Brazil welcomes Carstens' IMF bid; no backing yet

Reuters News
Posted: Jun 01, 2011 1:39 PM
Brazil welcomes Carstens' IMF bid; no backing yet

By Raymond Colitt

BRASILIA (Reuters) - Brazil welcomed the Mexican central bank chief's candidacy for the IMF's top job on Wednesday as a step forward for emerging economies but stopped short of offering an endorsement, saying it needed more time to decide which candidate to back.

Agustin Carstens is in Brazil on the third leg of a global tour to drum up support for his underdog candidacy to lead the Washington-based International Monetary Fund against French Finance Minister Christine Lagarde, who kicked off her own worldwide campaign in the South American country on Monday.

While Brazil has been among the loudest voices calling for more say for emerging markets in global economic affairs, government sources have said the country is leaning toward Lagarde because she is seen as having more clout within the global lender to push through reforms.

"Emerging economies are under-represented in the fund's leadership, especially Latin American countries," Brazilian Finance Minister Guido Mantega said at a news conference with Carstens in the capital, Brasilia.

Mantega added that it was important to have a candidate from an emerging economy for a job that has traditionally been held by a European, and that it would be a step forward if the next IMF chief was chosen on merit rather than nationality.

Backing from the region's largest economy would be a major boost for Carstens, who said he had received expressions of support from much of Latin America despite having no official backing yet.

"I agree 100 percent that ... Latin America in general and Brazil and Mexico in particular should have more participation in upper and middle-level posts within the institution," he said after meeting with Mantega.

The resignation of Dominique Strauss-Kahn, who stepped down as IMF managing director to defend himself against charges that include attempted rape, has led to calls from developing countries to end the traditional European lock on the job.

Mexican President Felipe Calderon called his Brazilian counterpart Dilma Rousseff on Tuesday to ask for her support for Carstens' candidacy, a Brazilian government spokesman said.

During her visit to Brasilia on Monday, Lagarde told Brazil what it wanted to hear -- that she would push reforms to give emerging economies more say in IMF decision-making.


Carstens has questioned the argument made by several European Union leaders that a European IMF chief is needed to deal with the euro-zone crisis. He says an outsider would be in a better position to apply tough measures to help solve the crisis.

In an opinion piece published in the Financial Times, Carstens said European countries should not overestimate the role of the IMF in solving the sovereign debt crisis.

"From my own experiences in Mexico, as well as what I observed while serving on the IMF's executive board and later as a deputy managing director, for each country the tough decisions are political and they need to be taken domestically. The IMF cannot make these political decisions for Europe, whether its managing director is European or not," he wrote.

Carstens has also said that a French government claim that Lagarde has the support of the G8 group of leading economies was political spin.

The board has a June 30 deadline for picking a successor.

Carstens will meet Brazil's central bank chief Alexandre Tombini in Sao Paulo on Thursday ahead of meetings with Argentine authorities on Friday.

(Writing by Stuart Grudgings; editing by Todd Benson and Eric Beech)