BRICS disunity on IMF leaves Lagarde clear run

NEW DELHI: The scramble for the IMF top job was a chance for the BRICS group of emerging nations to flex their collective muscle, but it has instead revealed the limitations of the alliance, analysts say.

The BRICS group -- Brazil, Russia, India, China and South Africa -- has emerged as a possible counter-force in international affairs to Western nations and its clout was enhanced by the global financial crisis.

The leaders from all five countries, which account for 40 percent of the world's population, met last at a summit in April and they have coordinated on issues from climate change to trade and the war in Libya.

The vacant position at the International Monetary Fund (IMF) appeared an ideal opportunity for them to press one of their core demands: that Western-dominated institutions be opened up to the emerging world.

Initially, they issued a statement strongly condemning the selection process that traditionally sees a European lead the Washington-based lender, and then they began behind-the-scenes negotiations on a common candidate.

"We are trying to consolidate our position where we can take a view," Indian Finance Minister Pranab Mukherjee told reporters in New Delhi at the end of May.

But when the window for nominations shut on June 10, only Mexico's central bank chief Agustin Carstens stood in the way of Europe's choice for the job, French Finance Minister Christine Lagarde.

Carstens, a 53-year-old former IMF director, could count on no public backing from emerging countries despite a world tour during which he promised to reduce the influence of developed nations at the lender.

A final decision will be announced by June 30 at the latest.

"The BRICS is not a diplomatic force because apart from the fact that they are all emerging market economies, they have little in common," said Jayshree Sengupta from New Delhi think-tank the Observer Research Foundation.

The origin of the BRICS name reflects this: it was coined in 2001 by the investment bank Goldman Sachs to lump together major fast-growing economies.

"The BRICS do not have many policies in common," added Sengupta. "They could come together for a common powerful future, but the cement in the BRICS is missing."

Unlike the G7 group of developed nations -- democracies with industrialised economies -- BRICS includes authoritarian, manufacturing powerhouse China, and four democracies, two of which are raw material exporters.

On the IMF, there is apparently no BRICS consensus on how to reform voting rights, or the appropriate level for the Chinese currency, another key issue likely to confront the next managing director.

"It (the BRICS alliance) is not very united and it has limited influence," said Andrew Kenningham, a London-based economist at Capital Economics.

"All these multilateral groups struggle... because they're ultimately sovereign governments that have their own different agendas."

In recent weeks, BRICS solidarity appears to have been sacrificed in the name of national interest, with each country pushing for the best possible deal under a European chief.

China was reportedly keen to see the Fund's Chinese de facto deputy managing director Zhu Min installed formally in the position, while other titles such as the chief economist are up for grabs.

"If the BRICS wanted to prevent a European from getting the job they could do it," said Edwin Truman, a fellow at the Peterson Institute for International Economics in Washington, in emailed comments to AFP.

"If they had all come out for Carstens, many of the other developing country constituencies would have done so too, and, in my view, the United States, and I suspect Canada and Japan, would have done so as well."

But Mark Weisbrot, co-director of the Center for Economic and Policy Research, also in Washington, believes that tomorrow's superpowers simply decided not to put up a fight.

He noted that in the past they have effectively countered the West at the World Trade Organization and were united in their criticism of the NATO-led bombing campaign in Libya.

"I can't blame them for not fighting over the managing director position," he says. "If you have to chose the battles, then I wouldn't choose that one. It's a fairly symbolic thing.

"There is no doubt that the world is becoming more multi-polar and the United States can't run the show like it used to. That trend is only going to accelerate."

Copyright AFP (Agence France-Presse), 2011