- The Washington Times - Tuesday, June 28, 2011

With the Obama administration offering an 11th-hour endorsement, French Finance Minister Christine Lagarde on Tuesday was elected to be the first woman to lead the International Monetary Fund.

The IMF board confirmed the choice after she won support from the U.S., Europe, China, Russia and Brazil, in large part due to her leadership over the last three years during the financial crisis in Europe.

Mexican central banker Agustin Carstens, seen by some as a champion of rising developing nations, finished a distant second. Europeans have traditionally held the post since the IMF’s founding in the aftermath of World War II, and efforts by rising powers such as India and China to field a rival candidate never gained momentum.

“The executive board of the International Monetary Fund today selected Christine Lagarde to serve as IMF managing director and madame chairman of the executive board for a five-year term starting on July 5, 2011,” the organization’s 24-member executive board said in a statement.

She will replace compatriot Dominique Strauss-Kahn, who resigned as director in May after he was arrested in New York City and charged with sexual assault over an incident at an upscale hotel.

The Obama administration waited until very near the end to reveal its support. Treasury Secretary Timothy F. Geithner made the American position known just hours before the vote was held — in part in order not to offend developing nations who had pushed for a non-Western candidate.

In a statement, Mr. Geithner praised Ms. Lagarde’s “exceptional talent and broad experience” and said he was encouraged by the broad support she enjoyed among the fund’s membership.

Ms. Lagarde, who has been finance minister since 2007, faces an internal challenge in reviving IMF morale in the wake of the Strauss-Kahn affair, while dealing with a host of international trouble spots topped by the debt crisis in Greece.

In a first, the 55-year-old new IMF chief made her first public acknowledgment of the selection via Twitter: “I am honored and delighted that the Board has entrusted me with the position of [managing director] of the IMF!”

The office of French President Nicolas Sarkozy, who lobbied hard to keep a French national in the influential post, called it a “victory for France.”

Ms. Lagarde, who speaks excellent English and worked for a time for a Chicago-based law firm, faces a packed, problem-filled agenda. She takes over as Europe’s debt crisis is intensifying, and emerging nations are demanding a greater voice at the organization. It was widely reported that she secured China’s critical endorsement earlier this week in part by promising that a Chinese IMF official will be one of her top deputies.

The scandal involving Mr. Strauss-Kahn has rocked both the IMF and the French political scene, where he was at one time considered a leading contender in next year’s presidential elections against Mr. Sarkozy.

In an interview on French television after the announcement, Ms. Lagarde said Tuesday her first order of business was to unify the IMF’s staff of 2,500 employees and 800 economists and restore their confidence in the organization.

There was fresh street violence in Greece on Tuesday as the government in Athens struggles to pass a package of austerity measures designed to avoid a crippling default. As France’s chief financial official, Ms. Lagarde has been at the center of stumbling efforts by the European Union to contain the crisis and keep it from spreading to Portugal and other countries.

She issued an immediate plea Tuesday for Greece’s main political parties to unify behind the austerity package.

Many nations in the developing world were pushing for Mr. Carstens, because they want to have a larger say about how global finances shape up.

But Miss Lagarde’s supporters argued a European should remain in charge, in part because of precedent and in part because the focus of the IMF’s work in the short term will be dealing with the continent’s crisis.

She also had history on her side. Europeans have traditionally held the post since the IMF’s founding in the aftermath of World War II, while an American has traditionally been at the helm of the World Bank.

Eswar Prasad, a Cornell University economics professor who used to work for IMF, said Ms. Lagarde will need to show she doesn’t favor European countries.

“She will have to assert her independence from the European position and advance a broader view,” he told the Associated Press. “Whether she can cast off the baggage she brings with her is an open and important question.”

This article is based in part on wire service reports.

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