Dominique Strauss-Kahn cannot become the president of France. But, equally, his contribution to the making of the world order will exceed Nicolas Sarkozy's. The manner in which he quit his job at the IMF triggered the scramble that followed, which, in turn, has brought into focus the fault lines in the international system. But for Strauss-Kahn, the birth pangs of a multipolar world struggling to be born wouldn't have surged.
The heart of the matter is that despite the universal homilies that the world order needs to be democratized, when the crunch time came, the western countries rapidly closed ranks and staked their claim in unseemly hurry to keep the IMF job as their exclusive preserve. It is, literally, the West versus the Rest. The US traditionally headed the World Bank and Europe the IMF. The West simply can't contemplate any other way the world financial system can be run.
But the crudity of the western attempt to hustle the election to the IMF post by June 10 and to draw up the schedule of election almost unilaterally in a weekend meeting without even giving time for all executive directors to assemble in Washington indeed came as a rude shock for the "non-Western" countries, BRICS countries in particular. Thus followed their joint statement on Wednesday calling for abandoning the "obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe" and for observing the commitment made in 2007 at the time of selection of Strauss-Kahn by the Euro group that "the next managing director will certainly not be a European" and that "in the Euro group and among EU finance ministers, everyone is aware that Strauss-Kahn will probably be the last European to become director of the IMF in the foreseeable future".
Within BRICS, all eyes are on China and India. (Japan is indifferent despite holding the second largest shares.) Can China and India tango although they have shared interests? That's the big question. China has taken an unusually noisy stance. All three major Chinese newspapers carried editorials/commentaries. The Xinhua commentary which was carried by People's Daily and China Daily expressed satisfaction that the statement is "a much-needed example of coordination among these leading emerging economies". It exhorted the BRICS countries to be "more confident in asserting their common position, even if that may annoy others". The commentary was in a self-congratulatory mood and appeared more about the BRICS having come of age than about the IMF becoming senile.
In comparison, the Global Times featured a forceful editorial attacking the "backroom deal between Europe and the US to respectively head the IMF and the World Bank". It said: "Dominating the global financial layout, the US and Europe are grabbing colossal benefits in international labor division." It explained candidly that China has been pragmatic to join hands with the BRICS as alone it lacked the clout to put up a fight against the western dominance. "Besides, due to historical and practical reasons, BRICS countries still have misunderstandings and divergences among themselves, which may be taken advantage of by the US and Europe to disintegrate the group. However, by issuing the joint statement, the BRICS have initiated a protracted battle to oppose Western financial dominance."
In sum, China recognizes that "It may take a few decades before the BRICS are able to bring substantial changes to the ingrained financial order... It is still early to stress the status of the BRICS members in the IMF... Their latest joint statement is but the beginning." China is not even cautiously optimistic about a candidate from the emerging economies making it to the top job in IMF at this juncture. China is obviously playing for the long haul and, meanwhile, thrilled that BRICS finally put its hat in the ring on a major international issue.
Is it that China is waiting for India to take the lead? Contrast this with the Indian Indian optimism. Finance Minister Pranab Mukherjee said in New Delhi on Thursday, "I am in touch with some of the finance ministers of developing countries and emerging economies… We are trying to consolidate our position where we can take a view."
But then, India is also speaking in many voices. India’s executive director in the IMF Arvind Virmani said on Wednesday: “Unless the voting shares which various countries hold in the IMF are changed to reflect new economic realities, it is going to be extremely difficult for any non-European candidate to win the election." Prime Minister Manmohan Singh seems to concur with Virmani's note of resignation. Singh told the India-Africa summit in Addis Ababa that developing countries must stand united in pushing reforms at the World Bank and the IMF to change the power structure in Bretton Woods institutions. However he admitted, "Those who wield power do not wish to yield ground very easily,” and bringing about change in these two institutions was a long drawn process.
Manmohan Singh and Virmani seem to agree with the hard-nosed Chinese assessment. So, is Mukherjee grandstanding? It is all becoming a bit confusing. The confusion is further compounded by the report that India’s commerce and industry minister Anand Sharma met Christine Lagarde, French finance minister, in Paris on Thursday and during the meeting she raised the issue of her candidature for the post of IMF chief. Sharma apparently made it clear that “India looks at it as part of the larger process of reforms at IMF. The selection process has to be transparent, consultative and participative”, an Indian official travelling with him has been quoted as saying.
Some may deduce from what Sharma said that India probably has a candidate in mind. After all, Mukherjee is a veteran diplomat who never says anything out of place. Is it that Delhi doesn't consider Lagarde's candidature as a done thing yet? Indeed, there is some justification to hold back endorsement of the European candidate. There are lots of dissonant voices even in the western opinion calling into question Lagarde's candidature. Some very pertinent questions have been raised about the implications of Lagarde heading the IMF.
Lagarde hopes to visit Delhi as soon as she gets a date. The intriguing part is that Sarkozy himself refused to bring up Lagarde's candidature at the G-8 summit that he hosted on May 26-27. Sarkozy not only parried but spoke somewhat impatiently. Rather uncharacteristic of the up-front personality who simply grabs anything he sets his sights on, isn't it?
Confusion galore! Russian President Dmitry Medvedev claimed subsequently that the G-8 summit at Deauville indeed reached a "consensus" on the IMF election. He didn't divulge details. More important, was Russia part of that "consensus"? If so, where does it leave BRICS, whose most ardent advocate is of course Russia? Maybe, the Chinese who are a wise people could foresee all this happening. Maybe, the Indians, too. Both are ancient peoples. But I still think the last word hasn't yet been said. Mukherjee seldom goes wrong.
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