Lagarde’s background “not an advantage” for IMF in Greece crisis, says Stanley Fischer

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By:
Dominic O’Neill
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Fischer says there needs to be “distance” between Europe’s problems and how the IMF deals with the crisis; calls leadership rules “archaic”

 
Stanley Fischer has cast doubt over Christine Lagarde’s appointment as the new head of the IMF. She is the eleventh consecutive European to take the role. Fischer’s own bid for the job was rejected last month, superficially because of a 65-year age restriction. The 67-year-old describes the rule as archaic and says it should be changed. Given the IMF’s key role in resolving the Greek crisis, Euromoney asked the Bank of Israel governor about Lagarde’s proximity to one of the main interested parties in the Greek debt crisis – French President Nicholas Sarkozy. “Starting as managing director with Christine Lagarde’s background is not an advantage at this point,” says Fischer in an interview, the day after the IMF announced Lagarde, former finance minister of France, would be its new managing director. Lagarde was until last week Sarkozy’s finance minister, while French banks are among those most exposed to Greek debt. Some say this has already been evident in the French President’s proposals on dealing with the debt crisis. “It’s not a convincing argument to say the main problem facing the IMF is dealing with Europe, and therefore we need a European as managing director. There are arguments to say there should be some distance between the region concerned and the people who have to decide how the Fund deals with it,” Fischer says. “You need someone who is able to look coldly at each situation, including today's situation.” Stanley Fischer was in many ways ideally suited to the job: formerly the PhD supervisor to US Federal Reserve chairman Ben Bernanke, Fischer played a key role in the 1990s Asia debt crisis, when he was the IMF’s first deputy managing director. But the IMF’s executive board decided there was not enough support for Fischer for the board to recommend a change to the Fund’s by-law on the age of its managing director. Europe has control of more than a third of votes on the IMF’s board, and the continent lobbied for a candidate of its own. Lagarde stated at the time of her interview for the job as IMF head: “I will not shrink from the necessary candor and toughness in my discussions with European leaders.” Read more on the IMF leadership race and Euromoney’s interview with Stanley Fischer in the August edition.