By Catherine Bremer
PARIS, May 23 (Reuters) – Christine Lagarde has made her
mark as International Monetary Fund chief by taking a firm yet
pragmatic stance in the austerity-versus-growth debate raging as
Europe struggles to pull itself out of a long crisis.
Lagarde, who was quizzed by a Paris magistrate on Thursday
over a 2007 arbitration payment she made as French finance
minister to settle a spat between the state and a businessman
, was appointed IMF head in June 2011.
Appointed in part for negotiating skills that she showed
brokering Europe’s response to the 2008/09 global financial
crisis, Lagarde has shown firmness at the IMF in insisting on
the need for nations to stick to budgetary rigour where they
can.
“We believe it is a question of pace,” she told the Economic
Club of New York last month.
“(Reforms) don’t have to be brutal or abrupt or massively
front-loaded. Those under financial pressure have to demonstrate
the ability to do so but be mindful of the fabric of society.”
She has offered no radical new ideas, but has given candid
and practical guidance to sickly countries as the IMF has
reassessed the best mix of austerity and growth policies, rather
than preaching one-size-fits-all solutions from the pulpit.
In a speech in Berlin seven months into the job, she said
cross-continent budget cuts would only add to recessionary
pressures and countries should match their respective policies
to the fiscal room for manoeuvre they had.
The onus was on Lagarde to turn the page for the IMF after
her predecessor, Frenchman Dominique Strauss-Kahn, quit the post
in disgrace when a New York hotel maid accused him of sexual
assault. The charges were later dropped.
Now Lagarde risks being placed under formal investigation
over her role in a 285 million euro ($366.98 million) payment
made to businessman Bernard Tapie, a supporter of former
conservative president Nicolas Sarkozy.
She is not accused of financially profiting from the payout
and denies doing anything wrong by opting for a settlement that
enriched Tapie. But a court specialising in cases involving
ministers is targeting her for complicity in the misuse of funds
because she overruled advisers in the case.
SHARP DRESSER, BLUNT SPEAKER
Lagarde, 57, is an anti-trust lawyer by training, not an
economist, which worried some when she took over the IMF helm.
Yet she had a strong international profile thanks to several
years in the United States with Baker & McKenzie, as the Chicago
law firm’s first female chairman.
Forbes magazine ranked her this month as the world’s 7th
most-influential woman.
IMF staff say they appreciate the way she listens
attentively to in-house experts and uses honesty and bluntness
in delivering the IMF’s message to countries in difficulty.
Her straight-talking ruffled feathers in Greece last year
when she said in a newspaper interview that she was concerned
about “all these people in Greece” trying to avoid paying taxes.
She similarly irked many in France early in her tenure as
finance minister by suggesting the French had become work-shy.
A former synchronised swimmer who shuns alcohol, Lagarde
started her law career with Baker & McKenzie in Paris and rose
quickly through the ranks to the top, helped by the fluent
English she learned during a stint at a high school in Maryland.
She joined the government in 2005 as Minister for Foreign
Trade and was then made Agriculture and Fisheries Minister.
Appointed finance minister by Sarkozy when he took power in
2007, she oversaw a softening of the 35-hour work week
introduced by the Socialists, by removing taxes on overtime.
Standing out from the dark suits of international finance
with her cropped silver hair, Chanel jackets and monogrammed
Hermes bag, Lagarde soon won a reputation for brokering deals
under pressure as Europe grappled with economic meltdown.
She played a key role in crafting Europe’s response to the
2009 credit crisis and in putting together the 110-billion-euro
Greek bailout.
As IMF head, she made an early call for banks to be
recapitalised and said countries like Greece needed to show they
were making fiscal efforts in order to win outside support.
In a public spat at a news conference late in 2012,
Jean-Claude Juncker, who chairs the Eurogroup of finance
ministers, said a goal of cutting Greece’s debt to 120 percent
of output should be pushed back by two years to 2022, but
Lagarde disagreed and insisted an initial 2020 target should
remain.
More recently, Lagarde has urged central banks to keep easy
monetary policies in place as growth remains tepid this year.
Raised in the northern port city of Le Havre, Lagarde is a
proponent of women as top executives, once noting drily that if
Lehman Brothers had been Lehman Sisters, it might have survived.
The mother of two adult sons, she spends her rare free time
scuba-diving with her Corsican businessman beau Xavier Giocanti.
($1 = 0.7766 euros)
(Reporting By Catherine Bremer)
