshi finance minister Abul Maal A Muhith, apart from ABD president Haruhiko Kuroda.
The same evening, Lagarde was back at the head table with Mukherjee, Japanese finance minister Yoshihiko Noda, IMF’s deputy managing director Naoyuki Shinohara and Kuroda. Incidentally, the ADB president himself has been seen by some as a possible successor to Strauss-Kahn.
The rhetoric matched the appearances. Not only did she show concern for Asian economies, many of which have been swamped with capital inflows from the developed world, Lagarde pushed for a greater role for the region in the reform of the international monetary system, the focus of the French G-20 presidency.
“Asia is not a passenger,” Lagarde notably said, with regard to its function in the reform process. Her participation at both the panels were well-received and her off-stage rapport with counterparts, including Mukherjee, obvious.
Unsurprisingly, the word on the corridors of Vietnam’s National Convention Centre in early May, where the ADB meeting was held, spoke of the French finance minister’s quick-fire charm offensive. ADB chief Kuroda reportedly even said that Lagarde would make the “perfect” candidate to replace Strauss-Kahn.
Europe, which has traditionally had its candidate run the IMF, has already begun looking for someone within its own pack, while emerging economies, including those in Asia, are calling for an end to this dominance.
Given the situation, Lagarde’s strategy to engage with Asia’s economic decision makers in their own backyard would do her no harm. But whether it will deliver remains to be seen.