Lagarde faces turning status into real power at IMF

28th June 2011, Comments 0 comments

Christine Lagarde comes to the top job at the International Monetary Fund with international stature, a eurozone debt crisis before her and unfinished reforms from the financial crisis at her back.

In fighting the fires of the eurozone-Greece crisis and the dangers it poses to the global financial system, she comes well-armed, not least because she is fully fluent in English and at ease in front of the media.

But Lagarde, poised to be named new IMF chief on Tuesday after winning the crucial support of the United States, must change hats and dissipate concern in certain quarters that she is a lawyer by training, not an economist.

Some commentators have also argued that, as French finance minister, she did not have a truly free hand and was monitored carefully under the watchful eye of President Nicolas Sarkozy.

-- Lagarde must lead world out of financial crisis --


For the past 18 months, latterly as a pivotal figure during France's G20 presidency, she has been a high-profile and, by all accounts, highly effective architect of financial-political solutions, but in a French-eurozone role.

Now she must follow Frenchman Dominique Strauss-Kahn, who resigned last month to fight charges of sexual assault, in taking a lead in guiding the world out of crises and towards a new and more robust financial system.

Central facets of this task involve developing a more powerful IMF with a bigger role for the emerging economies, many of whom dropped early objections to help place yet another European in the post.

Lagarde won the job on the back of her successful record as French finance minister and also because of her deep inside understanding of the eurozone crisis, which initially will be the new IMF chief's principal challenge.

She played on her international stature and also sought to broaden it during a whirlwind, marathon charm offensive in recent weeks when she criss-crossed the globe to argue why a European and French national should continue to head the fund.

The chairman of the financial commission in the French parliament Gilles Carez, commenting on her four years at the finance ministry, said: "She's the first minister totally to assume the international dimension to the job... (in that respect), she did wonders."

Sarkozy first named Lagarde as agriculture minister in 2007 but, in a quick cabinet reshuffle, promoted her, in part for her symbolic weight as a French woman who had made it in corporate America.

For years, Lagarde was chief executive at Baker & McKenzie, a law firm based in Chicago, a rare high-profile success for a French citizen in the US which made an impact in French political circles.

Once finance minister, and once the economic crisis began in 2008, she quickly showed herself at ease in international settings such as the Davos Forum. Lagarde was described by Time Magazine, in 2009, as one of the most influential women in the world.

However, some observers say that although an astute mover, Lagarde lacks intellectual originality.

"She didn't have a major intellectual impact, unlike a Balladur or Strauss-Kahn before her," Christian Saint-Etinnine, professor at Paris-Dauphine University, said.

-- Strauss-Kahn: A hard act to follow --


Strauss-Kahn, an economics professor and former finance minister, is credited with changing thinking at the IMF and with being quick to see new challenges and new opportunities in the aftermath of the financial crisis.

Within France, Lagarde made an impact within the framework of attempts by Sarkozy to reform the economy, even though this programme was knocked sideways by the financial crisis.

Lagarde was in the hot finance ministry seat when, in October 2008, France saved its banks from the ripple effects of the Lehmann Brothers collapse, injecting nearly 20 billion euros ($28.5 billion) in emergency loans.

Two months later, in part to fend off criticisms that Lagarde's handling of the crisis privileged international finance, France launched a 26-billion-dollar domestic spending scheme.

But the programmes were largely planned at the presidential palace and not in the hallways of Bercy, France's finance ministry. Lagarde's role was to promote the programmes, in France and internationally.

"All the final decisions are made at the Elysee," said Thomas Piketty, a professor and advisor to France's opposition Socialists.

Jerome Cahuzac, Socialist chairman of the finance commission in parliament said: "Christine Lagarde was the Elysee's reliable relay, a little audaciousness would have not done her harm."

But her political reliability, and unique talent in France of handling the world stage, has reaped dividends.

This year she became France's longest running finance minister for decades. Before her, there were seven ministers in seven years.

© 2011 AFP

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