By CHRISTOPHER S. RUGABER and SARAH DiLORENZO
WASHINGTON – French Finance Minister Christine Lagarde was chosen Tuesday to lead the International Monetary Organization and will immediately confront a European debt crisis that threatens the global economy.
Lagarde will be the first female managing director of the 66-year-old global lending organization and the 11th European. Next week, she will begin a five-year term.
Among her challenges, she will have to prod fellow Europeans to take painful steps to prevent a default by Greece. She’ll face pressure from developing nations that want a greater voice at the IMF. And she’ll be looked upon to restore the IMF’s reputation, which was tarred by a scandal involving Dominique Strauss-Kahn, the man she’s replacing.
Strauss-Kahn resigned last month after being charged with sexually assaulting a New York City hotel housekeeper. He has denied the charges.
“I am deeply honored by the trust placed in me,” Lagarde said in a statement in Paris after the vote Tuesday. “I would like to thank the fund’s global membership warmly for the broad-based support I have received.”
Lagarde was chosen by consensus, the IMF said in a statement.
Her selection became all but assured once the Obama administration endorsed her earlier Tuesday. Hours later, the IMF’s 24-member board voted to appoint her. She had also won support from Europe, China and Russia. Mexico’s Agustin Carstens challenged her, but his candidacy never caught fire.
In an interview on French television after the announcement, Largarde said her first priority is to unify the IMF’s staff of 2,500 employees and 800 economists and restore their confidence in the organization.
She also said she wants to meet with Strauss-Kahn, if permitted to by the U.S. government.
“I want to have a long talk with him, because a successor should talk with their predecessor,” Lagarde said during the interview on French television channel TF1. “I can learn things from what he has to say about the IMF and its teams.”
Lagarde, 55, will be the first IMF leader who is not an economist. She led the Chicago-based law firm Baker & McKenzie before entering French politics in 2005. She has spent much of her career in the United States and speaks impeccable English.
As one of the longest-serving ministers under French President Nicolas Sarkozy, she made the country’s labor market rules more flexible. Forbes has listed her among the world’s most powerful women.
Most urgently, she will be expected to help stabilize Europe’s debt crisis.
“This will put her in the position to work more closely with her European counterparts and push them if needed,” said Domenico Lombardi, a senior fellow at the Brookings Institution and a former member of the IMF’s executive board.
Under an informal arrangement dating to the end of World War II, a European has always lead the IMF and an American has run its sister organization, the World Bank.
Lagarde helped lead negotiations for a bailout package last year that combined European Union and IMF funds in a pool to aid highly indebted European countries. But some experts argue that Europe’s leaders have been too timid in responding to the crisis and have been discredited by their failure to solve it for good.
She moved to address that criticism last week when she met with IMF’s executive board. She told them there was “no room for benevolence when tough choices must be made, and there is no option that does not start with difficult but necessary adjustments by the Greek authorities.”
A default by Greece would reverberate well beyond Europe. Such dangers are why even some developing countries, such as China, supported her Lagarde’s candidacy, Lombardi said. China owns billions of dollars in euro-dominated bonds and has little interest in seeing the European debt crisis worsen.
She also will be expected to boost morale among the staff in the wake of the scandal. Before being criminally charged last month, Strauss-Kahn was reprimanded in 2008 for having a brief affair with a subordinate, though he faced no disciplinary action.
Lagarde’s support for gender equality in the workplace might help her put her stamp on the organization, said Susan Schadler, a former IMF deputy director who now serves as a senior fellow at the Centre for International Governance Innovation.
“The IMF’s culture is no different than any institution in the financial sector: It’s dominated by men,” Schadler said. “But I would imagine she would be a good influence and improve the environment for the better.”
Lagarde spoke to that issue in her interview on French television Tuesday.
“In my interview at the IMF with all the 24 administrators, there was not one single woman,” she said. “So while I was being questioned for three hours by 24 men, I thought it’s good that things are changing a little.”
Analysts say the IMF’s culture is evolving, however gradually. Her appointment puts two women in prominent leadership roles at the organization. In April, Nemat Shafik, an Egyptian economist and former World Bank official, was appointed a top deputy at the fund.
Shafik said last month that the IMF is boosting its efforts to recruit women. The fund wants 25 percent to 30 percent of its management positions to be held by women by 2014, Shafik said.
Other analysts noted that as a European and as a woman, Lagarde is both a conventional and a bold choice to lead the IMF. Like her predecessor, she represents the French elite. But as the first woman to lead the organization, she represents a break with history.
“She’s the old guard and the new guard,” said David Bosco, an assistant professor of international politics at American University.
DiLorenzo reported from London. Associated Press Writers Greg Keller and Cecile Brisson in Paris and Derek Kravitz in Washington contributed to this report.
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