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Co-heads for the IMF? Say yes to Lagarde and Carstens


Stephan Richter is president of The Globalist Research Center and publisher of

Say what you will about the IMF, but the problems dropping in the Washington, D.C.-based institution's lap are massive. The job, in fact, is too large for anyone person to handle. Plus, the IMF has had an unfortunate tendency in recent years, well beyond the current calamity, of seeing its boss, or Managing Director, not serve out their term.

That has led to a series of rather acrimonious succession races, which the institution cannot afford. It would be much better to always have somebody in the number two slot to move up to number one, in case the need arises.

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For that to happen, however, something needs to change inside the IMF's structure. Traditionally, the No. 2 job -- that of first deputy managing director -- has always gone to a U.S. national, usually one of the country's top economists.

In Ms. Lagarde and Mr. Carstens, the IMF is blessed with having two very well-qualified candidates. Both individuals have impressive track records while in office in their home countries.

However, Christine Lagarde's eventual elevation to the top post, if it comes to pass, does not resolve the problem of the under-representation of the emerging markets at the top level of the IMF.

Fortunately, the U.S. government -- in an enlightened display of wisely applied self-interest -- is in a position to unilaterally fix the problem. Forfeiting the right to pick a U.S. national as first deputy managing director and suggesting Agustin Carstens for that post, who is Mexican by nationality, would do wonders for the U.S. relationship with Mexico, Latin America and the developing world.

In policy terms, it would cost the United States next to nothing. The University of Chicago-trained Mr. Carstens, after all, de facto is a U.S. economist. He is as rigorous as they come.

In light of that option, I would argue that, yes, we can have it all -- a woman at the top of the IMF, alongside an emerging market representative. It would be a truly Solomonic solution -- and one that that is forward-looking and dependable.

Rather than just Europe, Christine Lagarde represents a much larger global constituency that has never received the nod for one of the top global jobs: the half of humanity comprised of women.

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She is a consummate professional, very global and smart, a good manager and, this will matter a great deal in the years to come, a very good explainer to the public at large of complex economic challenges on the global agenda.

And offering Mexico's former finance minister and current central bank president, the wily Agustin Carstens, the "American" post currently held by John Lipsky, the former chief economist at Salomon Brothers and JP Morgan, should come natural.

Making this offer doesn't even lead to any power loss for the United States at the institution. The organization's agenda is really determined by a board of directors that is in permanent session. Consisting of 24 executive directors, representing single governments, groups of countries and broader regional constituencies, this body is quite unequal in structure.

Far from being "one man, one vote," or consensus-based, what counts here is money. Voting rights are effectively based on capital percentages of paid-in funds. And here, one country stands above all others: the United States. Its share of about 17 per cent effectively gives it veto power at the Fund, as important decisions require a supermajority of 85 per cent.

For all the focus on the Europeans, and they do remain overrepresented at the Fund (but don't vote in unison), the real kingpin of the IMF is the U.S. government. Unlike the UN, the IMF in essence has a permanent "security council" composed not of five members, but one: the United States. Given that veto power, one must wonder why the United States indeed does get to "double dip."

That veto is exercised by the U.S. executive director at the IMF. Without any doubt, the views of the U.S. government do get extremely close consideration in board discussions at the IMF. They may not always be the determining factor but, by practice and track record, are clearly the overpowering one.

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That makes it plain that there is no need for the United States to have another "chief control officer" in the post of first deputy managing director.

Finally, is it really feasible to have a true condominium in the IMF leadership? I would answer yes. Clearly, the IMF is a pivotal institution. Having a healthy dose of economic management insight from the battle-experienced -- and disciplined (and potentially disciplining) emerging markets is important.

Given the challenges at hand, the IMF's top bosses need to live in an airplane, while at the same time managing the institution and coming up with responses to crises. Why not have two of them, in a co-directorate? The two individuals under consideration would make a great team: one for the complex politics, the other for the complex economics.

For all of Mr. Carstens' indubitable talents, being part chummy and part resolute with top-level political counterparts, as the job requires when things burn, isn't one of them. And for all of Ms. Lagarde's indisputable communications and leadership skills, thinking through the ins and outs of complex economic and financial recovery strategies doesn't come naturally to her. But the two would make a good team in the sense that their respective sets of analytical skills are not just top-notch, but highly complementary.

Time therefore for the U.S. government to act in an enlightened and conciliatory manner and state that the presumed U.S. seat, this time around, really is an "Americas" seat, to be occupied by one of Chicago's finest minds, Agustin Carstens.

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