Sometimes even the most squalid of matters have silvery linings.
In the disgusting criminal case of Dominique Strauss-Kahn, the best possible result would be that he may soon be replaced as International Monetary Fund chieftain by Christine Lagarde, the French finance minister. Her unassailable character, proven crisis-management skills — and yes, it does matter in this case that she’s a woman — can help wash away the DSK stain and distraction with all the dispatch demanded by the current European crisis.
Her candidacy allows President Barack Obama to postpone an inevitable, but untimely, fight with the leading emerging market countries over whether the U.S. and Europe must finally give up their historic claims to the top World Bank and IMF jobs. Lagarde is also a respected and familiar quantity in Washington at this dangerous time — a person Treasury Secretary Timothy Geithner has said has “an excellent mix of financial economic knowledge, talent and the kind of political skill you need to navigate this context.”
If there is a downside for the White House, it is that major emerging market countries will be less understanding when the World Bank president job comes up for review next year. If Europe regains the IMF, as is likely, pressure will almost certainly build for the U.S. to surrender its monopoly on that position. But that is tomorrow’s problem.
The rapidly building consensus around Lagarde’s candidacy — including in countries like China, Russia, Brazil and Saudi Arabia, which, under other conditions, would lobby for their own favorites — is a reflection that global financial players understand the gravity of the eurozone crisis and the pure luck that someone like Lagarde is available.
One key reason she is so qualified — perhaps even more compelling than her four and a half years in the French Cabinet — is her experience as chairwoman of the executive committee of the law firm Baker & McKenzie, where she deftly steered more than 500 outsized legal egos, spread across more than 60 offices around the world.
I first ran across Lagarde when The Wall Street Journal Europe — where I was then editor — was putting together its 2002 top European woman in business rankings — to celebrate women who were pushing through the mostly male ranks of corporate Europe. The jury of experts ranked her among the top 10 finalists. But we had a dilemma: As a French lawyer, was she really a business leader? And she chaired a U.S. company, so did she count as a European executive?
But the judges were so taken by her accomplishments — and the certainty that she would only achieve more — that she placed near the top. It was revolutionary that Baker & McKenzie, then the world’s third largest law firm, had elected her as the first woman, the youngest partner and the second non-American to run the place in its 50-year history. Her former partners still marvel at her remarkable consensus-building skills and how she steadied the firm in the first months following the Sept. 11 disaster and later, pushed through tough ethical standards.
That’s relevant experience for running the IMF’s skilled but not always easy staff made up of more than 160 nationalities in 182 countries, often in unstable and corrupt settings. What one hears from Lagarde’s counterparts — whether Chinese, Argentinean, Nigerian or German — is that her manner is congenial in all cultures.
Yet she doesn’t shrink from conflict. She irritated German Chancellor Angela Merkel, who has endorsed her candidacy, by warning Germans in a Financial Times article that they had to raise their long-stagnant domestic consumption.
For traditionalists, her biggest flaw is that she isn’t an economist. However, having followed the failure of economists to either predict our recent crises or prescribe antidotes, that is not a problem. She’ll have enough economists to call on at the IMF. And having an economist of one school run the IMF might limit the required debate about where the world is going.
The best-run hospitals learned long ago that it can be better not to put physicians at the controls. As with economists, doctors are often better at diagnosing than managing. What the IMF needs now is someone who will listen to all sides, win the confidence of everyone but then knock heads together to achieve the right outcomes. She has proven her economic knowledge more than sufficiently through a tenure that has put her at the French financial helm through the collapse of Lehman Brothers and its aftermath through the continuing eurozone debt crisis.
The IMF director position is, however, above all a political job. That’s where Lagarde excels, proven by the dearth of enemies fighting her candidacy. When the president of the French parliament’s equivalent of the Ways and Means committees opposed her candidacy, saying that he spoke for his committee, his statement was angrily protested by more than 300 others.
Oh, yes, Lagarde is a woman. She would be the first to run one of the major international financial organizations. But she has never made much of such distinctions. Lagarde demonstrated her wicked wit a Versailles conference The Wall Street Journal Europe organized in 2002. She answered, with a wink, a reporter’s impertinent question about how she got the Baker & McKenzie job: “I squeezed where it hurt.”
But she also acknowledged that changes are due. When asked how it felt being the only woman among 40 partners when she was elected chairwoman, Lagarde replied: “I was ashamed?”
It is important to have a woman’s face replace that of a man who has been charged with such a sex-based crime. More useful, however, may be what Lagarde considers uniquely female management skills. “Male managers are generally very competitive,” she said in 2002, “with what I would say [are] larger egos than their female counterparts. Generally, woman are more into building consensus … forming a team and then guiding the team into the direction that’s been agreed.”
Asked then how she has risen through male-dominated worlds, she answered, “the ability to listen … to gently, subtly but firmly drive people into the direction that had been determined jointly.”
As Martin Wolf wrote in the Financial Times: “The king is dead; long live the queen.”
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