With the future of the euro zone in doubt, policymakers are looking to the brilliant and glamorous French-born Christine Lagarde, the first woman to head the International Monetary Fund, for answers. In her first major policy speech since becoming managing director of the IMF, Lagarde offered a scholarly diagnosis of the sluggish world economy, along with a hard-hitting assessment of what needs to happen.
She urged political leaders on Thursday to exhibit “leadership over brinkmanship,” warning that a “vicious cycle” of weak growth and unsustainable debt is being made worse by the lack of political resolve and collective determination.
Crisply organized in both her appearance (tailored navy suit) and her thinking (four policy guidelines, all starting with the letter “r”), she is likely the only human being to appear on the cover of Forbes and in the pages of Vogue the same month.
Introduced by former congresswoman Jane Harman, head of the Woodrow Wilson Center for International Scholars that sponsored the event, Lagarde framed her remarks in the spirit of President Woodrow Wilson and the “global fraternity” that he championed. She said the world today is so intertwined that there is no such thing as acting alone, and she made clear her belief that collective action is needed for the world economy to shake off the current crisis of too much debt and too few jobs. (Harman is a director of the Newsweek Daily Beast Company.)
“We have entered a dangerous new phase of the crisis. Without collective, bold action, there is a real risk of the major economies slipping back instead of moving forward,” Lagarde warned.
As she outlined her prescription for recovery—repair, rebalance, reform, rebuild–she said for the first time that she welcomed President Obama’s recent proposals to address growth and employment, adding that it remains critical to have a “parallel track” to stabilize debt, indirectly endorsing the so-called Super Committee on Capitol Hill charged with finding $1.5 trillion in savings.
In a brief question-and-answer period that followed the speech, Lagarde said she was heartened by the phone call that German leader Angela Merkel and French President Nicholas Sarkozy had with Greek Prime Minister George Papandreou. “It was a clear indication from them that Greece will remain in the euro zone,” she said, affirming that one of the guiding principles of the euro zone is that “as long as a country in difficulty performs its obligations,” it will receive help “without a cap and without a limit.”
The challenge, she said, is that legislation takes at best three to four months and sometimes 12 to 18 months for 17 euro-zone parliaments to come together. The time frame for investors, markets, and media is much shorter. It’s not like the days of Napoleon, she concluded with a wry laugh, when it was “I decide, then it happens.”
It’s not like the days of Napoleon, Lagarde said with a wry laugh, when it was “I decide, then it happens.”
Lagarde, at six feet tall, is no Napoleon, but when she talks, people listen, and women especially take pride in her orderly and elegant way of confronting a range of problems. She started her day in Washington with what sounded like a real power breakfast with some dozen members of Congress, bipartisan and from both chambers, and all women.
Harman noted what a pleasure it was for her as the first woman president of the Wilson Center to hear someone of Lagarde’s stature “who happens to be a woman, so gracefully and completely address these tough issues of today.”