Among Men: How Christine Lagarde Beat the Odds to Head IMF

By Marc Hujer

Photo Gallery: Breaking One Glass Ceiling after Another Photos
REUTERS

Christine Lagarde is the first woman ever to lead the International Monetary Fund. As part of her role in helping to save the euro, she's had to go head to head with some of the world's most important countries. She's not afraid of the fight and she doesn't give up easily.

"Mr. Ambassador," says Christine Lagarde, "I have a story for you."

She is sitting in the garden of Latitude 13°, a chic boutique hotel in the Malawian capital, Lilongwe. In front of her, leaning back in his chair, is Peter Woeste, the German ambassador to the country, an impressively self-confident man.

He has brought along his counterparts from Japan, China, Ireland and France. But at this moment, he is the center of attention. Feeling flattered, Woeste's confidence seems to grow as he sits in his chair.

Lagarde begins telling her story. It's about her 57th birthday, which she celebrated on Mauritius around New Year's. "There was a lot of diving and swimming," she says. "What, in Germany?" Woeste asks disdainfully. "Oh, you mean Mauritius. Well, that's reassuring."

Lagarde smiles, granting him his joke. She is well-traveled and sure-footed on the international stage. She knows ministers and national leaders throughout the world, and she is on a first-name basis with most of them. That is her trump card: No matter whom she's dealing with, Lagarde always knows someone who is more important.

She looks Woeste straight in the eye. "Do you know what was delivered to my room on the morning of my birthday?" she asks. This time she doesn't give him the chance to interject anything before she gets to the point of her story. "A large bouquet from (German Finance Minister) Wolfgang Schäuble, with a handwritten note."

Madame Lagarde is traveling in Africa. On her seven-day trip, from East to West and South to North, she will visit three extremely poor countries that rarely make it into the news: Malawi, Ivory Coast and Mauritania. She wants to talk about the devaluation of the Malawian kwacha, the cocoa harvest in Ivory Coast and the future of the Mauritanian fishing industry. None of this has much to do with Europe.

A Curse and Opportunity

Still, the managing director of the Washington-based International Monetary Fund (IMF) has recently spent more time in Europe than she had expected, attending special sessions of the European Union, crisis meetings, EU finance minister conferences and meetings of EU leaders. She has participated in many a late-night session and is likely to attend many more.

In the wake of Italy's parliamentary elections, the world is worried about the euro once again. Italy, the third-largest economy in the euro zone, faces the prospect of political gridlock. The parliament is divided, there are no clear majorities in the Senate, interest rates are rising and the Moody's rating agency is threatening to downgrade Italy's credit rating. There are growing fears, once again, of an uncontrollable avalanche of debt and the possible end of the euro.

The euro is both a curse and an opportunity for Lagarde. Can she save the common currency? It's the question she is asked wherever she goes, even Africa. And whenever it's asked, it is accompanied by an underlying doubt as to whether the French IMF chief is tough enough for the task. Will she speak her mind to fellow Europeans? Will she be as resolute as the IMF has always been in Africa whenever it imposed its relentless austerity programs?

Eventually her conversations always turn to Germany and her best friend "Wolf-gang." He is her most important partner, and her anchor in Germany -- the country upon which the future of the euro is dependent. At the end of the day, the success of IMF chief Christine Lagarde also hinges on the euro.

Europeans Lack Will To Help Each Other

The fund has approved a €40 billion ($52 billion) bailout deal for Greece, and Lagarde has also collected $430 billion worldwide for a global bailout fund, just in case things take a sharp turn for the worse. In doing so, she has accommodated Europe. But Europe doesn't really need the money -- it's rich enough to help itself.

This is what distinguishes the current crisis from earlier crises the IMF has faced, including the Asian crisis and the debt crisis in Latin America. At the time, the IMF came to the aid of countries with no funds of their own. This time, though, the problem involves countries that have enough money but lack the political will to help each other.

The money she is promising isn't intended to remove the pressure on Europe to take action. On the contrary, her weapon is the threat that the IMF will withdraw from Europe unless it lives up to its commitments to reduce debt. Her goal is to force Europe to take a more active role, even if this is likely to be more expensive than planned.

Balancing Act

It is a balancing act between proximity and distance, absence and presence. Lagarde has to help Europe, because she depends on Europe's success. At the same time, she has to give the Europeans the feeling that she can also do without them.

This is one reason she is in Africa, in the midst of the euro crisis. It's more than just an obligation. She wants to demonstrate that she can afford to do it. Her trip could also be interpreted as a show of strength.

She is accompanied by six people: her life partner, Xavier Giocanti; Antoinette Sayeh, the head of her African department; two bodyguards; her press spokesman, Christoph Rosenberg, a native Bavarian; and her assistant, Gilles Bauche, who has brought the IMF's collective knowledge for the trip -- data equivalent to 8 pounds of printed paper that he keeps on his iPad mini.

It's a small, committed group. Lagarde needs them to make a strong impression, but also, even more importantly, to demonstrate her independence.

After a lunch reception with the ambassadors, she is standing in the hotel garden, engaged in small talk. She mentions her speech, the first during her Africa trip, which she gave in the morning to 350 invited guests of the Malawian industry association.

In addition to the major issues relating to the Malawian macro-economy, she also talked about men. She had read on the flight that the men of Malawi were tired of hearing their country referred to as the "warm heart of Africa," and that they wanted to become manlier. The article prompted her to issue an appeal: "All I can say to you is this: Please, stay just the way you are!"

It was a surprise to everyone, which Lagarde now finds extremely amusing. Many experts had worked on the manuscript, a product of at least 10 days of work: a speechwriter, the AFR department for issues relating to Africa, employees with the OMD, or Office of the Managing Director, and the External Relations Department, or EXR, which had coordinated everything. They had chosen Malawian expressions and African proverbs, creating a manuscript that covered eight single-spaced typewritten pages. But the comment about men wasn't in the speech, and none of her staff members knew about it. Nor was it in the Financial Times, says Lagarde.

Rosenberg, her press spokesman, joins the group. He, too, worked on the manuscript. During the speech, he sat in the audience with a pen and the manuscript to note any possible deviations, in the hope of being able to post the transcript of the speech online as unaltered as possible.

He had also been looking at his watch, and had noted that Lagarde had spoken for 50 minutes, while the speech in the manuscript was only intended to last 25 minutes. The comments about Malawian men also took Rosenberg by surprise.

"It went well," Rosenberg says now, praising her for giving "a very personal speech."

First Woman to Lead IMF

Lagarde has been his boss for a year and a half, the first woman at the head of the IMF, an institution in which men hold 80 percent of management positions.

Lagarde once studied law, and for five years she led Baker & McKenzie, one of America's largest law firms, the first woman in that position as well. She was already a star at the time. But is she an expert on economics? She applied to the French elite school ENA twice and was turned down both times, and her later record as French finance minister was mixed.

Can this woman lead the IMF? She is responsible for about $1 trillion in available credit. One has to know a lot to be the head of the IMF, an organization with 188 member states. The job involves questions of monetary policy, money market activity and credit conditions. It isn't easy to keep an eye on everything at the IMF.

Lagarde can't conduct major economic debates like her predecessor Dominique Strauss-Kahn, who was treated as an equal by the IMF's top economists. She doesn't arrive at the meetings with a fixed goal in mind. Instead, she listens a lot and prefers to act as referee, putting her weight behind the best opinion in the group. Is the female instinct at work, or is she just clever?

At any rate, the strategy has made her many friends at the IMF. She listens to her experts, largely adheres to their recommendations and doesn't delve into technical details. This frees her up for the things she does best: to represent the IMF and, most of all, communicate bad news. The vital political questions are her chief concern.

She gives the first interview of her trip in her hotel room. The journalist conducting the interview is from "Top Brass," a popular Malawian television program. Her staff members are worried that there could be some tough questions.

She is a star in Malawi, if only because she is the head of the IMF. But she also stands out when compared with her predecessors, Frenchman Michel Camdessus, the German bureaucrat Horst Köhler and the Spaniard Rodrigo Rato. Only her fellow Frenchman, Strauss-Kahn, equalled her charisma in running this agency -- that is, before a sex scandal with a New York hotel maid forced him to resign.

The "Top Brass" journalist is very nervous. When he tries to ask his first question, he doesn't even manage to pronounce her name properly and immediately begins to flounder. Lagarde gets up, pours him a glass of water and takes a large gulp from the bottle. Then she waits until he has repeated the question.

"Who is Christine Lagarde?" he says, with some difficulty.

"A woman," says Lagarde.

It's her trump card. She always appears on photos from euro meetings. The world's image of the IMF is an image of Lagarde, and it has everyone fascinated: the tall French woman who is running the world's most powerful financial club.

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