With Trevor Manuel arising as the South’s candidate for the chief position at International Monetary Fund or IMF, Australia and South Africa demand a change in convention.

The incident opened a north-south conflict over the future of the agency. Consequently, the two countries asked the IMF management to choose candidates based on merit rather than nationality. This proposal has the support of Brazil, China and India.

French economic minister Christine Lagarde is Britain’s and other major European states’ candidate. However, Manuel who is a former South African finance minister, appeared as a strong challenger on Sunday.

A joint statement by Australia's treasurer, Wayne Swan, and South Africa's finance minister, Pravin Gordhan posed challenge to the European control of the IMF.

Swan’s and Gordhan’s statements reflect the claims of emerging powers and developing countries that the post-war status quo by which Europe chooses the head of the IMF and the US-run World Bank were no longer appropriate in a changing world half a century later.

Switzerland also declared it would not support a European for the managing director's job, and there were indications last night of a rise in support for South Africa's Manuel as an "outsider" candidate.

Another contender for the position is Mexico's central bank chief, Agustín Carstens. On June 10 the IMF's executive committee shall draw a three-person shortlist with an upcoming election on June 30.

Lagarde, who is presently involved in negotiations over Greek debt, gained speedy support from European capitals in an effort to conquer any uncertainty over the IMF’s future at a perilous moment in talks over Eurozone debt.

The German chancellor, Angela Merkel, the Italian president, Silvio Berlusconi, and the French government all commended Lagarde’s skills.

William Hague of Britain reaffirmed his endorsement of Lagarde. Meanwhile, Washington has so far made no comment on its inclinations.

Lagarde is confronted with a further threat to her candidacy in France, where a court has until 10 June to decide whether to investigate her role in the settlement of a legal claim in 2008 of €285m (then £226m) in favor of the previous minister and businessman Bernard Tapie. The French press is also scrutinizing her private investments for evidence of any conflicts of interests. With these, Lagarde denies any misdeed.