New IMF leader ignores world realities

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(NNPA)—Part of me is delighted that France’s Finance Minister Christine Lagarde will replace the accused rapist Dominique Strauss-Kahn as managing director of the International Monetary Fund. She will be the first woman to hold this position, and her background makes her a good pick for this important position. That she is a Frenchwoman replacing another French national suggests no loss of power or influence for France after the national soul-searching on gender attitudes that the DSK imbroglio sparked. While gender is not likely to shape the ways that Lagarde approaches IMF business, interest in her gender and her background may motivate more women to consider international finance as a career path.

JulianneMalveauxBox

While the woman that I am, is cheering at the selection of Christine Lagarde, the woman of color in me wonders when the United States and Europe will loosen their lock on key global finance positions. Customarily, someone from the United States leads the World Bank, and someone from Europe the International Monetary Fund. Last year, at the G20 Summit in Seoul, representatives from China, Brazil, and other countries balked that their economies are not only influential, but also growing. When they argued that they, too, should be considered for leadership positions, there was concurrence. The selection of Christine Lagarde suggests that concurrence was only lip service.

When one considers the growing role that China plays in the world economy, including its recent bet on the euro, it is beyond myopic that China should have such a minimal role in international finance. One might argue, too, that leadership of the IMF or the World Bank should not simply be reflective of the size of a national economy, or a regional one. What about the African continent or Latin America? How would perspective change, if financiers from these countries had the opportunity to provide global financial leadership?

To be sure, neither gender nor nationality will shape an approach to the faltering economy in Greece, nor to the world economic slowdown. Except the whole world really isn’t slowing down. While Western economies are relatively stagnant, economies in developing countries are showing much more robust growth. Leaders from these countries may have different perspective on bailouts and other ways to induce world financial stability.

The world GDP is roughly $78 trillion; the U.S. GDP is $14 trillion, or about 17 percent of that. The GDP of the European Union is a bit higher, at $16 trillion. The U.S. and the EU have about 38 percent of world GDP. While the Chinese economy is growing rapidly, its GDP was just $5.8 trillion in 2009. Though China and India’s have more people than the United States, they have much smaller GDPs, with India’s hovering at just $1.5 trillion. Still, if the U.S. and the EU argue that size is the only thing that matters, then we had better enjoy our hegemony while we can. Certainly at the pace it is growing, and with the currency reserves it has on hand, China is poised to topple the United States within the next two to three decades.

(By the way I am aware that the larger economies pay a larger share of the operating funds of the IMF and the World Bank, and one might argue that she who pays the band calls the tune. She might find herself at a rather unruly party, if no one gets the beat.)

Instead of the “might matters” argument, we might look at other things that matter in terms of international financial leadership. What about growth rate? Educational development? Energy efficiency? These are all metrics that could be considered when leadership is being selected. Of course, the United States might not fare well when different metrics are used, which is why we’ve held fast to the notion that size is the most important things.

China’s presence at the world financial table is bound to push the envelope of western hegemony in coming years. As the Chinese economy gets larger, and as China claims a larger role in the development of other countries, including those on the African continent, it is likely that many will make the case that non-Western countries deserve more of a voice in world economic matters. Even as Christine Lagarde was being selected to lead the IMF there were rumblings from Brazil, especially, that there ought to be alternatives. When these rumblings become a roar, and they will, then the United States had better watch out.

As we struggle to lift the debt ceiling, we might also ask who holds our debt. Are we beholden to some of the countries that we refuse to treat fairly? This isn’t a question that will be resolved this year or next, but as world demographics shift, it is a question that will have to be answered. We in the United States must examine the advantages we enjoy from our “might is right” posture, and ask what we are prepared to give up in the interest of fairness.

(Julianne Malveaux is president of Bennett College for Women in Greensboro, N.C.)

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