J.J. Goldberg

Bank of Israel Governor Stan Fischer Mulls IMF Run

By J.J. Goldberg

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The Wall Street Journal reports that Stanley Fischer, governor of the Bank of Israel,

is examining a formal bid to head the International Monetary Fund, said an official familiar with his thinking, and figures he has an outside shot at the job if there is a deadlock in the voting.

Mr. Fischer, a former deputy managing director of the IMF, is a long shot. While he’s widely respected among central bankers and finance ministers, his current position as Israel’s central bank governor would make it tough to win the support of Arab nations and other emerging-market countries, said an Arab official who has worked with Mr. Fischer…

The odds-on favorite, French Finance Minister Christine Lagarde, is widely supported in Europe, which has about 35% of the votes in the IMF. A simple majority is needed to win the job. She told The Wall Street Journal on Thursday she expects shortly to tour major emerging-market countries, including China and Brazil, to build support. …

In 2000, Mr. Fischer, then the IMF’s deputy managing director, made a run for IMF managing director and picked up substantial support from Africa and the Middle East, including from Mr. Manuel of South Africa. Mr. Fischer was born in what is now Zambia and positioned himself as an African candidate despite his U.S. citizenship. But the U.S. balked, trying to preserve the tradition of the top IMF job going to a European and the second position going to a U.S. citizen.

Eventually, Germany’s Horst Kohler, who was president of the European Bank for Reconstruction and Development, got the managing director’s job, and Anne Krueger, an American economist, got the No. 2 slot.

The currrent reports don’t spell it out, but part of the U.S. objection to Fischer is his left-leaning outlook, which he shares with Socialist party stalwart Strauss-Kahn. He was named IMF deputy chief at the beginning of the Clinton administration, when the Robert Reich left faction was still in charge, before Robert Rubin became top dog after the 1994 elections. After that Fischer was unpopular in D.C. The African group nominated him in 2000 as a friend of the working man. As a kid in Zambia and Zimbabwe he was a member of Habonim and made aliya to kibbutz after high school, departing pursue a career as an economist when he unexpectedly got accepted to London School of Economics. He’s close to Shimon Peres and his post-industrial, high-finance New Socialism.

Stephanie Flanders at BBC reports from the IMF conference in Rio that the Lagarde candidacy is leaving a lot of insiders cold:

They don’t like the symbolism of the job going to yet another French citizen; they worry that she will not be able to inject fresh thinking into the management of the eurozone crisis, and more than a few still harbour hopes of a last minute revolt.

And so many are fantasizing about an outsider, and Fischer is a favorite fantasy:

The way the fantasy plays out, there would be a major fight in the board over the decision, with Fischer then emerging at the last minute as the compromise candidate to break the deadlock.

Stan Fischer would be an extremely good choice: born and raised in Africa, he has friends across the developing world and, as a distinguished economist, he’s both liked and respected within the Fund. He’d also be good at banging European heads together.

Unfortunately, the fantasy has little chance of coming true, not least because he has been a US citizen for much of his working life.

If he came in as number one at the Fund, the Americans would lose not just the number two slot at the Fund, currently taken by John Lipsky, but the job of running the World Bank as well.

The Americans like Stan Fischer a lot, but not enough to give up two senior posts in the international financial system in exchange for just one.


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