Mexican bank leader continues fight to head IMF

MEXICO CITY — Mexico's central bank governor Agustin Carstens knows that he faces an uphill task: the votes in his bid to be the first representative from an emerging economy to lead the International Monetary Fund are not adding up.

Still, Carstens says he will continue his campaign to beat French Finance Minister Christine Lagarde, even as the powerful voting block of Europe and countries outside such as Egypt and Indonesia line up behind her.

"It's difficult but not impossible," Carstens told The Associated Press in an interview. "As they say in baseball games, it's not over till it's over."

Carstens argues that as an authority in an emerging economy he is more qualified to lead the fund, where he has already served as executive director and deputy managing director. Countries such as Mexico, Brazil, China and India stand to make up more than 50 percent of the world economy by next year, he said, while the traditional powerhouses of the U.S. and Europe face stagnation and crises.

The World Bank predicts the economies of Latin America and the Caribbean will grow by a total of 4.5 percent this year, and Mexico by roughly the same percent.

"For the last several years the economies who have been contributing to world economic growth and stability are emerging markets," said Carstens, who holds a doctorate in economics from the University of Chicago. "We're doing something right."

Carstens is heading to China and Japan this week for his final stops on his quest to take the IMF helm. The IMF executive board is expected to choose a replacement for Dominique Strauss-Kahn, who resigned last month after his arrest on sexual assault charges, in the final week of June. Strauss-Kahn has pleaded not guilty.

Lagarde, a lawyer by training, has made the same world stops as Carstens.

The IMF, made up of 187 countries, lends money to countries in financial distress and has played a key role in trying to solve Europe's debt crisis. Its members are represented through a quota system broadly based on their relative size in the global economy.

For much of its history since its creation after World War II, the dynamics in the IMF didn't change much but the rise of China and other emerging economies over recent years has seen some increases in their voting power.

The IMF has always been headed by a European since its creation, something Carstens called a "regretful tradition" that holds the fund "hostage."

China, India and Brazil, three of the fastest growing nations in the world, have also argued that the IMF process for choosing its leader should be more open. Still, none of those countries have so far come out in support of Carstens.

Brazil's finance minister Guido Mantega said Monday that Brazil is still evaluating the candidates, though he called Carstens' candidacy important.

While the Chinese government too has said it favors an open process for choosing a managing director, it has not expended any political capital in that regard. Beijing already is well-represented in the IMF hierarchy and has a large and growing influence over IMF activities.

Carstens boasts the support of 12 Latin American countries, but he lacks those with the most voting power — Argentina and Brazil. He didn't want to respond to suggestions they and other countries are trying to cut deals with Lagarde in exchange for their votes.

"I cannot explain the reasons Argentina and Brazil have not come out and expressed their support, you should ask them not me," he said. "They assured me they haven't made up their minds."

He said he started the campaign at a disadvantage because European nations, which hold about 30 percent of the voting power, decided to back Lagarde from the beginning.

"Europe is overrepresented in the fund, with more voice and representation than Europe has in the world economy," he said.

He could win the managing director job without Europe. But he can't win without the U.S., a country with about 16 percent of the vote. Though the U.S. has so been neutral in the race so far, it has never broken from Europe in who should lead the IMF. In return, Europe has always supported a U.S. candidate to head the IMF's sister organization, the World Bank.

"So far it hasn't happened," Carstens said. "Hopefully there will be a first."