Published by Minyanville
The IMF leadership race is heating up as Mexican central bank governor Agustín Carstens plays the economist card, touting his past and digging deeper at contender Christine Lagarde, France’s finance minister.
Carstens went as far as to suggest that a win by Lagarde could lead to a conflict or interest. He suggested that having a European head would cause problems as those countries attempt to solve a financial crisis. The organization has had a European head since its inception.
"It's very difficult to break a tradition of 65 years. And it's very difficult to break it in a particular point in time when a major, if not the major player which is Europe feels the need to have some control on the fund," he said.
“That makes it more difficult, and I'm not fooling myself. It's like starting a soccer game with a 5-0 score. The chances that you win are slim,” he added, conceding that Lagarde was likely to win the race.
“We emerging markets might take more than one round to get to the final position, but if we don't start at some point we will never get there."
The Mexican official made the comments on Monday in Washington, after talking to US Treasury Secretary Tim Geithner. He said that the US didn’t commit on supporting either himself or Lagarde, though it is expected to back his opponent.
Carstens has since visited China and Japan. Neither of the key Asian economies has expressed support for a candidate yet. Events in Greece got a mention from Carstens, which could give him an opportunity to dig into Lagarde: "The events that have taken place today, if they would be conducive to facilitate reaching a consensus in the country for the difficult measures that Greece needs to take, that's a very positive step.”
Carstens is able to link the Greek crisis to general problems in the Eurozone. “[Lagarde will] argue that she’s well placed, with political skills and managerial skills to broker compromises,” Simon Tilford, chief economist at the Center for European Reform, a London-based think tank, told Associated Press. “But the problem is that in many people’s eyes the eurozone leadership is discredited” by its failure to get a handle on its Greek problem once and for all.”
Tilford added that Lagarde may not be the best person for the job.
Domestically, the Mexican authorities are facing the same drug war that has plagued the entire presidency of Felipe Calderón. New York-based intelligence firm Stratfor looks forward to 2012’s elections but worries that a new Mexican president will not mean any changes to the cartel war. Calderón is not allowed to stand for another term.
Scott Stewart of the organization says: “One of the trial balloons that the opposition parties—especially the PRI—seem to be floating at present is the idea that if they are elected they will reverse Calderon’s policy of going after the cartels with a heavy hand and will instead try to reach some sort of accommodation with them. This policy would involve lifting government pressure against the cartels and thereby (ostensibly) reducing the level of violence that is wracking the country.”
However, he argues, this would just mean a return to the status quo of former PRI rule in the decades before 2000.
Drug cartels are thought to be behind oil thefts amounting to $250m in the first four months of this year, up around 50% on the same period last year, according to state oil company Pemex. Cartels and gangs tap into pipelines and often inject water to displace the oil and hide the drop in pressure. Many explosions have been caused, however, this has not deterred the thieves.
Direct of Pemez Juan Jose Suarez Coppel said that 556 illegal taps have already been detected this year compared to 710 in the whole of 2010. Many of these, around 150, took place in the state of Sinaloa, the heartland of Mexican drug trafficking.
The fight continues, however, as a cartel leader nicknamed "El Brad Pitt" was captured this week. He is accused of heading an armed wing of the Juárez cartel known as La Linea. Apparently the name comes from a disguise he once wore when acting as a lookout.
Monterrey-based Femsa (FMX) is one of many companies in the area concerned about the drug wars as big business being to receive extortion threats. “If we can’t deal with the problem in Monterrey, with all the resources and the people we have here, then that is a serious concern for the rest of Mexico,” said chief financial officer Javier Astaburuaga.
Cemez (CX) chief executive Lorenzo Zambrano said: “The trend is worrying but we won’t let Monterrey fall.”