20 MAY 2011
By Sean O'Grady | The Independent
The IMF used to be an organisation in which the rich economies of the West bailed out the distressed economies of the emerging world. Now the position is precisely reversed.
With the exception of Germany, and, maybe, Japan, it is the West that is virtually bankrupt. And it is now the fast-growing economies of Asia and Latin America that are bankrolling the West. Even the United States, which still calls so many of the shots at the IMF, is effectively funded by China. And yet, China has fewer votes at the IMF than the UK.
So there is an argument of equity for giving the top IMF job, which has been hastily vacated by Dominique Strauss-Kahn, to a non-Westerner. But there is also a very good practical reason too, and it is this: they would be that crucial bit more likely to offer unsentimental, unflinching advice on the one course of action for these distressed eurozone economies that is always ruled out, and that is to get the hell out of the eurozone.
I just think it is very hard to imagine Christine Lagarde being able to say to Greece, for example: "Look, you do not need another bailout, and whether or not you default on your debt; the best course of action for you in the long term is an orderly withdrawal from the single currency."
Impressive as she is, the French finance minister is, I think, like the other European candidates, too steeped in the European Union establishment and too much part of the French elite to be able to abandon the euro as an article of faith.
For a clear-headed, dispassionate Singaporean, let us say, the decision on recommending that Greece leaves the euro would be a much less traumatic affair.
And even if that were not the case, we might still be better off with someone for whom the idea that they are a Sarko crony could never stray into our minds. So while it is true that Ms Lagarde knows the eurozone's funny little ways, she might also be more blind to its failings.
Political "clout" – which she does possess – is only useful if it is wielded in the right direction.
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