Plus c’est la même chose. Or is it?
Yesterday it was announced that Christine Lagarde will be the new head of the International Monetary Fund (IMF). Yes, the new Managing Director of the Fund is from Europe. Yes, she also held the position of French finance minister, like her fallen predecessor once did. But for the first time in its 66-year-long history, the IMF will have a Directrice Générale, not a Directeur – an anomaly in the male-dominated field of economics.
Lagarde is not an economist, another rarity given her new position. Although the Fund’s second Managing Director, Ivar Rooth, like Lagarde, was a lawyer by training. Yet her resume is not short on credentials, the former Baker & McKenzie chair has won praise for helping to steer Europe through the 2008 financial crisis and she played a key role in negotiating the euro bailout fund; illuminative of the type of IMF chief she might be.
More of a politician and negotiator than technician or policy whiz, Mme Lagarde may be exactly the type of Managing Director the IMF needs at this juncture. In the opinion of this humble blogger, if someone can put a human face on conditionality, it is this skillful negotiator. The fund cannot do its job without being perceived as legitimate, and Lagarde’s promise to swiftly implement governance reforms in the organization can help if she follows through on it. Both she and the now-defeated Agustín Carstens spoke of the need to increase the fund’s legitimacy during their campaigns. (The former competition, Carstens, is an economist through and through. He holds a PhD from Chicago, a top school in the field; a controversial school for its connection with names like Hayek, Buchanan, Friedman and Lucas, and the supposed neoliberal dogma that was said to have contributed to the last financial crisis.) Selling politicians on conditional loans is a difficult job; the ongoing riots in Athens are just one example of the domestic constraints faced by austerity-seeking officials. And the IMF is scarcely popular in the countries it loans funds to.
Still, the Fund is increasingly operating in the advanced economies, not in the developing world. As CIGI Senior Fellow Bessma Momani has pointed out, it is more than a little odd that Europe has argued that it is now more important than ever for a European to be at the head of the IMF—someone who understands “European problems”. One wonders what a Latin American with memories of the 1980s or an Asian looking back on 1997 has to say about this. Lagarde seems well aware of the need to run down any claims of conflicting interests, and must do so if the IMF is to be perceived as delivering global public goods.
The global economy is not short on great minds and well-trained economists. However, it is short on credible governance and coordination mechanisms. The walls of IMF offices will continue to be adorned with degrees from MIT, Princeton and Stanford, but Lagarde seems apt to deal with the politics of political economy. In my opinion, the IMF Board made the right decision yesterday.
- Council on Foreign Relations: Background - The International Monetary Fund
- Foreign Affairs: Can The BRICs take the IMF?
- Reuters: Lagarde wins IMF top job, presses Greece on Crisis
- Wall Street Journal: France’s Lagarde named IMF Chief
John Zelenbaba is a Research Assistant at The Centre for International Governance Innovation. He is a fourth-year undergraduate student in Political Science and Economics at the University of Waterloo.