Christine Lagarde takes IMF reigns

Christine Lagarde has been elected by the IMF’s Executive Board to be the fund’s new managing director, filling the vacancy created by the arrest of Dominique Strauss-Kahn. France’s Minister of Economic Affairs, Finances and Industry and a former synchronized swimmer, Lagarde will lead the global rainy day fund for the next five years. As the French saying goes, “Cherchez la femme” (Look for the woman). And so they’ve found her.

A European to save Europe

Lagarde’s candidacy was supported by every influential member of the IMF. The United States, as well as some other countries, including Brazil, declared their support on Tuesday. Prime Minister Vladimir Putin described her as a “serious” and “acceptable” candidate in early May, and Finance Minister Alexei Kudrin confirmed on Tuesday that Russia would vote for Lagarde, even though Russia, along with other emerging economies like India, China, Brazil and others, are dissatisfied with the predominance of Europeans in the IMF’s management and its general slant to the West.

The IMF has been traditionally headed by a European official, while Americans have held the reigns of the World Bank. Lagarde is the fifth French official to head the IMF. Her main competitor for the position, Mexican Central Bank Governor Agustin Carstens, was a distant second. The entire European Union backed Lagarde, as did the United States. And this bloc of votes (Europe alone owning 30% votes) outweighed all the remaining votes of the 187-member IMF.

Perhaps now is not the time to change how the IMF head is elected or to inject some Asian, African or Latin American blood into it. Given the difficult situation in the global economy, with lingering aftereffects of the economic downturn, perhaps there is good reason not to rock the boat.

Christine Madeleine Odette Lagarde will have to navigate the IMF through the financial crisis roiling Greece and the entire European Union.

Given that Greece is unlikely to recover any time soon and its disease can spread to the entire European Union and the global financial system, a European heading the global creditor is probably the best choice.

The only flaw the world seems to find with Lagarde, 55, is her lack of a degree in economics. She is a lawyer by training. Along with being the first woman ever to head the IMF, she is also the first leader without a solid economic or financial background. All the previous IMF heads have had one or both.

But Lagarde appears unfazed by the criticism. And with an army of qualified economists by her side, she does not need to be a university professor of finances to run the fund. All the more so since Lagarde, with her perseverance, talent and an inherited love of academics (both her parents were teachers and professors), has gained an in-depth knowledge of finances during her career in the French government.

The IMF, in fact, badly needs something Lagarde has in abundance – her ability to maneuver, find the right approaches, smooth out rough edges and gently prod partners toward compromise. Some say these skills go back to her training as a synchronized swimmer. She was on the French national team in her teen years.

This ability to maneuver while sticking to the larger, strategic course is a great asset for a managing director to have, especially now.

A strong will wrapped in grace

For all her elegance and grace, Madame Lagarde is not gullible or complacent. She has shown an iron will and aggressive attitude during her career as a minister of trade, agriculture and finance, and before that, as the head of the major U.S. law firm Baker McKenzie. She is a highly qualified lawyer, fluent in English after many years in the United States. In fact she is often called “the American” at home.

Just like any other arm of the UN, the IMF is resistant to dramatic changes in course. This boat is too heavy and needs a lot of time and space to make a U-turn.

Her predecessor, Strauss-Kahn, had begun the process of turning the IMF to face the emerging markets – India, Russia, China, Brazil and others. Lagarde seems willing to go even further.

During her month-long campaign for the post of IMF managing director (she announced her intention to run on May 25), Lagarde toured the capitals and met with IMF members, telling each of them exactly what they wanted to hear.

“I’m not a French candidate. I’m not a European candidate. My ambition is to serve the institution, to serve the International Monetary Fund. I think that the fund doesn’t belong to anybody. It belongs to the 187 members,” she said, adding that there will not be the same “doctrinal approach” that dominated the IMF in the past. “The IMF is not the doctrinal property of such and such a school,” she said. She also said that the IMF should not adopt a “one size fits all” approach, but adjust to different circumstances and show understanding toward countries that need help.

China was promised a greater quota (the financial contribution a country makes to the IMF), which will proportionally augment China’s influence in the organization.

Time will show how many of the promises will be fulfilled. Until recently, when the IMF issued loans to countries on the verge of bankruptcy, it almost always forced the ailing economies to institute austerity measures. That was rarely productive and often led to social upheaval. This policy was close to usury.

On the other hand, failing impose harsh conditions would amount to giving handouts. That was sometimes the case, too. Maybe Lagarde knows of a better way.

What’s obvious is that she is a remarkable woman in many ways. Born in Paris, Lagarde is France’s first female finance minister. She has also become, next to President Nicolas Sarkozy, the best-known face of the French government outside France. She has been ranked among the top ten most influential women in the world. And she is famous for her wry comments on the gender bias in politics and finance.

While talking about the latest crisis in the Euro zone, she noted recently that the euro was given “fragile foundations” by its “founding fathers.” “Founding fathers, not mothers, notice. Regrettably there was no woman at the table at the time,” she added. She believes there should never be “too much testosterone in one room.”

A vegetarian who never drinks alcohol, she enjoys yoga, gardening and, of course, swimming. She has two grown-up sons. She did not remarry after her divorce but is in a long-term relationship.

The views expressed in this article are the author’s and do not necessarily represent those of RIA Novosti.

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