The Woman Who Saved France
French Finance Minister Christine Lagarde’s strict banking regulations sustained her country while Europe melted down. She talks to Eric Pape about her tough-love strategies.
The word’s No. 1 finance minister, Christine Lagarde, fought for strict banking regulations that sustained France while Europe melted down. Lagarde, who will speak at The Daily Beast’s Women in the World summit, talks to Eric Pape about her tough-love strategies.
France’s most powerful government ministers tend to be Old World figures. Many are officious, bombastic, self-satisfied, and prone to la langue de bois, which often refers to the spouting of elegantly phrased but hollow B.S.
And then there is Christine Lagarde, the nation’s glass ceiling-shattering economics minister. In 2007, she became the first woman ever to hold the top finance job in any of the world’s G-8 countries. For a time, she was also the sole lady at the helm of a ministry of Finance in any of 27 European Union nations. (A Spaniard and a Lithuanian have since joined her.) If you ask her why she was first, she will likely give you a self-deprecating response about how you just need to “work hard and pay attention to detail.” Pursue it further and she starts to convey part of the unique strength that can come from being the first woman with a seat at the big finance table. “I feel accountable to the community of women,” Lagarde says. “And I don’t want to fail because of them.”
“We have to regulate, temper, level, and balance,” Lagarde says. “In that way, maybe I am European and I am preaching the gospel to my colleagues on the other side of the pond.”
Whatever it is that drives Lagarde, it seems to be working. She is a ubiquitous presence on lists of the world’s most influential and powerful people put out by Forbes, Time magazine, and The Wall Street Journal. (She is edging ever closer to the top last year.) In her field, the Financial Times ranked her No. 1, the Finance Minister of the Year, in November. Given the importance of the economy in 2009, she may need to change fields to continue overachieving.
So when I recently placed my iPhone on her vast office conference table, a stone’s throw from the somber centuries-old columns of the Palais Bourbon, to record our conversation, I was surprised when the 54-year-old minister immediately began asking about the device. “Is that the latest generation? How long can it record?” she queried, pulling out her own iPhone. “This is the [recording] application you use?” By the time I said yes, she was speaking into her phone: “Test, test,” and then playing it back.
Yes, France’s minister of finance is a new breed. Many of her colleagues would surely be confused by the prospect of an iPhone interview, but she immediately seeks to integrate an innovation into her life. And she recently went further than that. Whereas her French colleagues might find the courage to conduct interviews with the most traditional old-school international media, Lagarde tempted fate on Jon Stewart’s Daily Show last fall— and won.
That said, Lagarde’s refreshing style wouldn’t grab much attention if she weren’t getting things done. She has been lauded for creativity, pragmatism, and stewardship during an era of economic turmoil that has riled the world. Ironically, she was brought in to this government to liberalize France’s economy and bolster economic growth. Doing this required convincing the French to work longer hours—in theory, for more money, but definitely with less job security. At the start of her tenure, she called on France to “roll up its sleeves and get to work.” She helped to eliminate more than 50,000 civil servants, trim $15 billion in taxes, gut the socialist-inspired 35-hour workweek, and chop the tax on the rich from 60 percent to 50 percent. For her efforts, she was branded the government’s “American” minister—as in a country where people live to work, have little job security, and unimaginable health-care concerns.
But after the extent of the global economic crisis became clear, Lagarde switched gears to push for regulations that helped to restrain banking world excesses (such as larger bonuses to top bankers who seek short-term gains that proved detrimental) and increase cash flows. You can disagree with her before or after her (likely temporary) conversion, but France appears to have weathered the economic crisis far better than its main European neighbors.
Lagarde now feels as though, philosophically, she might be on an island somewhere between the U.S. and Europe. “I now say that we cannot let the financial universe drown the general economy; we cannot let speculation sweep a country away. We have to regulate, temper, level, and balance; in that way, maybe I am European and I am preaching the gospel to my colleagues on the other side of the pond.”
In a way, the philosophical tacking back and forth was foreshadowed in Lagarde’s adolescence, when she was a medal-winning synchronized swimmer. It was reaffirmed by her greatest role model, her mother, who was left to fill multiple roles when she was widowed with four children while the future minister was just a teenager. “It wasn’t an easy time to be a widow. She was very brave,” recalls Lagarde , who describes an almost cinematic mother who nurtured and pushed her children, and then took part in racecar rally competitions. “Sometimes she would come home with silver trophies from her meets and we’d say, ‘Wow, Mom, that’s great,’ and she’d say, ‘I was the only one in the race.’” Self-deprecation runs in the family.
Lagarde herself learned an early lesson in humility when she was preparing to study at France's prestigious École Nationale d'Administration, the legendary civil-servant finishing school that the French academic elite attends before moving up to running the country. Distracted by love, Lagarde failed the admissions test miserably. “The lesson I learned was: Work harder, try harder,” she says. Determined to get in, she studied vigorously the following year. But she got her interview dates confused, meaning she wasn’t permitted to take the test. “That taught me another lesson: Pay attention to details.”
Much later, the school’s director told Lagarde, “It was lucky for you that you failed—and it was lucky for the country.”
Did she believe him?
“No. No, of course not.”
Lagarde opted for law school. When she graduated, at age 24, a rare powerful female lawyer of that era took Lagarde under her wing at Baker & McKenzie, a major international law firm. Monique Nion was that rare woman who had risen high in the male-dominated legal world (and when Nion was brought in, her boss told the men that she was a paralegal, to avoid undermining morale).
Lagarde’s professional mentor taught her to navigate in that world with grace, and toughness—perhaps a little like her mother—teaching the new employee to “dress, address, and redress.” By this, Lagarde means, dress properly to look business-like, learn to address an audience, clients or colleagues, and immediately and efficiently redress things when something goes wrong. Rising to the position of president of the company's executive committee in its Chicago office (she had a few campaign brushes with the up-and-coming Barack Obama when her firm supported one of his early candidacies, although she only met him in earnest at the G-20 summit in Pittsburgh). Each time she broke through a glass ceiling, she felt a weight on her back. “When I was elected chairman of Baker & McKenzie, I felt that I could not let the other women down and that I had to show that we could do it. If I could do it, they could do it—so we could do it?”
Now, with a French government shakeup looming—especially if polls on regional elections in March prove correct and the center-right government gets pummeled—Lagarde could be offered new challenges. President Nicolas Sarkozy could ask her to take over at the Ministry of Foreign Affairs—a sensible choice given her excellent command of English, extensive international experience, and the ever-growing importance of economic policy—or, less likely (given that she is more appreciated abroad than by the average Jean), she could be tapped as prime minister.
Then again, with Christine Lagarde there are always new ceilings to shatter.
Eric Pape has reported on Europe and the Mediterranean region for Newsweek since 2003. He is co-author of the graphic novel Shake Girl, which was inspired by one of his articles. He is based in Paris. Follow him at twitter.com/ericpape