Why Lagarde got the IMF job today

June 28, 2011

For me the interesting thing about Christine Lagarde becoming the new managing director of the IMF is not the news itself. I said she’d get the job as long ago as May 15, and I’ve considered her a lock since May 20. Rather, the interesting thing for me is the timing: everybody expected the announcement on Thursday, the 30th, but instead it came today, the 28th. Why push things up?

Because in the fraught negotiations with Greece, every day counts — the IMF disbursement was originally due tomorrow, the 29th, and can’t wait much longer than that before Greek debt maturities in July start piling up and forcing a default. And the headless IMF, it turns out, has not been an effective actor in those negotiations. Here’s Mohamed El-Erian, an old IMF hand:

The post of managing director is not to be taken lightly in an institution that operates like a well-disciplined army, with staff looking up to the unquestioned general for decisive leadership.

This is why the resignation of Dominique Strauss-Kahn has been so disruptive to the functioning of the IMF.

With Lagarde now moving swiftly from an international campaign to actual management of the Fund, the world’s technocrats will all be hoping that she will prove a forceful and decisive leader on the urgent subject of Greece. The Greeks have a certain amount of freedom here, since it’s pretty much unthinkable that Lagarde’s first act would not be to disburse bailout funds. But one sign of a leader is getting results even when your actions are severely constrained. Lagarde has an immediate opportunity to prove herself, and it’s absolutely in Greece’s long-term interest to make her look tough and effective. She might well put these extra two days to very good use.


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