Lagarde has second IMF term in the bag

Ms Lagarde, managing director of the International Monetary Fund, helped bring credibility to an institute reeling under the sex scandal of its previous chief Dominique Strauss-Kahn and steered it through rough waters, such as the Greek crisis.
Ms Lagarde, managing director of the International Monetary Fund, helped bring credibility to an institute reeling under the sex scandal of its previous chief Dominique Strauss-Kahn and steered it through rough waters, such as the Greek crisis.PHOTO: BLOOMBERG

With backing of global movers and shakers, Frenchwoman looks set to take helm again

Minutes after the application process for the top job at the International Monetary Fund (IMF) opened, incumbent Christine Lagarde was formally nominated by Britain's George Osborne for a second term.

Heavyweight endorsements quickly followed and, within two days, European bigwigs France, Germany and Italy had pledged their support for her candidature. Asian powers Japan, China and South Korea soon followed suit.

And with no challenger in sight thus far, the 60-year old Frenchwoman seems like a shoo-in for another five-year term at the helm of the Washington-based IMF.

A possible trial for criminal negligence in her home country will be but a minor distraction for the woman who not only helped bring credibility to an institute reeling under the sex scandal of its previous chief, but also steered it through rough waters, such as the Greek crisis.

"She was able to use the Fund effectively to help solve difficult situations and crises, not just in Europe," Italian Finance Minister Pier Carlo Padoan said of Ms Lagarde in Davos last week to Reuters.

United States Vice-President Joe Biden was also all praise for her during his address at the World Economic Forum, saying: "You are doing a superb job."

But a second term looks as challenging, if not more, as the first, with headwinds like a global economic slowdown, turmoil in China markets and competition from the newly minted Asian Infrastructure Investment Bank threatening to hit the sails.

A straight-talking lawyer and former finance minister of France, Ms Lagarde took over the reins of the 188-member IMF in 2011, when a sex scandal forced its then head Dominique Strauss-Kahn to resign.

She was the first woman to head the Fund, smashing the proverbial glass ceiling to smithereens as she fought off a tough challenge from Mexican central bank governor Agustin Carstens.

What followed was a difficult four years of financial tightrope walking, starting with restoring the lustre of the organisation tainted by the Strauss-Kahn saga, amid frustration among some countries over Europe retaining the top job at the Fund since 1946.

She was credited with working patiently to reform the IMF mindset away from the one-on-one working style of her predecessor to her own consensus-building style.

Long-time staffers said her leadership style revived morale. "Nobody feels left out," one senior official told the Wall Street Journal.

The tough negotiator was also credited with skilfully shepherding through a reform in the IMF to give greater weight in voting to China and other emerging economies. She had joked that she would "belly dance if needed" to see US ratification of the reform, which had stalled in its Congress.

Many have been bruised by her bold truth-telling. Just ask Mr Pierre Moscovici, her successor as French finance minister, who was chided by her for sleeping during a crisis meeting. At the recently concluded Davos summit, she called on China to communicate better with its financial market, currently being rocked by turmoil.

Her major successes were in keeping the IMF involved in a series of financial rescues for euro zone countries, notably Greece, as well as adding the Chinese yuan to the Fund's basket of reserve currencies.

The mother of two sons, once listed by Vanity Fair magazine as among the best-dressed personalities, was 23rd on Forbes World's Most Powerful People of 2015.

Perhaps the only dent to her reputation has been a French court order in December last year to stand trial over her involvement in a settlement paid to a French tycoon during her tenure as the country's finance minister. But that appears to have little impact on Ms Lagarde's IMF candidature, as she confidently announced her bid last week. "I've had the honour of receiving support since the opening of the procedure," she said, pointing in particular to the high-profile endorsements.

The US customarily waits till the end of the election process, which will be in March, before backing a candidate.

"Everyone has cause to be happy with Lagarde. We don't feel any counterwind," a senior IMF official told Reuters.

But, for Ms Lagarde herself, the allure of office, although important, seems to be secondary to her real passion.

"My real dream is to be a performing pianist," she once said.

A version of this article appeared in the print edition of The Straits Times on January 27, 2016, with the headline 'Lagarde has second IMF termin the bag'. Print Edition | Subscribe