Will French public start a write-in campaign for the presidency for Mr. Strauss Kahn? Will China claim the IMF chair for an emerging market economy representative? The world has changed – today China holds largest bundle of IMF bonds.
DOMINIQUE Strauss-Kahn did not leap on an innocent chambermaid in New York – he was the victim of a plot to derail his presidential bid. Suspicions are thus widespread in France that Mr. Strauss Kahn may have been set up. On Wednesday, a poll conducted by CSA showed that 57 percent of people surveyed think he was “the victim of a plot.” That is what nearly six out of 10 French people believe, according to a poll by CSA, a research organization. Seventy percent of respondents from his Socialist Party also agree with the theory.
The Conseil supérieur de l’audiovisuel (CSA) was established by the President of the French Republic on 13 February 1989 and entrusted with the double-pronged mission of guaranteeing and promoting audiovisual communication freedom in France. Having succeeded the Haute Autorité de la communication audiovisuelle and the Commission nationale de la communication et des libertés, the CSA is the third audiovisual regulatory authority to have been created in France.
The results of the poll were no surprise, given that much of France is in denial over the incident. Mr Strauss-Kahn’s self-destruction was so implausible that some malevolent hand must have wrought it, according to the majority view.
“This poll exposes how the French are in denial over the scandal,” said Jerome Sainte-Marie, of the CSA. “They do not want to believe it. That’s interesting from the point of view of the collective psychology.”
In the popular narrative, the Americans and/or President Nicolas Sarkozy got together to destroy DSK. “In some quarters, the question of what is wrong with Strauss-Kahn has almost been replaced by what is wrong with the United States,” said Dominique Moisi, of the French International Relations Institute – after all – in Europe – behavior like that of Italy President Silvio Berlusconi are glossed over as mere curiosities.
According to a joke in Canard Enchaine, Mr Sarkozy has ordered Carla Bruni, his pregnant wife, to give birth on the day that the trial of the supposedly “degenerate” Mr Strauss-Kahn opens in the autumn.
As Mr. Strauss-Kahn’s lawyer prepared to renew efforts obtain his release on bail, France was quickly recalculating the impact on the political landscape.
As the country heads into a presidential election next year, those questioned by CSA believe Mr. Sarkozy has the most to gain from Mr. Strauss-Kahn’s downfall, followed by the far-right National Front candidate, Marine Le Pen, and François Holland, the current Socialist front-runner.
The more important question is what will happen at the IMF.
IMF experts and analysts have said that if Strauss-Kahn resigns soon, it may force countries to maintain the status quo and choose a European. Throwing open the process may take longer at a time when the job needs to be quickly filled. . . Brazil has been one of the most aggressive emerging economies to call for an end to the status quo. Brazilian Finance Minister Guido Mantega told the IMF’s steering committee last month it was “high time that we make a political breakthrough in departing from the outdated practice.” OK – he resigned today but we still think that it probably will not be a European banker who will get his job.
There by 2025 more then half of global growth total will be accomplished by the six countries: Brazil, China, India, Indonesia, Russia, and Korea. These are the new SIX of the enlarged BRICS – they grow collectively now by 4.7% per year compared to the mere 2.3% growth total of the old economies of the Trilateral Commission – the US and the EU and Japan.
Further – China is already the largest bond holder of the IMF and it was the added purchase of bonds by China that has enabled the IMF to take on the increased challenges dished out by the latest string of crises in the world economy please note that those crises came about in the large consuming economies of old. With Brazil promoting the idea that the Reminbi is entitled to become a currency at par with the US dollar for clearing purpose of World Trade – this being a World Bank issue – is it still possible for the World Financial institutions to be parceled out to the US and the EU alone? That is the main issue now before the world when faced with the DSK CRISIS!
We are watching the names that governments will be putting forward as replacement for Mr. Strauss Kahn and we find it inconceivable that Madame Christine Lagarde, the French finance minister, will get the nod.
The tag of representing an old economy also eliminates from contention the Asian Development Bank (ADB) president Haruhiko Kuroda of Japan.
We rather believe that China will step up and champion an emerging economy representative to get the job.
The world media is tossing around names of well qualified people of whom Stanley Fischer of Israel and the USA, Kemal Dervis of Turkey and the UN, or Singapore’s Finance Minister Tharman Shanmugaratnam, who now heads the IMF’s policy-making committee may be the most talented in this group – but we do not think that any of these will get the Chinese backing – neither will an economist from India. We rather believe that time of Brazil has arrived – and former Brazilian central bank president Arminio Fraga is being mentioned.
In this context it is particularly interesting to note that Brazilian Finance Minister Mantega wrote to members of the Group of 20 finance ministers to express Brazil’s Director-General of the International Monetary Fund concerns of candidates, and elaborated on the Brazil’s position - Mantega in the letter said that the new Director-General should determined not by their nationality, but rather their ability to work as representative ”of the will of the overwhelming majority of Member States, on International Monetary Fund, the institutional reform of an open mind and understand the current challenges facing the world.“
Mantega stressed that the European citizens history of rotation in this important position is over. Similarly, the Group of Seven making decisions on some major issues in this era has passed. G-7 has been replaced by
G-20 as the main international forum for economic cooperation. For International Monetary Fund, the institutional reform can not turn back. If you want the agency to have legitimacy and representativeness, in making the Choice for the IMF position candidates must listen to the comments of all Member States.
Until a new Managing Director of the IMF is selected Mr. John Lipsky, an American Deputy Managing Director whose term ends August 31, 2011, will be Acting Managing Director. Also we note that 79% of the Fund’s loans are now to Europe and not to the Developing World. The latter gets its money from the World Bank – the other Breton Wood Financial Institution established in parallel with the UN. The World Bank has also soft lending windows. The IMF deals mainly with members treasuries.
The World Bank and the IMF were set up in 1945 under the Bretton Woods Agreement among Allied nations with their key tasks being the formulation and implementation of strategies for the recovery of the world economy from the ravages of the Second World War. At the time it was taken for granted that these institutions will use US money. By tradition the World Bank is run by an American.