May 21, 2011
PARIS — France’s frank, hard-working and chic finance minister, Christine Lagarde, emerged Friday as Europe’s likely choice to lead the International Monetary Fund.
The IMF insists the departure of former chief Dominique Strauss-Kahn has not hurt its day-to-day operations, but it is clearly under pressure to find a successor fast to lead an organization that provides billions in loans to stabilize the world economy. A new chief would also draw attention away from the seamy scandal surrounding Strauss-Kahn, who quit this week to face charges in New York that he tried to rape a hotel maid.
Lagarde’s chances for the top IMF job got a boost Friday when Kemal Dervis, a former finance minister for Turkey, said he did not want to be considered for the job.
Dervis, who had been considered perhaps the leading non-European candidate, said he was happy in his current position at the Brookings Institution, a Washington think tank. Dervis is a prominent economist who had spent 24 years at the World Bank, the IMF’s sister lending institution.
Treasury Secretary Timothy Geithner said in a statement Friday that the United States was consulting broadly with IMF member countries “from emerging markets as well as advanced economies” during the search process for a new IMF leader.
A Treasury official on Thursday said the United States has not made a decision yet on whether to support Lagarde or a non-European for the job.
The IMF may face a choice between naming its first woman leader or its first leader from the developing world. Emerging economies see Europe’s traditional stranglehold on the position as increasingly out of touch with the world economy, but have not yet united around a candidate.
German Chancellor Angela Merkel said Friday that she “very much appreciates the French finance minister.” She insisted she wasn’t announcing Lagarde’s candidacy, just sharing her views.
Merkel has also said the next IMF chief should be a European, since the fund is deeply involved in tackling the eurozone’s sprawling debt crisis. Germany’s view is critical, since as the continent’s economic powerhouse it funds much of the bailouts to weaker eurozone nations.
Lagarde, 55, has a clean-cut image and has been praised for her acumen in helping steer Europe through the global financial crisis and its more recent debt woes. She speaks impeccable English and spent much of her career in the United States as a lawyer. One of the longest-serving ministers under French President Nicolas Sarkozy, Lagarde eased French labor laws and helped France weather its worst recession since World War II better than many other developed countries.
A champion swimmer as a teen, Lagarde is known for her colorful language and a sense of humor, and for being vocally pro-market in a capitalism-wary nation. When she took over as finance minister, she urged compatriots to stop their endless ideological yammering and “roll up your sleeves.”
Italian Prime Minister Silvio Berlusconi has openly endorsed Lagarde for the job, saying she would make “a great choice.” That view was backed by Swedish Finance Minister Anders Borg, who told journalists that Lagarde carries weight internationally and has a lot of experience.
Sarkozy hasn’t spoken publicly about Lagarde, possibly because that would feed domestic conspiracy theories that Strauss-Kahn’s troubles are a plot by political rivals. Strauss-Kahn, a Socialist, had been seen as the potential winner of France’s presidential election next year, while the conservative Sarkozy’s poll ratings are dismal.
The French foreign minister, however, expressed confidence that his continent would keep the job.
“Europe still has IMF leadership guaranteed,” Alain Juppe said Friday. “We have excellent candidates for the position and it would be wonderful if we agreed on a candidate that would then be accepted by the IMF board.”
French economist Nicolas Bouzou said Lagarde is “eminently competent” but the fact that she’s French “could pose problems.”
The IMF has already had four Frenchmen at its helm since its inception in the 1940s. Frenchmen also run the World Trade Organization, the European Central Bank, the London Stock Exchange and UEFA, the European soccer body.
Her gender “on the contrary, could help her,” Bouzou said. The IMF has never had a woman managing director.
Questions have also surfaced about Lagarde’s role in getting arbitration for maverick businessman Bernard Tapie, who won euro285 million ($449 million) as compensation for the mishandling of the 1990s sale of sportswear maker Adidas in 2008. Lagarde was finance minister at the time. No formal investigation has been announced, but prosecutors are looking into the matter.
Germany, Europe’s biggest economy, appeared hard-pressed to offer any candidate who had major-league political clout backed up by economic experience. Former Bundesbank chief Axel Weber’s political capital suffered badly when he resigned earlier this year, effectively ending Germany’s chances of leading the European Central Bank. Among other names mentioned, former Finance Minister Peer Steinbrueck is opposition party member and eurozone bailout fund chief Klaus Regling lacks a high political profile.
John Lipsky, the IMF’s acting managing director, said its 24-member executive board is seeking a new leader, but there is no indication yet when a decision will be made.
France hosts a meeting of the G-8 — a group of eight developed countries — next week in the seaside resort of Deauville, and all the major decision-makers will be there.
Together, the U.S. and Europe control more than 50 percent of the votes on the IMF’s board. A simple majority is all that is required to select the group’s leader.
With Dervis withdrawing from consideration, remaining candidates from outside the EU include Singapore’s finance chief, Thurman Shanmugaratnam and Indian economist Montek Singh Ahluwalia.
Poland said it may propose its own candidate, former Finance Minister Leszek Balcerowicz, who turned Poland’s post-communist economy into a market-driven one.
Gordon Brown, Britain’s former Labour prime minister, also ruled himself out Friday.
“No I am not pitching for the job,” he said while visiting a primary school in Soweto, South Africa.