Aides of Governor of the Bank of Israel Prof. Stanley Fischer refuse to disclose his real intentions, but have said from the beginning that he has been approached and that there is pressure for him to take the IMF job. For now, Fischer and his aides are keeping quiet. A source close Fischer told "Globes", "Fischer would be very pleased to be appointed to run the IMF, and he would be equally pleased to stay as Governor of the Bank of Israel. His departure would not be on the agenda had such an opportunity not come up."
The source added, "This isn't a job you seek until you thoroughly check the lie of the land, the pulse, and the international media, which totally supports Fischer. There are still two weeks. That's a lot of time, and a lot can happen between now and then. This is a win-win situation. If he wins, this is a dream job; if not, he'll be satisfied. Fischer and his wife really love Israel."
Minister of Finance Yuval Steinitz has been indirectly urging Fischer to reveal his intentions about the IMF job. Last week, Steinitz said that he would French Minister of Finance Christine Lagarde, unless Fischer was a candidate.
Lagarde is the leading candidate for managing director of the IMF, after announcing her candidacy last week. She has been very discretely working the behind the scenes to win support since former managing director Dominique Strauss-Kahn was arrested in New York for allegedly assaulting a hotel housekeeper, and subsequently resigned.
Candidates for the post must formally apply by June 10.
However, it is necessary to take the fundamentals of the IMF managing director's post into account. Traditionally, the job always goes to a European, while an American heads the World Bank. Former UK Prime Minister Gordon Brown would be a natural for the IMF job, but his stock has fallen since his successor David Cameron does not support him. This opened the chance for Lagarde and non-European candidates, such as former South African Finance Minister Trevor Manuel and former Mexican Finance Minister Agustín Guillermo Carstens Carstens, both of whom represent emerging markets.
Fischer's chances of winning the managing directorship of IMF depend on the inability of the leading countries to support another candidate. If the traditional method applies this year, the Europeans will support Lagarde and they will strike a deal with the Obama administration on the number 2 spot at the IMF, who is usually an American. Agreement will end the race, while disagreement will create a whole new ball game.
Another issue is Strauss-Kahn's legacy, if it can be called that. He took the IMF down new roads, and distanced the organization from the orthodoxy that previously characterized it, when its prestige was damaged. Fischer could help the IMF come up with pragmatic solutions to global economic problems thanks to his proven skills and professionalism during previous crises.
Given US-Chinese disagreements over exchange rates policy, the independence that Fischer showed in interest rate policy might be considered important by the governments of emerging markets.
Although Lagarde has the support of most European governments, she has a clear disadvantage compared with Fischer: she is not an economist, and the crisis threatening the European economy sharpens the need for a top economic figure at the helm of the IMF. "This is not a ceremonial job," said a Fischer aide.
But there are other voices as well. A prominent figure in the Israeli economy says, "Fischer doesn’t have a chance. The appointment is political, and so is the job. All the G8 is united around Lagarde, including all the European countries, and there's no chance that they will forego appointing the IMF's managing director, especially when Europe is collapsing and desperately needs the IMF's support. Even US Secretary of State Hillary Clinton has implied her support for Lagarde, said a prominent source, adding, "Fischer is over 65, which disqualifies from the post at the outset (the maximum age for managing director is 65, under the IMF's articles of incorporation). The big Wall Street investment houses haven’t forgotten his mistakes when he was the IMF's number 2 man."
Another top global economic figure said that Fischer's candidacy is "wishful thinking".
Prime Minister Benjamin Netanyahu's aides say that he is taking no chances and is preparing for the possibility that Fischer will announce his departure from the Bank of Israel earlier than expected. Under the Bank of Israel Law, the prime minister appoints the governor of the Bank of Israel.
Fischer was originally thought to be leaving the Bank of Israel next year, following the establishment of its monetary and administrative councils, two new bodies set up by the new Bank of Israel Law.
Published by Globes [online], Israel business news - www.globes-online.com - on May 29, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011