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IMF chief Lagarde: Woman of the year in 2012?

Unable to solve its euro crisis, Europe is turning to the International Monetary fund. Its new leader, Christine Lagarde, brings unusual skills to solve a debt crunch that could stall the world economy.

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    President Obama listens to International Monetary Fund (IMF) Managing Director Christine Lagarde at an Asian-Pacific summit in Hawaii in November.
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As a French woman who worked for years in America, Christine Lagarde brings a particular leadership style to solving the world’s economic woes. In 2012, her style – which is inclusive, humble, and pragmatic – could be the kind that leads Europe out of its financial crisis.

Ms. Lagarde took over at the 187-nation International Monetary Fund last July and, ever since, Europe’s squabbling politicians have looked to her to do what they have so far failed to do for the 17-nation eurozone.

Up to now, she has not been highly visible, even though she’s steadily filling a power vacuum for Europe. Lagarde prefers to work in the background, listening to diverse views, probing thorny details, and finding common ground.

Recommended: The eurozone crisis explained in 5 simple graphs

Perhaps she learned to shun the spotlight after being on a winning team in synchronized swimming when she was young. Later, as France’s finance minister, she designed many of the reforms that shed the country’s socialist past, although she didn’t take the glory.

Lagarde is the first female to lead the IMF, which serves as the world’s lender of last resort for troubled economies. As a long-time lawyer in Chicago, where she worked mainly with men, she honed her skills as a mediator. She creates solutions without trying to take credit for solutions.

With a soft-but-insistent style, she could become the unsung hero of 2012 who prevents Europe’s woes from crashing the world economy.

At times, Lagarde plays the Jeremiah, quietly warning of “a dangerous situation” for the global economy because of Europe’s mismanagement. The IMF is already playing nursemaid to Greece, Ireland, and Portugal, with more than $100 billion committed to those countries. And the agency is advising Italy, whose debt is so large that a default on its loans would overwhelm the resources of the richer euro partners, including Germany and the current rescue kitty known as the European Financial Stability Fund.

Thus the need for the IMF to be prepared to act. It can collect money from other nations to loan to Europe and be the enforcer of discipline and reform, a role that German Chancellor Angela Merkel has played up to now.

True to style, Lagarde doesn’t boldly come down hard on the big issues that divide Europe, such as the extent of fiscal austerity, whether to share debt with a common eurobond, and how to stimulate economic growth. She can’t afford to be a lightening rod for raging disputes.

To line up money for the IMF to rescue Europe, she is artfully trying to persuade governments to contribute. Europe itself is so far putting up the bulk of the money. So far, Congress and President Obama aren’t interested. Lagarde has talked privately with leading lawmakers who oppose such aid, telling them that no country is “immune” to Europe’s unfolding crisis.

 The IMF has a strong track record in getting back money on its loans and setting the right conditions for reform. With her integrity and the IMF’s credibility, Lagarde may be the best person to deal with what many say will be the world’s biggest problem in 2012.

Her strong suit is in bringing the players together, nudging them to act, and then letting them take the lead and the credit. “I want to be desperately optimistic,” she told CBS. “And I want to believe that countries will understand that they can actually change the course of things.”

Recommended: The eurozone crisis explained in 5 simple graphs
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