June 29, 2011
France’s Christine Lagarde is IMF Managing Director
WASHINGTON: France’s Christine Lagarde was named on Tuesday (June 28, 2011) as the first-ever female chief of the IMF, faced with an immediate crisis as violent Greek protests rocked the stability of the eurozone.
The French Finance Minister, respected for her leadership during the financial crises that have rocked Europe over the past three years, was chosen to replace countryman Dominique Strauss-Kahn, who resigned abruptly on May 18 after being arrested in New York for an alleged sexual assault.
“I am honoured and delighted that the board has entrusted me with the position of MD of the IMF.” Lagarde said via Twitter minutes after the announcement.
Despite grumblings from emerging economies over Europe’s 65-year lock on the IMF’s top job, the solid support of the United States and European nations made it virtually impossible for Mexican challenger Agustin Carstens.
Ultimately key emerging nations, including Brazil, China and Russia, also gave Lagarde their backing. Choosing Lagarde was expected to ease concerns in Europe over the Fund’s support for the fragile bailouts of Greece, Portugal and Ireland in the wake of the unexpected departure of Strauss-Kahn.
“The executive board of the International Monetary Fund today selected Christine Lagarde to serve as IMF managing director and madame chairman of the executive board for a five-year term starting on July 5, 2011,” the Fund said in a statement. French President Nicolas Sarkozy’s office declared it a “victory for France.”
Since the race began in late May, 55-year-old Lagarde has been the strong favourite over Carstens, Mexico’s central bank chief, despite his formidable resume.
Despite an effort to cobble together a developing world challenge to Europe’s lock on the job, key emerging economies were persuaded by Lagarde’s lobbying to cast in for her.
And few had expected Washington to break the tacit pact, dating to the founding of the International Monetary Fund and sister institution the World Bank, that an American would run the Bank while a European headed the Fund.
The 187-nation Fund, which plays a crucial but often controversial role aiding countries in financial straits, was left reeling after Strauss-Kahn resigned in the middle of tense negotiations over Greece’s massive bailout and anxiety over other struggling European economies.
Strauss-Kahn, the IMF chief since 2007, was arrested in New York on allegations that he sexually assaulted a hotel chambermaid. He denies the charges, and remains under house arrest while preparing his defence.
With their crisis festering, Europe’s powers aggressively put forward Lagarde. Though not an economist, she has gained wide respect as France’s point-woman during its leadership of the G20 as well as in European debt talks.
“The big advantage of Christine Lagarde is representing a continuity in the cooperation between the Fund and the eurozone,” said a source close to the IMF. Nevertheless, Lagarde had to tour the world to convince emerging economic powers like China and India that she would not be too biased to take tough stances on the European bailouts.
“I am not here to represent the interest of any given region of the world, but rather the entire membership,” she told the IMF board last week.