Christine Lagarde breaks barrier as new IMF chief

In replacing Dominique Strauss-Kahn as IMF chief, French Finance Minister Christine Lagarde becomes the first woman to lead the fund.

Michel Euler/AP
France's Finance Minister Christine Lagarde smiles during a press conference of France's President Nicolas Sarkozy at the Elysee Palace, Paris Monday. Lagarde has been chosen as the new managing director of the International Monetary Fund.

She was the most likely candidate: Christine Lagarde, French minister of finance and economy, had been Europe’s favorite to succeed her fellow countryman Dominique Strauss-Kahn as head of the International Monetary Fund.

When the US and Russia officially joined the group of her supporters earlier Tuesday, it was clear that the Parisian would snap the post from her last remaining competitor, Mexican central banker Augustín Carstens.

“The executive board agreed that both candidates are highly qualified,” the IMF said in a statement read out by senior adviser David Hawley in Washington. “The objective was to select one by consensus. Ms. Lagarde was selected after considering all relevant information."

"I am honored and delighted that the board has entrusted me with the position of managing director of the IMF,” Ms. Lagarde said in a Twitter post a few minutes after the decision was announced. She will start her five-year term on July 5.

The IMF top job has been vacant since Mr. Strauss-Kahn was arrested in New York on charges of rape and sexual assault in May. Emerging markets countries made clear they believed the time had come for one of their candidates to lead the institution that has always been headed by a European since its creation 67 years ago. But given the crucial role the IMF is playing in attempts to overcome the debt crisis in several eurozone member states, EU leaders like German Chancellor Angela Merkel and French President Nicolas Sarkozy indicated early they would not waive Europe’s claim to the post.

No one doubts Lagarde’s qualifications. She studied labor law in the US and France, and in 1981 joined the Chicago-based law firm Baker & McKenzie, becoming director in 1999. In 2005, French Prime Minister Dominique de Villepin offered her a cabinet job as minister for foreign trade. Two years later, she took over the super-ministry of finance and economy.

Lagarde, a tall and elegant figure, is praised as a skillful and pragmatic negotiator with excellent connections on both sides of the Atlantic. She also has a reputation for being straightforward and frank.

When the French complained about rising gas prices, she recommended that her compatriots should cycle. And she wasn’t popular in Germany when she told German business to bring down their record exports and pay higher wages in order to give other European economies a better chance to compete.

But her direct approach also made Lagarde a well-respected politician in a continent struggling with huge financial problems.

She took a leading role in the creation of the European Financial Stability Facility, a rescue mechanism for countries on the brink of bankruptcy, and was seen as “Madame Oui” – in contrast to “Madame Non,” Chancellor Merkel, who for a long time denied there was a need for bailing out countries like Greece and Portugal.

The Financial Times voted her “Best finance minister of the year” in 2009, which is when the European debt crisis started.

When she takes up her new job in Washington, Lagarde will try to bring calm to an institution that has been rocked by the accusations against its former head. But at home, in France, she is being investigated herself. Prosecutors have asked for an inquiry into Lagarde's role in awarding compensation to former minister of city affairs Bernard Tapie. Lagarde, accused of abuse of power, insists she didn't do anything wrong. A decision on whether an inquiry will be opened is due in July.

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