Stanley Fischer, governor of the central bank of Israel, at the IMF-World Bank spring meeting in Washington
Israeli central banker Stanley Fischer is examining a formal bid to head the International Monetary Fund, and figures he has an outside shot at the job if there is a deadlock in the voting, said an official familiar with his thinking.
Mr. Fischer, a former deputy managing director of the IMF, is a long shot. While he's widely respected among central bankers and finance ministers, his current position as Israel's central bank governor would make it tough to win the support of Arab nations and other emerging-market countries, said one Arab official who has worked with Mr. Fischer.
However, George Abed, former head of the Palestinian Monetary Authority, said Friday that Mr. Fischer is "the most qualified of all the candidates that I have seen mentioned in the media so far" for the IMF job. Mr. Abed called Mr. Fischer "pragmatic, politically savvy, and a skilled manager" in an email exchange with the Wall Street Journal.
For now, the odds-on favorite is French Finance Minister Christine Lagarde because she is widely supported in Europe, which has about 35% of the votes in the IMF. A simple majority is needed to win the job.
Ms. Lagarde and Mexico's central bank governor, Agustin Carstens last week declared their candidacies to replace former IMF Managing Director Dominique Strauss-Kahn, who resigned after being arrested in New York on charges of sexually assaulting a hotel housekeeper.
The major European governments have coalesced quickly behind Ms. Lagarde. However, emerging economies, led by Brazil, Russia, India and China, have called for a break with the six-decade old tradition of appointing a European to the IMF's top job and an American to the IMF's No. 2 slot.
Mr. Carstens hopes to lock up the emerging-market bloc, while other candidates from developing countries could announce their candidacies in the coming days, including former South African Finance Minister Trevor Manuel. The IMF plans to announce three candidates by June 10 and select a winner by the end of the month. The organization, with 187 member nations, provides economic advice, technical assistance and emergency loans around the world.
The U.S., with 17% of the votes, could put Ms. Lagarde over the top, but hasn't indicated it will back her—at least in part, to make the process seem fair and open. The U.S. also wants to be able to install White House economic official David Lipton in the No. 2 slot, once occupied by Mr. Fischer. If Europe gives up the top position, the U.S. would likely have to forgo the second.
U.S. President Barack Obama didn't offer his support for Ms. Lagarde when French President Nicolas Sarkozy broached the subject during bilateral talks Friday at the gathering of the Group of Eight industrialized economies, according to sources close to the U.S. delegation.
If neither Mr. Carstens nor Ms. Lagarde—nor any other candidate—can show strength beyond their region, Mr. Fischer figures IMF officials, who know him well, might turn to him as a compromise pick, said the official familiar with his thinking. The official said Mr. Fischer—who was born in what is now Zambia and is a U.S. as well as an Israeli citizen—has had indications of support from nations apart from Israel.
But Mr. Fischer's odds are very low. He spent most of his career in the U.S. and held the IMF's No. 2 post, which by tradition goes to an American.
If Europe's hold on the top job were broken, "it would be done more on the grounds of increasing participation from emerging economies—not encouraging a candidacy from the IMF's No. 1 and largest shareholder," said Domenico Lombardi, a Brookings Institution economist and former IMF board member. "It would be very difficult for [Mr. Fischer] to portray himself as a non-American. He was designated as the No. 2 at the institution because he was American."
Based simply on his economic credentials, Mr. Fischer is one of the most qualified officials to lead the IMF. After a career as a respected academic economist, and a stint at the World Bank, he earned widespread respect during his time at the fund.
But even with his economic qualifications, he may fall short in his political profile compared to other candidates, Mr. Lombardi said. "He's a highly regarded technocrat. He's not a politician...This would be an important requirement given the increased political role the IMF has had in the past couple of years."
Mr. Fischer also is 67 years old—two years older than IMF rules allow for the initial selection of a managing director. But IMF experts have said that the board could waive or change those rules.
Asian countries might balk at a Fischer candidacy because of his role at the IMF during the Asian financial crisis of 1997-1998, which is remembered in the region as a time when the fund imposed unfair requirements on bankrupt nations in exchange for rescue loans.
Mr. Fischer has a wide range of close colleagues in the Obama administration, including Treasury Secretary Timothy Geithner. During the Asian crisis, Mr. Geithner, then a Treasury international affairs official, worked closely with Mr. Fischer to devise strategies to contain the economic turmoil.
But the U.S. opposed Mr. Fischer's candidacy for the top IMF job when he ran for it in 2000. Mr. Fischer won substantial support from Africa and the Middle East, including from Mr. Manuel of South Africa. But the U.S. balked, trying to preserve the tradition of the top IMF job going to a European and the second position going to a U.S. citizen.
Mr. Fischer figures he can blunt somewhat the opposition that an Israeli candidate might engender, said the official, because he has close ties with top Palestinian leaders. They include Palestinian Prime Minister Salam Fayyad, whose career Mr. Fischer advanced when Mr. Fayyad was at the IMF, and Mr. Abed, formerly of the PMA.
Messrs. Fischer and Abed worked together at the IMF before Mr. Abed left to run the PMA, which is the banking regulator of the West Bank and Gaza Strip, and would become the central bank of an independent Palestinian state.
In his Israeli job, Mr. Fischer helped Mr. Abed, who revamped and reformed the PMA. "In my tenure as Governor of the Palestine Monetary Authority under very challenging political circumstances, Stan, as Governor of the Bank of Israel, was very helpful to me and, subsequently to my successor," Mr. Abed said, "especially in navigating the exceedingly difficult relationship between Israeli and Palestinian banks."