MORE THAN 150 people had gathered in the sleek, light-filled conference room at the finance ministry in Paris on Wednesday morning by the time the tall, silver-haired figure of Christine Lagarde made her entrance and strode to the lectern. Having been alerted to a “significant announcement” by the ministry the previous night, journalists from around the world had turned up in such numbers that it took Lagarde 10 minutes to beat a path through the scrum of photographers at the door.
When she spoke, the room fell silent. When she so much as arched an eyebrow, a few dozen camera shutters clicked in unison. By her fourth sentence mobile phones were already buzzing with the rebounding news.
A politician declaring for the French presidency would struggle to generate half this much attention. That Lagarde managed it by confirming her desire to lead the bureaucracy of a remote financial institution tells us two things. The first is that the International Monetary Fund, having struggled to assert its relevance just five years ago, now interests some of the world’s most powerful people more than ever. And the second is that Christine Lagarde is a star.
A scene such as this would have seemed far-fetched six years ago. Back then the Paris-born lawyer, a former member of France’s synchronised-swimming team, was chairwoman of Baker & McKenzie, a large US law firm, living the life of a global executive between Chicago and Paris. She was virtually unknown to the French public when the then prime minister, Dominique de Villepin, called in 2005 and asked her to become trade minister.
Lagarde accepted, and remained in the job until 2007. Then, after a two-month stint as agriculture minister, she was appointed to Bercy, the finance ministry in Paris, by the new president, Nicolas Sarkozy.
Lagarde’s political and diplomatic skills have been widely praised this week, but her early days in government are remembered in France for the clumsy interventions of someone who has never run for election. In autumn 2007, as rising petrol prices were vexing the public, she advised people to get on their bicycles. She then earned the disapproval of colleagues by referring in public to a policy of rigueur (austerity), a word synonymous in the French memory with the painful cuts of the 1980s.
At the end of Lagarde’s first year in Bercy some were whispering about how much longer she would last. Her lowest point, she recently remarked, was when a journalist asked her during a G8 summit in Japan, in February 2008, whether she had offered her resignation.
Then came the financial crisis. Her steady, assured handling of the aftermath of the Lehman Brothers collapse, in 2008, drew international praise. She seemed to grow in stature every month, her command of the brief, her cool temperament and her personal warmth winning her allies in Washington, Berlin and elsewhere. In 2009 the Financial Timesranked her the best finance minister in Europe. She had a central role in approving the bailout mechanism to help struggling members of the euro zone and has co-ordinated France's presidency of the G20 this year.
“She is an exceptionally capable person, an excellent mix of financial and economic knowledge, talent and the kind of political skill you need to navigate this context,” the US treasury secretary, Tim Geithner, said this week.
Lagarde still has her critics at home. Being a newcomer to politics, she lacks a deep-rooted network in Sarkozy’s UMP party and still keeps a certain distance from domestic policy debates. Some left-wingers portray her as an ultra-free marketeer while some conservatives lament that she has become a classic French statist since joining the cabinet.
“I’m a liberal,” she said this week, adding that she espouses a regulated liberalism that “protects the weak against the strong” and respects the rules.
The plaudits Lagarde has received overseas have in turn boosted her standing at home, and polls now regularly place her as one of France’s most popular politicians. Declaring for the IMF job this week, she said she would bring to the role her experience as a “lawyer, company director, finance minister and woman”.
If appointed, she would become the first woman to lead the IMF, just as she was the first woman to run Baker McKenzie and the first to be France’s finance minister. She exudes a blend of authority, humility and self-possession rare in male politicians.
“In gender-dominated environments men have a tendency to show how hairy-chested they are compared with the man who’s sitting next to them,” she once said. “I honestly think that there should never be too much testosterone in one room.”
Lagarde, a 55-year-old divorcee with two grown-up sons, would change the IMF’s leadership style, but few believe her arrival would herald a major policy shift, at least not on the European crisis she understands so well. She pledged this week to retain the “social dimension” Dominique Strauss-Kahn had introduced, giving the fund a deeper sense of the need for social spending and of the effects of its policies.
But what would her appointment mean for Ireland? Given the French government’s insistence that Dublin must raise its 12.5 per cent corporate tax rate before it can be granted a lower interest rate on its bailout loans, some have wondered whether Ireland should be wary of Lagarde, particularly as the IMF under Strauss-Kahn was seen as supportive of Ireland’s stance.
It is true that Lagarde has challenged Ireland on the issue, but it has become clear from French and Irish sources that the pressure on Dublin has been driven by the Élysée Palace. I have attended numerous lectures and press conferences given by Lagarde over the past year, and not once has she raised the topic herself, though she repeats the government line when asked for her view. She gives every impression of neither fetishising the 12.5 per cent rate, as Ireland does, nor opposing it on principle, as Sarkozy does.
It is indisputable that, in Lagarde, Ireland would find itself dealing with an IMF chief who knows the country and its problems well. During her stints in the trade and agriculture ministries she travelled to Ireland and found common cause with Dublin on global trade and farming policy. She enjoyed a strong rapport with the former finance minister Brian Lenihan and gets along well with his successor, Michael Noonan. Her deputy chef de cabinet,Sonia Criseo, is a Limerick woman who has worked with her since the Baker & McKenzie days.
Even if she is antagonistic towards Irish tax policy Irish officials believe it’s highly unlikely that she would push for a shift in the IMF’s stance. One source at the Department of Finance points out that the detail of Ireland’s bailout deal was negotiated by technical teams from the IMF with relatively little involvement from the managing director’s office. “Strauss-Kahn signed off on the final press release,” the source says.
For those in Ireland who fear that the departure of Strauss-Kahn and the arrival of Lagarde would imperil the tax rate, the late 1990s provide an instructive lesson. In 1998 a French government led by the Socialist Party set off a rancorous row with Ireland when it pressed for the introduction of a single corporate tax rate throughout the European Union. The drive to harmonise the rates was a “priority project” for the high-flying, charismatic French finance minister of the day. His name? Dominique Strauss-Kahn.
