THE world’s power brokers lined up candidates to head the IMF while Asia held back, and its silence means it will probably have to wait five more years to break Europe’s grip on the top spot.
Emerging market powerhouses including China and India have long clamored for more clout within the International Monetary Fund, commensurate with their growing economic strength.
Last year, they won a hard-fought battle for a bigger share of IMF voting rights and convinced the fund to reconsider its long-standing opposition to capital controls.
So why the reticence when presented with a golden opportunity to claim the managing director post following Dominique Strauss-Kahn’s sudden resignation?
Forging quick consensus is never going to be an easy proposition in a region of such extremes, encompassing impoverished Bangladesh and wealthy Japan; Communist China and the world’s largest democracy, India.
It’s even tougher when the task at hand involves controversial questions of politics and economics.
It may be more convenient for Asia to sit idly by this time around with the understanding that it will make its preferences known next time. Even that seemingly anodyne point is so sensitive in Asia that no policy-maker has made it publicly, although it was raised by at least one official on the condition neither his name nor his nationality was published.
Contrast that with Europe, which quickly rallied around French Finance Minister Christine Lagarde to take the job that has traditionally gone to a European since the IMF was formed at the end of World War Two.
France’s budget minister said that Lagarde had China’s support as well, all but assuring she would have sufficient backing to win a five-year term.
China’s foreign ministry declined to comment on whether Beijing had backed Lagarde. An emerging market official said there was considerable discussion between Asia, Latin America and Africa, and another candidate could still emerge.
But the chances for success look slim. There has been no shortage of other names floated, including several from emerging Asian countries, yet none received the same degree of swift and public support as Lagarde has both inside and outside Europe.
The biggest obstacle to Asia putting forward a rival seems to be finding common cause.
China and India share membership in the “BRICS” grouping of rapidly emerging economies but little else, and would have a hard time agreeing on one Asian candidate. “To believe that everyone coming from the emerging markets will support similar policies is a mistake,” said Sebastian Edwards, a former World Bank official who teaches international economics at the University of California, Los Angeles.
For Japan, second only to the United States in IMF voting power, backing someone from elsewhere in Asia would serve as a painful reminder of the country’s waning influence.
Koichi Haji, chief economist at NLI Research Institute in Tokyo, said Japan is not thrilled with the prospect of Europe retaining its hold on the top spot, but isn’t in a position to propose a Japanese candidate and would not be comfortable with someone from an emerging market either.
“Nothing seems to be an attractive option, which might be why Tokyo remains so silent on this whole subject,” he said.
Japanese Finance Minister Yoshihiko Noda declined to comment when asked whether he would support Lagarde or another name put forward, Mexico’s central bank governor, Agustin Carstens.
He said only that the process should be open, transparent and merit-based, a line heard repeatedly throughout the region.
As for smaller Asian economies, the next head of the IMF is far from the top of the to-do list.
Many in the region harbor bad memories of the financial turmoil of the late 1990s and felt the IMF was condescending and harsh in its dealings with countries in crisis.
Asian nations have built up large cash reserves, in part as a form of self-insurance so that they would never again be forced to go hat-in-hand to the IMF. The fund has little influence over countries that don’t need its loans.