The challenges before Lagarde, new IMF boss

Her appointment is historical. So also the challenges inherited by her leadership. Tuesday, Christine Lagarde, for the third time in her 56 years on earth, made history  as the first woman to be elected as the President of the International Monetary Fund (IMF).

Christine Lagarde

But the Fund is also battling challenges of historical proportions which Largarde automatically inherits and must tackle if she must succeed. These range from the euro debt crisis, slow global economic recovery and tainted image of the IMF due to the inglorious exit of her predecessor, Mr Struass-Khan, who had to resign over his arrest and charges of sexual assault in New York.

Born on 1 January 1956  in Paris as Christine Madeleine Odette Lallouette to academic parents, Lagarde was previously the Minister of Economic Affairs, Finances and Industry of France, appointed by President Nicolas Sarkozy in June 2007. She was previously Minister of Agriculture and Fishing and Minister of Trade in the government of Dominique de Villepin.

Lagarde was the first woman ever to become Minister of Economic Affairs of a G8 economy. As French Finance Minister since 2007, she oversaw a softening of the 35-hour working week introduced by the Left by removing taxes on overtime. She attracted criticism early in her tenure by suggesting that the French had become work-shy and that navel-gazing hindered reform.

A noted antitrust and labour lawyer, Lagarde also made history as the first female chair of the international law firm Baker & McKenzie. On 16 November 2009, The Financial Times ranked her the best Minister of Finance of the Eurozone. In 2009, Lagarde was ranked the 17th most powerful woman in the world by Forbes magazine.

Yesterday,  the Executive Board of the IMF, elected and chose Lagarde ahead of the  Mexican central bank governor Agustin Carstens, as the President of the Fund for a five year term starting on July 5th 2011. “The Executive Board agreed that both were well qualified candidates and the objective was to select one by consensus.

Based on the candidate profile that had been established, the Executive Board, after considering all relevant information on the candidacies, proceeded to select Ms. Lagarde by consensus. The Executive Board looks forward to Ms. Lagarde effectively leading the International Monetary Fund as its next Managing Director.”The Fund said in a statement.

Challenges and Success factors

Lagarde’s  effectiveness as IMF Chief is hinged on  factors including her personality, experience, background and the dynamics of the challenges confronting the Fund.

For example, her  determination as a negotiator and experience working on the euro zone debt crisis are likely to ensure she settles smoothly into leadership of the International Monetary Fund, as the global lender faces some of the toughest economic challenges in its history.

Also, her charisma and expertise in international relations which she built up as French Finance Minister will carry weight with governments around the world as she replaces the disgraced Dominique Strauss-Kahn.

Supporters say Lagarde, the first woman to head the IMF, will have the political muscle to press indebted euro zone states into delivering on promised budget reforms.

Yet her lack of the highbrow academic credentials as an economist that Strauss-Kahn brought to the Fund, and the likelihood that she will continue the same conservative policies which have so far failed to resolve the euro zone’s crisis, are a concern to some.

She has a reputation for sealing deals under pressure — during talks among the G20 nations in February she brought China  into a compromise deal on ways to measure economic imbalances. She proved her negotiating stamina a decade ago as the first female chairman of U.S. law firm Baker & McKenzie.

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