Christine Lagarde
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Christine Lagarde interview on second day in IMF job

The head of the International Monetary Fund, Christine Lagarde, has been speaking to the media on the second day of her new role.

The former French finance minister said the IMF must better reflect the shifting balance of power in the global economy.

Mrs Lagarde takes over from Dominique Strauss-Kahn who resigned in May to face allegations of sexual misconduct.

She confirmed to the BBC's Stephanie Flanders that her contract includes a new clause requiring her to uphold the "highest possible ethics".

Transcript is below.

Stephanie Flanders: So Christine Lagarde, you are here, the first woman managing director, first week in the job. What you're going to do? What are you going to change around here?

Christine Lagarde: Second day in the job, not even the first.

Stephanie Flanders: First week.

Christine Lagarde: Maybe the first week, but only the second day. I will try to engage as many people as possible. What I know about the fund as a shareholder, as a member, as a client, which I was for the last six years or so, is that there are multiple talents, extremely smart individuals, a lot of expertise, a lot of background on difficulties and ways to recover or ways not to recover. And my first priority will be to engage people, to make sure that we are focused on providing actually user-friendly services ranging from surveillance to actual financial support. That will be my key objective. We have got lots of priorities as you can imagine, but that will be the overarching goal.

Stephanie Flanders: You've talked about the importance of women coming into top jobs, but not wanting women to get special treatment but to prove themselves in the top job. But I guess you did get a special leg up just from the fact that you are a European. Do you feel comfortable with that?

Christine Lagarde: You may have noticed that before I was elected, I went around the world to actually explain what I stood for, and I made a point of visiting in particular the emerging market economies, because there were comments and concerns about the fact that it was just yet another European. And I made it very clear that I was coming as a candidate for the entire membership, caring as much for emerging market economies, low-income countries as well as developed economies, including the European ones. But I am not, I don't see myself nor do I feel specifically French or European. I feel very much a member of the entire community and having to serve the entire community.

Stephanie Flanders: But I mean you can't get around the fact, I mean there are 187 members of the IMF, there have been 11 managing directors, 5 of them have been French, how come you just - I mean is it something in the wine that makes French people particularly good at running the IMF?

Christine Lagarde: It gives us a better longevity that is for sure. And talking of longevity, my plan is to be here for the next five years.

Stephanie Flanders: But it is hard to justify, I mean you have 187 members, why should it be a job that has gone always to a European and so often to a French person?

Christine Lagarde: You know, I don't want to look back at what was done before. What interests me is what will be done in the future and the request by all was that the recruitment, recruiting process be open, transparent and merit-based. Now you might challenge my merits and anybody was in a position to do so. I don't think that I "owe" my election to the fact that I was European.

Stephanie Flanders: Just to go to the big challenge, the eurozone. I think no serious observer looking at the situation in the eurozone, not just Greece but other countries, thinks that you can get out of this ultimately without a very big reduction in the value of the sovereign debt, particularly of Greece, but probably other countries and that will be paid for either by the private investors who are currently holding that debt or by European governments. Do you think that your former colleagues, the European leaders have understood that, that there has to be a reduction in the value of the debt in these countries?

Christine Lagarde: It's not a matter for me or for the IMF, it's a matter for all concerned. And I think that the solution that we will have to reach will concern everybody.

Stephanie Flanders: When you say that, including investors?

Christine Lagarde: Private sector, international institution if they are asked to contribute and participate and it will have to be comprehensive, cohesive and not ad-hoc as sometimes has been the case in the past.

Stephanie Flanders: But it's interesting you say that. So you don't think that a solution has been reached. You do think there will have to be a comprehensive solution that goes beyond what's happened so far?

Christine Lagarde: It's an ongoing process of - just to give you for instance on Greece, there is a programme underway. The fourth review is scheduled for this coming Friday, the board meeting of the fund. We will see whether there has been appropriate delivery of the undertakings by Greece and we will decide or not to release the fifth tranche that is coming due. And it's an ongoing process that is obviously fueled by confidence or lack of confidence, volume of debt escalation as a result of this confidence or shortage of confidence. And I know we are driven by what happens yesterday, what happens today and what will such a separating agency will say. I keep in the back of my mind that what we are trying to achieve is restore the stability of the Greek economy and make sure that it is more competitive. The same goes for Ireland, the same goes for Portugal and I think it's a policy that we pursue the world over.

Stephanie Flanders: You talked about the approach having been too ad-hoc. What do you think has been wrong with the approach that European governments have taken that you have been part of?

Christine Lagarde: The Europeans governments have massively changed the landscape in Europe. There is no doubt about it. They have put together the European Financial Stability Fund. They have discussed and approved the European Stability Mechanism. They have come a long way and it is perceived as very much an ad-hoc process, an ad-hoc journey with one step after the other. It has to be communicated in a comprehensive and cooperative way.

Stephanie Flanders: Just on Portugal, obviously a lot of concerns this week and downgrading, which is based on the assumption that there will be a second IMF bailout or IMF European bailout of Portugal. Are you confident there won't be a second bailout of Portugal?

Christine Lagarde: You know I'm very comforted by the fact that the Portuguese programme, which is a very strong one, is supported by all political forces in Portugal. The fact that the political party in government reached out to the opposition, that the opposition was prepared to join and to embark in the negotiations, and in the discussions and in the partnership that was put together by the troika together with Portugal, I think is a very very significant strength. If Portugal delivers on the commitments that it has made under the programme, it will restore its position. I'm convinced of this.

Stephanie Flanders: As you know, in the past the IMF has sometimes lent money to countries that have defaulted on their sovereign obligations in one form or another.

Christine Lagarde: Who are you thinking of?

Stephanie Flanders: Iceland, Argentina have been willing to do that. Would you be willing to do that in the context of the eurozone, for any country in the eurozone?

Christine Lagarde: It's completely premature. We have three programmes in place. We need to have a very professional step-by-step approach in making sure that at each review, we take stock of what has been done, what has not been done and we pursue the partnership. It's, you know, much too early to actually say, "yes we will do this, we will do that."

Stephanie Flanders: We found out yesterday that you do have a new clause in the contract for the managing director about upholding the ethics, of the highest possible ethics. What does it say about the institution in the events leading up to you coming here that that kind of clause is now necessary, that we have to tell the managing director to behave ethically?

Christine Lagarde: Well, I see that that's partly a result of what I call judiciarisation. I don't know how that comes about, it's bit of a mouthful. But the fact that legal clauses and legalese are very much part and parcel of the improvement, but there is no question that this institution is solid, is sound, is driven by a combination of integrity and rigour, and I have a huge regard for this entire chemistry that is also based on a diversity that I want to improve and enhance.

Stephanie Flanders: You don't think that the institution has been damaged by what has happened to Dominique Strauss-Kahn?

Christine Lagarde: It has suffered a shock, it's obvious. You don't lose a managing director just overnight without suffering as a result. But, I think, again, we all need collectively to look at the future and to look at the future as positively as we can with a sense of service and you know, what are we delivering, what are we offering, what are we in for and concentrating on the service to the entire membership. The principle of evenhandedness, making sure that we include and integrate those that are underrepresented I think will guide me.

Stephanie Flanders: Do you feel a tiny bit grateful to the Manhattan district attorney for making it possible for you to take this job?

Christine Lagarde: Not at all. I think your question is interesting but as far as I'm concerned, slightly irrelevant.

Stephanie Flanders: Finally, just talking about the skills that you bring and you mentioned in your press conference that you are not a - the conductor doesn't need to be able to play all the instruments. You are not an economist, but you are a lawyer and in a past life you were a very good synchronised swimmer. Do you think that those skills will help you perhaps more than being an economist?

Christine Lagarde: I'm sure they will. I'm sure they will. And bringing skills together and making sure that people can actually display the best that they have is also an art that I will try to constantly improve, no doubt about it.

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  • 06 Jul 2011