US lets India down; votes against Chidambaram in IMF

When the Bush administration voted for the Canadian candidate instead of India's Finance Minister, P Chidambaram, who till end of September had been the front-runner to head the International Monetary Fund's Monetary and Financial Committee -- the IMF's influential policymaking body, it was the second time in less than two years that the US had let down India.

A year ago, the US, despite acknowledging that then UN Under Secretary General for Communications Shashi Tharoor had the credentials and wherewithal to be UN Secretary General and succeed outgoing UNSG Kofi Annan, opted for South Korea's Ban Ki Moon during the voting.

Sources told India Abroad that Chidambaram's candidacy -- which was backed solidly by the likes of Russia, China, Brazil and some developing countries, started going down the tubes when a group of Anglo-African countries led by Nigeria, which had earlier indicated that it would endorse India, had succumbed to some heavy-duty sustained lobbying by Italy and decided to ditch India.

Although the reasons for the move were not made public, the general consensus was that the Anglo-African nations, long time beneficiaries of aid from the industrial nations had put their apparent vested interests ahead of having a developing country like India break the tradition of having this Committee always headed by a representative of an industrialized nation.

Thus, with the US backing Canada along with Saudi Arabia, the Franco-African countries and some European nations while others and the group of Anglo-African states endorsed the Italian candidate, the race was now between Canada's finance Minister Jim Flaherty and Italy's Finance Minister Tommaso Padoa-Schioppa.

Sources had earlier told rediff.com that that Chidambaram's candidacy was being backed by some in the Bush Administration and also leading US economic think-tanks like the Peterson Institute for International Economics, and there was a lot of excitement.

If he had clinched the chair of this coveted position, he would have been the first candidate from an emerging market to occupy this seat, which has traditionally been the preserve of finance ministers from the industrialized world, and literally holds the purse strings with regard to the transfer of resources to developing nations, among several of its other functions.

The  sources acknowledged that US Treasury Secretary Henry M Paulson, whom Chidambaram met with on September 25 during a one-day visit to Washington to discuss bilateral and global financial issues, had been leaning in favor of supporting Chidambaram, but had been overruled by the White House, which had been insistent that the US vote would have to be cast for Canada to succeed Britain and chair this influential committee that meets twice a year to discuss the policy direction of the IMF and what action to take to alleviate the balance of payments and other financial crises of nations.

One of the most enthusiastic supports of Chidambaram was the Peterson Institute -- the leading and arguably the most influential economic think-tanks in the US, and last month during an appearance at Peterson to discuss India's Economy and Future Outlook, C Fred Bergsten, Director of the Institute introducing Chidambaram disclosed that he was a front-runner for this post and said this "is a clear indicator of the esteem in which Minister Chidambaram is held."

Bergsten said, "That he is (Chidambaram) being very actively considered was a clear acknowledgment of his caliber and track record as one of the key architects of economic reform in India since the early 1990s and obviously now with dramatic results."

"If I were a betting man," said Bergsten, who has headed the Peterson Institute since its creation in 1981, and is also the chair for the US side of the US-India Trade Policy Forum's Private Sector Advisory Group, "I would put my money on Minister Chidambaram."

He acknowledged that "there is some competition -- a few others who would like to have (this position) -- but given the desire of so many others in the international economic community to broaden the governance structure and to welcome leaders from the developing countries' emerging markets into key positions in the global decision-making structure, I think this is actually an enormous opportunity to do it."

"And, given the universally high regard in which Minister Chidambaram is held," Bergsten reiterated, "he would be a natural to lead that process."