Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, Economics editor for Bloomberg Businessweek Peter Coy will introduce us to Christine Lagarde, the new head of the IMF.
For the first time in history a woman will lead the International Monetary Fund, following the resignation of former leader Dominique Strauss-Kahn.
Christine Lagarde, like Strauss-Kahn, is French, and like her predecessor, she comes to the job after serving as Finance Minister. However though Lagarde and Strauss-Kahn share a lot of similarities, there are major differences between the two. Strauss-Kahn is a socialist, while Lagarde is affiliated with the administration of French president Sarkozy.
Peter Coy explained the function of the IMF as an institution whose main job is dealing with financial crisis.
It’s supposed to be an international lender of last resort. So the same way that the federal reserve is the financial crisis lender of last resort in the United States, they need to have something that is sort of multi-national, [for] what happens if a country gets in trouble. And you can imagine that they’re pretty busy right now, especially in Europe.
He said the IMF was created in the depression of WWII in 1944.
It’s had an eventful history and this is one of the most eventful episodes right now.
Christine Lagarde is a lawyer by training, born in 1956. She attended high school in the States and interned in Congress, before working at a large US law firm.
The IMF Director is a position that comes with a lot of power, and Coy said traditionally it has been an economist in that seat.
So she comes in and she saying right off the bat “I’m not an economist and I don’t pretend to know the micro aspects of this job, but I’m going to be… more like an orchestra conductor.. Orchestra conductors don’t have to know how to play the cello or the harp, they just need to know how to elicit the best performance."
Coy said Lagarde had to be strategic in seeking supporters, courting nations such as China and India.
She understands that Europe is the number one job for her to deal with right now, but she’s not going to get the support of the organization to deal with Europe unless she shows that she cares about the agenda of the rest of the world as well.
Predictably, Lagarde has been facing questions regarding the scandal involving her precursor at the lender. Coy said while he doesn’t think the IMF as a whole is too badly tarnished by the allegations against Strauss-Kahn, he does think the IMF might be tightening its ethics rules in response to the number of women who stated that there was a hostile climate towards women at the IMF.
Asked recently if she has concerns about the IMF’s credibility, Lagarde said that institution needs to be transparent and even-handed. Coy said part of the problem with being evenhanded is that IMF bylaws mandate that the lender cannot lend to countries without a sustainable plan to fix their finances. That explains, he said, the austerity plan passed by the leadership in Greece despite blistering protests.
It seems as thought some of the official organizations, the IMF in particular, are willing to kind of give a wink and a nod to the Greeks because they realize just exactly how deep their problems are. They kind of want to give them money if they possibly can because they see how severe the nation’s problems are.
One of the legacies of the discrediting of Strauss-Kahn, Coy said, is that many have forgotten what a good IMF leader he was.
He was charismatic, he was intelligent, he knew everybody who was anybody, he knew how to forge compromises. Now Lagarde has to show that she’s capable of the same thing, and I think she is.
Lagarde began the job this week on July 5th.