The IMF and Madame Managing Director
- 6 July 2011
- From the section Business
Christine Lagarde is surely the first synchronised swimmer to take one of the top jobs in international finance.
She is also the first woman, which is a novelty that the staff of the institution clearly relish. The new managing director's "town hall meeting" with staff on her first day in the job, on Tuesday, was full of people and by all accounts plenty of goodwill.
But the IMF can't rely on goodwill alone, in fact sometimes it needs to inspire the exact opposite.
Aside from that missing Y chromosome, Christine Lagarde is not a novelty at all. Though there are 187 countries in the IMF, five of the 11 managing directors have been French and all have been European.
When I interviewed her after her press conference today, I asked Lagarde whether she felt uncomfortable that her nationality had been a large factor in her getting the job. Was it something in the wine perhaps that made French people better-suited to the job of running the Fund?
Well, she said, the wine did give people greater longevity, and she intended to be in the job for five years. As for the rest of it, she was looking forward, not back. Change of subject.
I'm tempted to say, fair enough. After all, it's not only the unusually rapid and united support of European governments that got her this job. I've now been told that China and Brazil also played a key part.
Hours after her candidacy was announced, the Chinese called her privately to offer their support. Days later, the Brazilian finance minister made it known to the Europeans and the US that Brazil would not be getting behind an alternative, emerging market candidate.
From that point on, Lagarde's coronation was assured. Even the Americans could not have changed the result. (And, as we know, they didn't try.)
So when she says, as she did in our interview, that she did not see herself as a purely European candidate, those are not (just) empty words.
Yet, there is no getting round the fact that European governments put her where she is today. Now she must decide whether she will return the favour in her approach to the crisis in the eurozone.
Most economists, in fact, any serious observer of the situation, says there will be no solution without a major reduction in the debt of the governments in trouble, particularly Greece. Martin Wolf has a stab at the numbers involved in his latest column in the FT. The only question is whether private investors will bear the loss or European governments will, not to mention the IMF, which now has so much of its balance sheet tangled up in Greece, Portugal and Ireland.
In her interview she told me there would need to be a more comprehensive solution than has been attempted in the past, and said that European governments' approach in the past had been too ad hoc. It's easy to say, but she didn't give much indication how she would force such a solution in practice.
Governments often need the IMF to be the outsider, forcing them to do what they lack the political will to do on their own.
Plenty of people wonder whether she can possibly take that approach in the eurozone, when only days ago she was negotiating on the other side. But as she said herself, with her typical grasp of English cliché, "the proof of the pudding will be in the eating".