Christine Lagarde owns a room when she walks into it. Whether it is a hall filled with thousands of participants at the opening of the annual International Monetary Fund meetings where she laces her speeches on macroeconomic challenges with Alice in Wonderland references, or a small bilateral room for a swift but impactful meeting with a head of state at the World Economic Forum's annual meeting in Davos. She has perfected the art of walking into a room, head straight, walking with purpose, making immediate eye contact with her interlocutor, with a confident smile that simultaneously is a welcome and a warning. She is also known not to suffer fools.
This week, Madame Lagarde has been reflecting about her legacy at the IMF, stepping down as Managing Director after eight years in order to take on her new role as President of the European Central Bank. In her final interview as managing director of the IMF, Madame Lagarde spoke to The National about the importance of striking the right balance between nationalist policies and global co-operation to tackle some of the world's toughest challenges.
“Globalisation, international trade, the transformation that technologies bring about is not attributable and is not going to be fixed by multilateral institutions, it will be attributable and fixable at the local level because that is where governments are elected or designated," she says.
"But that is where the budgets lie, that is where domestic policies are identified, that is where the losers and the winners have to be equalised in some shape or form or inequality reduced.”
Madame Lagarde acknowledges that “a multilateral institution is not going to fix that. We have to come to realise that is it a combination of the national imperative and the international solutions. It is bringing the two together that will tackle issues such as terrorism, money laundering, corruption around the world, financial flows, migration of disease and climate change”.
A decade after the financial crisis, there are concerns about the slowing down of the economy around the world at a time of political tensions. Madame Lagarde said that “the financial crisis certainly taught me that it is by cooperating, it is by including, it is by facing collective hardship that we actually came out of the crisis. We managed to avoid a recession, that turned into a great depression”.
There are concerns that the collective lessons of the previous crisis have not been learnt. Madame Lagarde said: “We tend to forget over the course of time how difficult it was over those days right after the financial crisis. While ten years ago there was a strong co-operation, strong determination that no product, no market, no player would be not supervised, not regulated, the financial sector would have to be better capitalised and stronger and more crisis resistant, these things fade and those players who were critically important have either retired or gone away and we forget”.
This is where she sees an important role for herself: “One of my jobs, because I am a veteran in that field now, is to constantly remind those ‘new turks’ that a crisis can be around the corner, that sustainable growth, solid growth, stable growth, is critically important as it is important that it be inclusive”.
Responding to a question on what she knew today that she wishes she knew on her first day at the IMF, Madame Lagarde sighed and paused, before saying, “When I started 8 years ago, I thought it would be smooth sailing in much calmer waters than what I eventually discovered”.
She added: “First of all, when I joined the IMF we had to collectively make a effort to work together to look together in the same direction and suddenly the European Sovereign Debt Crisis erupted. It was literally a month and a half after I had joined. We had to very rapidly focus on countries like Ireland, Portugal, Cyprus, Spain with the banking sector, and Greece of course”, and ever since then she has had to tackle numerous problems. “In those eight years, we have helped 90 countries with programmes”.
And Madame Lagarde herself has been learning from facing international financial challenges. “If there is one learning that I take away myself is that behind the numbers, behind the macro situation, which of course is critical, we have to look at the people, we have to understand what it means for them individually, whether you talk about a family or a small enterprise, or whether you talk about a large corporate account, we all have to appreciate that what we do is going to affect people individually”.
The challenge is to keep in mind individuals when working on big policy ideas. “It is something that I care about personally and I am very proud that we have now adopted guidelines in a few areas that were not necessarily on the IMF page, guidelines about governance, the fight against corruption, social spending and how there should be sufficient safety nets to protect the most vulnerable people. Even when a programme has to restore the financial situation of a country which necessarily means either raising revenue or cutting spending or sometimes a combination of both. Those are achievements that I hope survive me and be part of my legacy”.
On what she wishes she could have achieved in her time at the IMF, she pauses for several seconds and responds “As I leave the institution, I wish I had been able to deliver on what we call the 15th review of quota, which sounds like jargon but is essentially strengthening financially the institution, even more so than I had, and making sure there is a better allocation of voices and shareholding between the membership in order to reflect the actual economic landscape as it is. For an institution like the International Monetary Fund to be credible, it has to represent the international community, and it does to a large extent, with 189 members, but there weight in the organisation can be adjusted, should be adjusted for the institution’s credibility. On that front, I wish I could have done better”.
The IMF, like many 20th century organisations, is continuously scrutinised about how representative it is for today’s world.
Madame Lagarde had strong words for the world’s leaders, calling on them to take on the challenge of climate change seriously. She said: “I would strongly suggest that they think of their accountability not only to their children or grandchildren but to all future generations. I don’t think they would want their great grandchildren to think of them as not having tried as hard as possible to transfer a good environment a good planet and a climate that can keep us healthy and safe”. On her mind is the responsibility to young people. “The world will belong to the young people who march the streets of the cities of our world at the moment, arguing we are not doing enough. We have a responsibility towards them and we should listen to them”.
And she acknowledges the challenges faced from world leaders who are climate sceptics. “For those who are most reluctant and the most cynical and sceptical, even if there was only a ten per cent probability that all these threats be true, is it not worth making sure that probability never becomes a reality”.
Having broken several glass ceilings, including being the first female finance minister for France – or a G8 country – Madame Lagarde is vocal about the importance of supporting women to have their rightful place in work and life. “It is the obligation of a woman in a position of responsibility to stand out and stand up for the values that she believes in and I hope all women would stand for other women, critically important”.
She adds, “I am proud to have brought the woman into the equation and to have convinced my board members who represent the international community that women matter and that their contribution to the economy can be sustainable and need to be accommodated. Without naming and shaming, we have identified which countries that need a lot of work done for a level playing field”. And yet “plenty of work still needs to be done when it comes to women’s rights and equality of opportunity”.
She often repeats the importance of the “three Ls” – learning, labour and leadership for women to have their place.
When told she is one of the most recognisable women on the face of the planet, she quips “it is because of my hair”, holding a lock of her distinctive silver hair. And her years of experience lead her to advise a younger generation of women.
“I would say to young women: have confidence in what you can achieve, don’t give up, forge alliances with others, men and women, who are going to help you along the way, and be yourself, don’t copycat men, you bring enormous value and contribution”. Being her own woman has sometimes led to push back to her policies. “You get what you see. This is me. I am who I am. But communication is vitally important for difficult things. I am going to experience that in monetary policy I am sure”.
Madame Lagarde has been keen not to make any policy decisions or forecasts before she assumes her role as President of the European Central Bank. When she takes on the helm she will be faced with a Europe contending with the fallout of Brexit, an uncertain economic outlook in several of the European bloc’s members and continued tariff wars between the United States and China. She has been careful not to speak on the specifics of her plans for the ECB just yet, winding down her eight-year tenure at the IMF.
“As is always the case when you change direction, you look at what you have done and you miss already the friends you have teamed up with and you look at the future with a bit of anxiety and a lot of excitement as well. It is that combination of sadness to leave and excitement to go over there back to Europe and to try and help”
The interview with The National was conducted in the state-of-the-art studio, one of several upgrades to the IMF buildings on 19th Street, just a few moments walk from the White House. Under her guidance, several upgrades were undertaken, including the audio studio, a café in the atrium and the installation of a piano on the mezzanine floor. The idea was to open up the international organisation for its staff and stakeholders.
On the Middle East, Madame Lagarde said, “I will come back to the Middle East, in whichever position I am, because I love this part of the world”. In all her visits to the region, Madame Lagarde made a point to meet with civil society members.
Recounting those visits, she said, “I have on my mind those moments I had with Tunisian women when they were working on the constitution and fighting for their rights. And had the courage to stand for their views and opinions. I have on my mind moments that I spent with students in universities in Abu Dhabi and other places as well, of young people full with enthusiasm and determined to contribute to their country”. On one visit to Jordan, she visited Zaatari camp for Syrian refugees. “Zaatari camp helped me understand how women were the first and primary victims of war and conflict”.
It is expected that Kristalina Georogieva of Bulgaria, the chief executive officer of the World Bank, will be announced as Madame Lagarde's successor. The lack of confirmation of Ms Georogieva is largely bureaucratic as she is the main candidate for the job. On what advice she would offer her successor, Madame Lagarde said: “My successor will face the same kind of challenges, making sure the institution remains relevant, credible, is respected, is financially solid, I know that she will inherit a formidable team of people, the staff, dedicated and spend their time and brainpower to serve the international community in order to deliver on the mission. He or she – and I think it is likely a she – will start with that fantastic asset that can be deployed for the good of humanity”.