Tuesday, May 24, 2011

Lagarde for IMF, Maybe, Maybe Not?

Finance Minister Christine Lagarde as the next head of the International Monetary Fund. That would be a huge get for France, demonstrating that Ms. Lagarde has support well beyond Europe’s borders, in the world’s most important emerging market. Add that to positive comments for Ms. Lagarde coming out of Brazil and the race for IMF director looks over before it formally is set to begin on June 8.

Trouble is there’s no evidence yet that China is actually backing Ms. Lagarde.

Asked about the French claims at a routine briefing Tuesday, a Chinese Ministry of Foreign Affairs spokesman said reporters should contact “relevant authorities” who have commented on that issue. Pressed, she clarified that she meant to look at what People’s Bank of China Governor Zhou Xiaochuan has said on the issue.

At least two implications that can be drawn from the Zhou statement. First, he may have been subtly lobbying for Mr. Zhu to get his anticipated promotion. Second, China is open to the idea that the top job could go to a European, but hardly committing itself. Phone calls to PBOC news department officials, who could clear up this issue if they wanted, went unanswered in the middle of the day in Beijing.

No one knows the precise nature of the communications between Paris and Beijing on the IMF job. And there have been times when the Europeans have said more plainly in public what the Chinese plan to do than China’s government itself–and have turned out to be right. At the April 2009 Group of 20 leaders summit, then British Prime Minister Gordon Brown said that China was going to lend the IMF $40 billion well before China made that commitment public. The Chinese said they would come through with a $50 billion loan in June 2009.

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