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Europe hails Lagarde as IMF successor

With strong backing from Europe and the United States, French Finance Minister Christine Lagarde has been named as the new head of the International Monetary Fund.

Christine Lagarde

Lagarde has added IMF chief to her list of achievements

France's Christine Lagarde was named the first female head of the International Monetary Fund on Tuesday, replacing her countryman Dominique Strauss-Kahn who was forced to step down from the post in May after becoming embroiled in a sexual assault case in the United States.

Her appointment was hailed by German Finance Minister Wolfgang Schäuble as "an excellent choice." European Commission President Herman van Rompuy said he was convinced it was a "good decision" and "very good news for Europe."

Lagarde, who is currently serving as French finance minister, had been widely tipped for the IMF top job, ahead of her only other rival for the position, Mexican central banker Agustin Carstens.

Lagarde said in a statement she was "deeply honored" and would make it her goal that the international lender continue in the same focus and spirit of "stronger and sustainable growth" and "macroeconomic stability."

The 24-member IMF board appointed Lagarde, 55, by consensus to a five-year term beginning July 5. Earlier Tuesday, she had won the backing of the United States, which carries the most votes within the board. A host of Asian, African, European and Latin American nations also threw their weight behind her for the role, which traditionally has gone to a European.

Strong case

Many feel Lagarde can bring something new to the IMF's top post. Last autumn she was quoted as saying that women were less affected by libido and testosterone in their work, and that following accusations of sexual assault against Dominique Strauss-Kahn it could well be a good idea to have a woman succeed him.

Lagarde was seen as a promising successor to DSK - as the former IMF chief is commonly called - from the day she officially announced her candidacy at a press conference on May 25.

Dominique Strauss-Kahn looking despondent

Strauss-Kahn resigned as IMF chief over sex allegations

Lagarde was the first woman to head the French Finance Ministry, the first female finance minister in a G8 country and is now the first woman to lead the IMF. She received strong support for her candidacy, backed not only by French President Nicolas Sarkozy but also by members of the OECD from Britain, Italy, Ireland and the Netherlands. Germany had also expressed support for her.

"If I look at the personality of Christine Lagarde, as a finance minister, she enjoys an excellent reputation worldwide, and in many ways is an ideal embodiment of economic and political experience," Chancellor Angela Merkel said during a visit to Singapore in early June.

Lagarde also received backing from Russia and China, despite the fact that the latter would have preferred a candidate from the emerging economies take the job, rather than another European.

The United States is also reported to have expressed strong support for a European chief. Together with Europe, the United States holds more than half of the IMF's voting power, which gives it enough influence to decide who should lead the IMF.

At home on the international scene

Lagarde has strong connections to the United States and was certainly not regarded by the Americans as an unwelcome candidate. She gained political experience as an intern for Republican William Cohen, later defense secretary under President Bill Clinton.

She returned to France to study law and English, beginning her career as a lawyer at American law firm Baker & McKenzie in Paris. She went back to the United States 18 years later to take up the post of manager at Baker & McKenzie's headquarters in Chicago. Former French Prime Minister Jean-Pierre Raffarin convinced her to return to France in 2005 to enter politics.

Christine Lagarde walks to a press conference accompanied by her staff

Lagarde has strong support in both Europe and the US

She brought with her a pragmatic Anglo-Saxon and team-oriented style of problem-solving. In France, she was somewhat ridiculed at the beginning for her forthright manner.

She caused an uproar, for example, when she supported a rigorous austerity program in a country where people were used to being taken care of by the state. When the French complained about high gas prices, she pragmatically encouraged them to ride their bicycles. Later, too, Lagarde refused to shy away from potential conflict.

Eventually, it wasn't just the French who were convinced by her direct style. She was voted "Finance Minister of the Year" by the Financial Times for her contribution to the establishment of the 750-million-euro bailout plan and for reining in hedge funds during the 2009 financial crisis.

A liberal with a touch of socialism

Lagarde's economic policy followed a similar path to that of Strauss-Kahn: in favor of market economy and globalization, but with clear rules. Like Sarkozy, she wants the IMF to develop into a type of global economic governance organization. The contacts she's made during her career in the international economic and financial world could help realize this aim.

With an attractive tan, elegant wardrobe and distinctive smile, the sophisticated Lagarde exudes optimism. As the older sister of three brothers, she had to prove herself in a man's world early on.

Teamwork is not a foreign word for her, and she made it onto the French national synchronized swimming team. Her father died when she was only 17 and two marriages ended in divorce. Today the mother of two sons is linked with Marseille businessman Eachran Gilmour.

Stumbling block before the executive chair

euro bills

Lagarde allegedly gave preferential treatment to businessman Bernard Tapie

Her professional past is spotless - with one exception that could have proved a stumbling block. As finance minister in 2007, Lagarde decided that a year-long legal battle between controversial billionaire Bernard Tapie and the former bank Credit Lyonnais regarding the sale of German sportswear company Adidas should be settled by an arbitration agreement rather than the normal legal process. Tapie received over 285 million euros ($400 million) in compensation from the state.

Suspicions were voiced that Lagarde used her influence in office to have taxpayers foot the bill for Tapie's compensation. Opposition politicians also claim that Lagarde acted on the instructions of President Sarkozy, who is a friend of Tapie.

The French newspaper Le Monde reported on its website that prosecutors had launched an investigation into the role of two of Lagarde's subordinates. A three-judge tribunal is expected to announce in July whether they will launch a formal inquiry into Lagarde's role.

Author: Insa Wrede / cn, Darren Mara
Editor: Michael Lawton

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