Monday, June 6, 2011

The debate over IMF leadership continues...

The article "Wanted: chief firefighter" on page 88 of this week's (June 4-10) print edition of The Economist   discusses how the four front-runners, Christine Lagarde of France, Stanley Fischer of Israel, Augstín Carstens of Mexico and Grigory Marchenko of Kazakhstan, perceive the various issues facing the IMF - from defaulting on debt to reforming the international monetary system. I was glad to see Marchenko described as a serious contender....but is he? Probably not.

Never in the IMF's history has it been lead by a banker from a developing country, let a lone a country outside of Europe. Already, Kazakh leaders have confessed that it is unlikely that Marchenko will succeed DSK unless the current IMF voting system is reformed and developing countries are given more representation. At the same time, developed countries recognize how the forces of globalization have transformed the international system. Reforming the representation of states international organizations is necessary in order to ensure that global institutions remain relevant, legitimate and authoritative actors in the conduct of international relations. This week, German Chancellor Angela Merkel will discuss leadership of the IMF and World Bank with President Obama.

So why not Marchenko? In The Economist, Mr. Marchenko is depicted as a financial hawk who "is as tough as they come," according to Anders Aslund of the Peterson Institute of International Economics. Marchenko is a seasoned veteran of handling bank crises and reportedly "prides himself on having closed 80 banks." As Governor of Kazakhstan's Central Bank since January 2009 following the financial disasters of fall 2008 (Lehman Brothers, Russian stock market crash), he has extensive experience working in risky and volatile financial markets. If there is one quality needed in an IMF chair, it is expertise in how to handle the possibility of defaults given the current loans to Greece and Portugal. Just today, the IMF agreed to a US$3 billion loan to Egypt! From a technical perspective, Marchenko is qualified.

Politically, Marchenko has the support of the CIS block and his appointment would bear symbolic significance as a leader of the developing world and as a beacon of Kazakh leadership. Marchenko is also a Georgetown graduate (1994) so as a Hoya, I am of course a fan. On a less serious note, there is a Facebook page devoted to him: Grigory Marchenko to head the IMF. As of this morning, there were 32 members in the group. To compare, there were over 129,000 members of the group that got Betty White onto SNL. (Of course, to the IMF, a Facebook group is irrelevant and bears no importance in selecting a candidate.)

While no one currently knows who will become the next IMF chief, my point is to not dismiss Marchenko as a serious contender. We shall see...

Three-day countdown to Kazakhstan!!

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