Meet Christine Lagarde, Europe's consensus choice to replace Dominique Strauss-Kahn as chief of the IMF.
- By Eric PapeEric Pape is a writer in Paris.
PARIS, France — French government ministers can come across as remarkably close to some of their stereotypes. Some are haughty and pander to their bosses — the prime minister and president — like royal courtesans. Many talk eloquently but with little substance, as though speaking well is more important than saying something meaningful. And a few act as though they believe that, as a result of their positions, they are virtually untouchable.
Then there is Christine Lagarde, universally seen as the front-runner — and Europe’s strongest bet — to become the next managing director of the International Monetary Fund (IMF). As France’s finance minister since 2007, she was the first woman to ever oversee a G-8 economy, and yet she comes across in one-on-one encounters as down to earth, warm, engaging, and a bit quirky. (In a film, Annette Bening would play her perfectly.) Surely, few other government ministers are vegetarians, have ever competed in synchronized swimming from early adolescence, or had a mother who moonlighted as a rally car driver.
Those who interact with Lagarde often sense that her professionalism was shaped as much by the United States as by France. While she grew up in de Gaulle’s France, she spent a year at Holton-Arms, a girls’ school in Bethesda, Maryland, and she did a stint as an intern in Washington for William Cohen, a Republican congressman. Like many others, she failed to gain admission to France’s prestigious École Nationale d’Administration, an elite finishing school for much of the political class, instead choosing to study law and garnering an offer from the Chicago office of the prominent international law firm Baker & McKenzie.
These days, she makes a special effort to avoid jargon, lingo, and wonkiness, and she speaks nearly flawless English, which is extremely rare for top French government officials of her generation. How well? She not only tangled with Jon Stewart on the Daily Show a couple of years back, but also managed to convey some meaningful points about international economics. More recently, on May 25, she even launched a Twitter account to support her IMF candidacy.
The combination of her quirky upbringing with a single mother, after the death of her father during adolescence, and the decisions she made to repeatedly return to the United States has led to her comfort with being something of an outsider in the workplace. In Chicago, Lagarde was a rare female attorney in a male-dominated law firm — and she rose to the top, eventually becoming its first-ever chairwoman. She so fully inculcated in herself the pragmatic American professional culture that she proved to be an oddity amid her highly formatted French colleagues when she returned to Paris full time after she was recruited into government in 2005 by Prime Minister Dominique de Villepin. Still, she rose from deputy minister of foreign trade under then-President Jacques Chirac to become agriculture minister two years later, before the incoming President Nicolas Sarkozy, impressed with her can-do spirit, tasked her with running the economy.
The competence and pragmatism that Lagarde has shown in her current position help to explain why she has won the strong personal endorsement of U.S. Secretary of State Hillary Clinton. "I actually know her. I admire her…. I am a strong supporter of qualified women, of which she is certainly one, being given the opportunities to lead international organizations," Clinton said on May 26. (The United States will not officially highlight its preferred candidate until after June 10, once all the candidates have been official declared.)
Clinton is hardly Lagarde’s only fan. She had a constructive working relationship with Dominique Strauss-Kahn, the French former head of the IMF whose resignation over shocking sex crimes charges in New York has led to her candidacy; and her counterparts in Europe see her as an able and stabilizing interlocutor for a French president whom some see as erratic. Sarkozy expressed his confidence at last week’s G-8 summit in Deauville, France, noting that though it is not up to a handful of the world’s wealthiest countries to chose Strauss-Kahn’s successor, the issue came up in bilateral discussions and "everyone" thinks that Lagarde "would make a very good managing director."
The idea that Sarkozy might replace a former political rival, Strauss-Kahn, with one of his closest ministers and simultaneously keep a French person at the helm of the IMF should bring him special satisfaction. The question is whether the unpopular president can afford to let her go.
When Lagarde first took over the country’s finances, she appeared to be a strikingly free market choice for France — at least until the global economic crisis hit in 2008. An economic model that she lamented for being too rigid proved to be fairly recession-resistant as the crisis cascaded across Western Europe. (To her credit, she readily recognized the need to adapt to circumstances, tolerating a sudden spike in government spending to fund much-needed economic stimulus.) While unemployment in the United States nearly doubled and el paro tripled in neighboring Spain, France’s chomage rose only by about 20 percent. France’s debt ballooned, as in nearly all Old World economies, but its real estate market didn’t collapse and there was no broad wave of foreclosures. And significantly, France’s public deficit, which jumped from 3.3 percent in 2008 to 7.5 percent in 2009, is now expected to be around 5.6 percent this year (thanks to increasing fiscal discipline), with a return to pre-crisis levels by 2013 or so. Despite the many challenges of recent years, Lagarde has remained atop France’s Finance Ministry since 2007, bringing remarkable stability to a position that has long seemed like an ejection seat. Hers is the longest stint at the helm since 1974, and it amounts to an eternity in a position held by seven different ministers in the seven years prior to her arrival.
Internationally, Lagarde has promoted efforts to develop a renewed international regulatory framework aimed at preventing a return to the speculative excesses that propelled the crisis, and she has promoted a combination of greater fiscal restraint for Europe’s most debt-laden countries while also pushing to secure resources to keep them afloat and bolster faith in the euro. Her activeness and pragmatism in navigating through economic crises helped to earn her the Financial Times distinction as "European Finance Minister of the Year" in 2009, while Time, the Wall Street Journal, and Forbes have ranked her among the most powerful women on Earth in recent years.
But one internal obstacle could act as a deal breaker for Lagarde’s aspirations to take over at the IMF. A judge is slated to declare on June 10 – the same day candidates are finalized — whether French justice will pursue a case against Lagarde for overstepping her authority. The issue in question involves her decision to settle out of court with a prominent French businessman, Bernard Tapie, much of whose wealth was confiscated in the 1990s in relation to a corruption affair that sent him to prison for a brief stint. A judge later voided the confiscation, but its subsequent valuation remained a source of debate.
Ignoring the recommendation of some in her ministry, Lagarde decided in 2007 to settle the case by ordering the return of Tapie’s money, plus extensive interest, from state coffers, as well as a settlement believed to be worth approximately 210 million euros, including 45 million euros in damages. A flamboyant former minister in a Socialist government, the Trump-esque Tapie is the sort of financier whom few French people have much sympathy for, especially these days. The fact that he supported the conservative Sarkozy in the 2007 presidential race has also raised suspicions in France. Lagarde argues that her decision to end the Tapie saga is now being used by Socialists simply to undermine the government, rather than because she did anything wrong. She also almost certainly resolved the Tapie case at Sarkozy’s behest. Still, if the judge decides to take the investigation forward, it could make it difficult for the IMF, under the current circumstances, to choose someone who is under a legal cloud at home.
If Lagarde is ultimately selected, she may prove to be as much of a fish out of water in Washington as she has been throughout her career — and the lifelong swimmer just might continue to advance upstream.