3 reasons why the IMF Managing Director, Christine Lagarde might not be reappointed
Last week, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, announced her intention to run for a second term in office. During an interview session in France, Lagarde said “I had the honour to receive endorsements as soon as nominations opened, if member countries of the institution as a whole wish I continue, (as managing director), I am a candidate.”
Undoubtedly, the IMF has maintained strong relationships with large emerging economies under Lagarde since her assumption in July 2011, thanks to her managerial and diplomatic skills. Her strong defense of the IMF on the international scene has earned her a better reputation than some of her counterparts in other international organizations like the United Nations and European Union (EU).
However these may not be the only factors to be considered. Here are 3 reasons why Christine Lagarde may not be reappointed:
IMF should not be an adjunct of the European Union.
The IMF is traditionally headed by a European and five of the last eight managing directors have been French. Lagarde is a French national while her first deputy managing director, David Lipton is an American. Events have moved from the BrettonWoods Conference agreement where an American would run the World Bank while the IMF would be run by a European. In past years, IMF has shown itself to be more concerned about the survival of the Euro than it is about the prosperity of Europe’s individual nations. Though appointing a non-European would not guarantee impartiality, it could provide a bit of balance and limit European dominance which could, in turn, undermine the IMF’s legitimacy.
The Greek debt crisis emerged in 2010 with huge expectations that the problems would be resolved within the euro zone without the intervention of the IMF.
The leadership of the international organisation under Lagarde failed to prioritize a strategy to help Greece regain competitiveness in global markets. Also, an earlier debt restructuring for the troubled country would have allowed significantly lower primary surpluses. The failed restructuring of Greece’s unsustainable foreign debt burden has been attributed to German and French banks. The broad issue of rescheduling sovereign debt, which the IMF has struggled to resolve for more than a decade, remains.
Christine Lagarde has a corruption charge record that links her to the Sarkozy government in France when she was the finance minister for the country. Lagarde is to stand trial in France for alleged negligence over a €404m ($438m; £294m) payment to Bernard Tapie; a businessman in 2008.
France’s Court of Justice of the Republic (CJR) decided that Lagarde, should be tried on the charge of “negligence by a person in position of public authority” over the compensation case. If convicted, she could be sentenced to one year in prison.
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