“An exceptional and unplanned opportunity has crossed my path, one that may never again present itself, to run for the head of the IMF," is how Governor of the Bank of Israel Prof. Stanley Fischer explained his decision to run for the post of IMF managing director. With this statement, at the last minute, he joined the two other candidates for the job: French Minister of Finance Christine Lagarde and Governor of the Bank of Mexico Agustin Carstens. Fischer is running with the blessing of Minister of Finance Yuval Steinitz, but there are quite a few Israelis who hope that Fischer will stay at his present job in Israel.
In truth, even after Fischer's announcement, Lagard is the leading candidate. Europe, which has a third of the necessary votes, supports her, and the job traditionally goes to a European. This year, the position carries even greater importance, given the economic crisis on the continent, and the EU's wish to see one of its own in the job. Carstens was supposed to be the alternative candidate of the emerging markets, but he has not been able to garner the support of key countries, such as Brazil, to support a Latin American candidate.
But it is doubtful if Fischer would have submitted his candidacy if he knew that he had no chance of getting elected. The US, for example, has not declared its support for any candidate, implying that it was waiting for Fischer. This still does not give Fischer much of a chance.
Many commentators, especially in the UK, said yesterday that Fischer had few supporters. They quickly mentioned that when he served as the IMF's no. 2 man before 2000, he promoted economic policies that were unfavorable to emerging markets. Furthermore, Arab countries will not like to see an Israeli candidate for the post, and in the end the US will not want a quarrel with Europe, and it will follow tradition that the head of the IMF is a European while the head of the World Bank is an American.
All these factors are correct and clear, but they are also obvious to Fischer, and he still decided that there is "an exceptional and unplanned opportunity" for him. The conventional wisdom, at least until a couple of days ago, held that Fischer's chances largely depended on the inability of the top two candidates to win a majority. In that case, Fischer could emerge as the compromise candidate, whose election would prevent a leadership crisis at the IMF. His prestige and support in the global economic media are factors on his side.
But Fischer may not be only counting on a deadlock in the elections for the IMF chief. In view of Carstens' inability to win support, Fischer could position himself as the primary alternative to Lagarde. It can be assumed that the 67-year old Fischer has garnered behind the scenes support, most of all from the US. The IMF regulations stipulate retirement at 65. If the US tries to amend this clause in the IMF's bylaws, it will more than hint that it supports Fischer. When that happens, non-European states might come over to his side. It should be remembered that Fischer supported the position of emerging markets during the currency wars of 2010, and adopted non-orthodox monetary and exchange rate policies.
This, then, is Fischer's path to the top of the IMF. He will need some countries to announce their support for him, to create momentum over the next few days until the votes are counted at the end of the month. If he wins, he will spend the next five years in Washington, the city he loves by his own admission.
Published by Globes [online], Israel business news - www.globes-online.com - on June 12, 2011
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