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A Favorite Emerges for Helm of IMF

The French finance minister, Christine Lagarde, was on a panel at the World Economic Forum in Davos this January when her usual smile turned into a frown. Next to her, Robert E. Diamond Jr., chief executive of Barclays and one of the most powerful bankers in the world, thanked regulators and finance ministers for their role in shaping a better environment after the financial crisis.

French Finance Minister Christine Lagarde is considered the top contender to replace Strauss-Kahn as IMF chief.
Yoshikazu Tsuno | AFP | Getty Images
French Finance Minister Christine Lagarde is considered the top contender to replace Strauss-Kahn as IMF chief.

Ms.Lagarde looked him in the eye. “The best way for the banking sector to say thank you would be to actually have, you know, good financing of the economy, sensible compensation systems in place and reinforcement of their capital,” she replied, to a burst of applause.

Her straight talk has helped burnish Ms. Lagarde’s reputation as one of Europe’s most influential ambassadors in the world of international finance.

And now it is helping to make Ms. Lagarde, 55, perhaps the leading candidate to succeed her friend and colleague Dominique Strauss-Kahn as head of the International Monetary Fund. The process of selecting a new managing director may speed up now that Mr. Strauss-Kahn has resigned his post as the I.M.F.’s managing director to deal with charges of attempted rape, stemming from his encounter with a hotel maid in New York last Saturday.

Another of Ms. Lagarde’s selling points, though, may be one not listed on her résumé. “What’s happened with Strauss-Kahn underscores how great it would be to have a woman in the role,” said Kenneth S. Rogoff, a former I.M.F. chief economist who is now a professor at Harvard University. If she gets the post, Ms. Lagarde would be the first woman to run the I.M.F. — or any large international financial institution, for that matter.

But Mr. Rogoff indicated gender was only part of her appeal. “She is enormously impressive, politically astute and a strong personality,” he said.

“At finance meetings all over the world, she is treated practically like a rock star.” European officials are frantically maneuvering to keep one of their own in a post Europe has controlled since the I.M.F. and the World Bank were created in the late 1940s.

It will not necessarily be easy. Three years after financial excesses in the United States and Europe brought the world economy to the brink of catastrophe, Mr. Strauss-Kahn has become the latest symbol of what many see as the faults of the wealthy West.

Appointing simply another European, particularly another white middle-age male, might not fly this time. The world’s fast-growing emerging economies say they should now get a shot at running a big institution like the I.M.F. — or the World Bank, traditionally headed by an American in a long-standing understanding between the two economic powers.

But with Europe facing a drawn-out financial crisis of its own, global leaders may consider it politic for a European to finish serving out Mr. Strauss-Kahn’s term, which ends in 2012.

That might then create an opening for a leader from one of the emerging markets — from South Africa or India, for example — whose collective economic heft and effect on global markets is starting to eclipse that of the West.

That is why Ms. Lagarde is seen as Europe’s lifeline. Her main competition,, analysts say, is another policy maker with an alternate profile, Kemal Dervis, a former finance minister of Turkey. Mr. Dervis is credited with rescuing the Turkish economy after it was hit by a devastating financial crisis in 2001, in part by securing a multibillion-dollar loan from the I.M.F.

Before that, Mr. Dervis worked at the World Bank for 24 years. But with the I.M.F. overseeing 100 billion euros (around $140 billion) in loans to Greece, Portugal and Ireland, Ms. Lagarde may be the best person to steer a transition at the I.M.F., analysts says, even if President Nicolas Sarkozy of France has not yet moved to put her in the running.

Ms. Lagarde has kept quiet about the rumors circulating about her potential candidacy.As one French official put it: “She knows that whatever she says will only diminish her chances. It’s best to stay above the fray and see what happens.” But French officials do not doubt her ambition to move to I.M.F. headquarters in Washington if the opportunity arose.

“She is without a doubt one of the top candidates people are talking about right now,” a French diplomat said. Ms. Lagarde’s biggest drawback as a candidate, perhaps, is that she is French — like Mr. Strauss-Kahn. But recent history suggests that that is not a disqualifier.

Between 1978 and 2000, two Frenchmen — Jacques de Larosiere and Michel Camdessus — were the successive chiefs of the I.M.F.

Ms. Lagarde, the former head of the Chicago-based law firm Baker & McKenzie, lived in the United States for 25 years.

Tall and stylish, with a shock of silver hair and a penchant for Chanel jackets, she is as connected and as respected in Washington and on Wall Street as in Europe.

Her lightly accented English is almost flawless, a rarity among top French officials, which contributes to her reputation for sharp-tongued wit.

She impressed American audiences during a 2009 appearance on “The Daily Show” with Jon Stewart, recounting how she pushed for the firing of incompetent managers at a French-Belgian bank that required a taxpayer bailout.

(“I, for one, said, ‘Management is out. They did a crappy job. They have to go.’ ”) She then presented Mr. Stewart with a beret. In an interview with Christiane Amanpour on ABC last year, Ms. Lagarde observed that women “inject less libido, less testosterone into” the workplace than men, a remark that seems prescient in light of Mr. Strauss-Kahn’s scandal.

Ms. Lagarde is one of the few members of the French elite who so far has avoided scandal — although a French prosecutor recently asked the court of justice here to investigate whether she abused her authority in playing a role in a case that resulted in a lucrative payment to a showy French businessman, Bernard Tapie, in 2007.

For the last two decades, Mr. Tapie — who has worn multiple hats over the years as the chief of the Adidas sports empire, as a French minister and as the coach of the Marseilles soccer team — has pursued claims that he was cheated by the French bank Crédit Lyonnais when it oversaw the sale of Adidas in 1993.

Ms. Lagarde ordered a special panel of judges to intervene in the dispute, resulting in a judgment of 285 million euros for Mr. Tapie.

Ms. Lagarde said she acted with “rigor and transparency” and has denied any charges of wrongdoing, which were advanced by the French Socialist Party.

“This is an attempt to smear me,” she told Le Figaro, the French daily. If Ms. Lagarde is respected in the United States, she also has the trust of Germany’s leaders — something of vital importance in the current European debt crisis.

While her boss, Mr. Sarkozy, has had a tumultuous relationship with Chancellor Angela Merkel of Germany, Ms. Lagarde has nurtured a close personal relationship with Mrs. Merkel.

The two women are on first-name terms and have on several occasions found common ground on important policy decisions, officials say. Last May, when Europe was on the edge of disaster, Ms.

Lagarde refused to start an important meeting before Germany had sent a replacement for its finance minister at the time, Wolfgang Schäuble, who was ill.

According to another official who was present, Ms. Lagarde told the group, “There cannot be an agreement without the Germans.” Another time, when Mr. Sarkozy ruled out involving the I.M.F. in a European bailout program, Ms. Merkel and Ms. Lagarde pushed for the fund’s involvement and prevailed.

“She is a negotiator at heart,” said one official, who has accompanied her to dozens of such meetings in recent years. “She knows how to identify the common denominator between different parties.”


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