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The inflation adjusted billion dollar question has become, \u2018what nationality should lead the International Monetary Fund (IMF)?\u2019 It used to be the $64,000 question, and then became the million dollar question. This says something about the \u2018naked\u2019 dollar or US influence or both.<\/p>\n
The tradition has been the Managing Director of the IMF was European. The tradition and traditional thinking has gotten us to where we are in today\u2019s inter-connected, borderless, flat-wired world in real time, resulting in credit crisis induced systemic risks, corporate and government bailouts at the expense of hard working tax payers. <\/p>\n
The established emerging markets like the BRICS countries, Brazil, Russia, India, China, and South Africa have raised valid points, and a recent FT article correctly mentioned, \u2018\u2026 the IMF executive directors for Brazil, Russia, India, China and South Africa said the \u201cobsolete unwritten convention\u201d of appointing a European as managing director undermined \u201cthe legitimacy\u201d of the fund and called for a \u201ctruly transparent, merit-based and competitive process.\u201d Announced on Monday, the shortlist for the post include<\/a> French finance minister Christine Lagarde and Central Bank of Mexico Governor Agustin Carstens, though Israel\u2019s Stanley Fischer had also thrown his hat<\/a> into the ring.<\/p>\n Now, what if the suggestion had been for a Muslim to head the IMF? Imagine the uproar, with \u2018Shariah creep Trojan horse\u2019 at the IMF resulting in dejure financing of terrorism with international lending agency\u2019s funds. Taken one step further, some may even say a benchmark sized, above investment grade \u2018terrorist sukuk\u2019 [with a Takaful put] offering led by syndicate of Islamic banks that is oversubscribed by family offices of narco-extremists and traded in the grey market in Afghanistan. <\/p>\n What if the new head of the IMF is Legarde, a non-Muslim woman who has embarked on making her country an Islamic finance hub since 2008? How would the world react? The point is, a Muslim in a very high profile position will probably result in a knee-jerk, sustained reaction of \u2018gloom and doom\u2019 by a vocal segment of society. Yet, a non-Muslim lobbying for Islamic finance, as part of financial inclusion, may not receive the same reaction and it will eventually die down as people will tire of Shariah takeover of capital markets, financial instruments, mass conversions of non-Muslims and non-Muslim countries.<\/p>\n As for how the real world works, the new Managing Director should be a moderate mind with thoughts of modernization of the institution to play catch up in today\u2019s contagion connected turbo-charged capital markets. The person would be someone who is a globally recognized brand by the western capital markets and media based upon merit and history of insights.<\/p>\n It would be someone who manages and speaks in hundreds of billions of dollars and tactical allocations in his nine to five job. Someone that can talk off the cuff about technical capital issues in the G-20 countries, which includes three Muslim countries, and switch gears to talk about geo-political issues in rapidly developing economies (RDEs). Someone who knows the difference between CDS (credit default swap) and CDs (certificate of deposits), between bonds and Sukuk, between leading and lagging indicators, between thinking outside the box and being boxed inside. <\/p>\n Someone who would easily be a keynote speaker at the prestigious and star studded Davos forum, but also empathetically connect with the financially disenfranchised. <\/p>\n One person who would have fit this bill is Dr Mohamed A El-Erian<\/a>. He bears double nationality, French and Egyptian according to Wikipedia (i.e., European citizen issues addressed) and previously worked for the IMF as an economist and was on the Committee of Eminent Persons. Presently, Dr. El Erian is the CEO and co-CIO of Newport Beach, California, based PIMCO (Pacific Investment Management Company), which manages about $1.2 trillion. Putting that number into context; it\u2019s much bigger than Islamic finance, larger than almost all Sovereign Wealth Funds, and about 10% of the US economy.<\/p>\n People like Dr El-Erian could move markets with comments via op-ed, books, media interviews, etc., hence, he commands the attention of markets, investors, regulators, policy makers and asset managers. He has written about the European debt crisis, hence, has a good grasp of the crisis unfolding in real time.<\/p>\n Together with PIMCO\u2019s co-founder, Mr Bill Gross, he coined the phrase the \u201cNew Normal\u201d in the post casino capital market crisis. The \u2018New Normal\u2019 is a reset of the different landscape in the post crisis world economy, and the ensuing of new opportunities for institutions and their clients. <\/p>\n Therefore, there needs to be a \u2018new normal\u2019 thinking for the head of the IMF. Dr El-Erian\u2019s candidacy would have hit a large number of important touch points in the \u2018post crisis new order world\u2019 (PCNOW), including an economist\u2019s understanding of boom\/bust cycles, strategist\u2019s thinking of tactical asset class allocations, and trader\u2019s mindset of quickly absorbing information, actively managing risks and transforming it all into knowledge for execution. This is the essence of merit for such an important position.<\/p>\n Oh, by the way he happens to be a Muslim. But did that really matter? Not really, but, unfortunately, it depends upon which camp one is speaking to.<\/p>\n Rushdi Siddiqui is the Global Head of Islamic Finance at Thomson Reuters<\/a>. Recognised as a thought-leader in Islamic Finance, Rushdi was a key force in the creation of the Dow Jones Islamic Index<\/a>, and is now a leading advocate of the convergence between Islamic Finance and the Halal industry.<\/i><\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":" The shortlist for the new head of the International Monetary Fund (IMF) has been announced, which includes French finance minister Christine Lagarde and Mexico’s Agustin Carstens. But in a globalized world in which Islamic finance is playing a larger role, there certainly could have been a suitable Muslim candidate considered (if politics were not a factor)<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-4338","post","type-post","status-publish","format-standard","hentry","category-commentary"],"yoast_head":"\n