Latin America’s candidate to head IMF speaks out

By Andres Oppenheimer

aoppenheimer@MiamiHerald.com

What irony! Despite all their grandiose rhetoric about Latin American unity, Brazil, Argentina and Chile have not yet come out in support of Agustín Carstens, the Latin American candidate to head the International Monetary Fund.

Earlier this week, I asked Carstens, a Mexican, whether he is disappointed that the three South American countries have failed so far to support his candidacy to succeed Dominique Strauss-Kahn, the former IMF chief who resigned after being charged with sexually assaulting a New York hotel maid.

Carstens, the current head of Mexico’s central bank, former Mexican finance minister and former No. 2 at the IMF, has already won the support of Spain and 13 Latin American countries, including Mexico, Colombia, Peru, Venezuela, Bolivia and most Central American nations.

He is competing against French Finance Minister Christine Lagarde for the job, which has traditionally been awarded to Europeans.

Throughout the interview, Carstens tried to avoid criticizing Brazil, Argentina and Chile, but left little doubt that the three South American countries should support his bid if they sincerely want Latin America — and emerging economies in general — to have a stronger voice in world affairs.

“I think they should support me,” Carstens told me.

“Within the world’s BRIC [emerging] economies, Brazil would come across stronger if it were seen as a country supporting Latin America.”

I asked what he meant. Carstens explained that “Latin America has been losing influence within the IMF” in recent years. While a few years ago there was a Latin American — himself — in the No. 2 position at the institution, today there are only two Latin Americans among 25 officials in the third echelon, he said.

“If I win, it would be a strong statement of Latin America’s power,’’ Carstens said

“And even if we don’t win, a strong Latin American vote against the status quo would be a strong signal that we don’t agree with the way things are being done at the IMF. That’s why it is so important to have a region-wide Latin American vote.”

Carstens added that, aside from the fact that it’s time for a representative of emerging economies to head the IMF, he is a better candidate for the job than Lagarde. As an economist who played a key role in solving Mexico’s financial crises of 1987 and 1994, he has more experience in handling economic troubles such as those currently faced by Europe, he said.

“Europe’s problem is very serious,” Carstens told me. “A pair of fresh eyes could be very helpful to solve Europe’s problems. Bringing in Latin American experts in crisis management, such as myself, could help a lot.”

I asked him what was wrong with Lagarde? Carstens noted she is a lawyer, while he is an economist.

“She has many virtues; she is a very articulate, intelligent woman, but she doesn’t have 30 years of experience handling IMF-related matters,’’ Carstens said. “She has been minister of economic affairs for four years. She doesn’t have the deep understanding [of economic issues] to give the IMF a strategic vision.’’

After the interview, I asked several IMF watchers in Washington why they think Brazil, Argentina and Chile have remained uncommitted on the race. Several told me Brazil, South America’s biggest country, may be motivated by its rivalry with Mexico. Others said that Brazil may want to wait and see which of the two candidates has the most votes before casting its own.

“Brazil wants to play in the big leagues and doesn’t want to take an exclusively Latin American position,” said Claudio Loser, a former IMF official. “And the Brazilians may also be betting for a winner: They must think Lagarde will win and they may not want to vote against her.”

My opinion: Getting a Latin American with Carstens’ credentials to head the world’s most important financial institution would be one of the most important things the region could do to increase its clout in world affairs.

Yet, incredibly, some of the biggest countries in the region ,whose leaders spend much of their time preaching regional brotherhood and integration, have not come out in support of Carstens. Shame on them!

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