The IMF’s Christine Lagarde: Can She Fix Europe?

The head of the IMF was key to dealing with the Cyprus crisis. There’s more trouble for her to deal with

  • Share
  • Read Later
Christine Lagarde cover

There was a time not that long ago when the International Monetary Fund was an obscure body whose financial work was a mystery to most regular people. Then its Managing Director Dominique Strauss-Kahn put the organization on the map for all the wrong reasons: He was hauled into prison in New York in May 2011, and charged with sexually assaulting a Manhattan hotel maid. The explosive scandal (the charges were finally dropped) ended his career. And in his place is one of the world’s most intriguing women leaders: Christine Lagarde.

This week TIME asks “Can this woman fix Europe?” After following Lagarde around Paris and Frankfurt as she dealt with Cyprus–one of Europe’s worst debacles in years–I have come up with one possible response: If Christine Lagarde can’t fix Europe, who can?

(MORE: Lagarde on Emerging Market Nations Getting More Power in the IMF)

While the tiny Mediterranean island threatened to send the world economy into a tailspin, Lagarde managed to maintain her cool and even crack a few jokes. Zipping from Paris, Brussels, Frankfurt, Washington and back to Brussels in the course of 10 days, Lagarde coaxed, prodded, harangued, schmoozed and lunched officials into a deal that would somehow save the euro. Invariably, she was about the only woman in the room: A tall, silver-haired figure bounding between meetings amid a sea of gray-suited bureaucrats. “All men, all men,” she says, describing her meetings in Algeria, from where she had just landed when I met with her in Paris.

The euro might be safe—at least for now. But safeguarding the reputation of Lagarde, ex-Finance Minister of France, and her EU partners who hammered out Cyprus’ bruising bailout is another question. Enraged Cypriots emptied ATMs and stormed into the streets, saying the bailout would devastate their country for at least a generation. One newspaper cartoonist in Lagarde’s own country showed Cyprus as a medieval prisoner in stocks. Some IMF critics privately wonder whether Lagarde, who, unlike Strauss-Kahn, is not an economist, can tackle a crisis this complex. To that, Lagarde says it’s time for economists to stop talking in opaque academic terms, and start engaging with people on their own terms. “Sometimes there are meetings when I stop [someone from] talking and say, ‘Stop it. You’ve lost me,’” she tells me. “You have to use simple terms that people out on the street will understand, because otherwise you are just talking to yourselves.”

MORE: IMF Chief: Economic Meltdown in Cyprus Could Have ‘Contagion Risks’


The IMF has, when one considers how large the welfare states and even government debts of Europe are vis-à-vis most Tropical World nations in the 1980s and 1990s, who were forced to undergo “structural adjustment programs” of devaluation and removal of price controls, been very lenient with countries like Greece and Iceland.

Logically, given the paucity of natural resources in the geologically extremely youthful lands and their consequent lack of comparative advantage in non-intellectual goods, these nations would need much deeper “austerity” than Tropical Africa. Abolition of farm subsidies, cutbacks to welfare and wage and price deflation by a very large amount might be painful for Greece or Iceland, but their poor endowment with mineral resources and flat land means they need to be exceptionally price-competitive and to eliminate money creation. In the long run, being price-competitive and removing their debts might help Europe to deal with its crisis of lowest-low fertility and an inverted population pyramid where they could be one retiree in Greece for every worker in a mere forty years. If housing was very affordable, then wmoen might be able to have enough children to avoid this Enriched World crisis.


we have been building europe with the wrong countries ,especially germany has showed the wrong way by creating a lot of poverty in its own country. sooner or later we will pay that. in  the 1930's we saw a man called hitler taking power, how long will it take before such a man stands up in germany or -day europe is hanging together because  of some david copperfield tricks but that won't last.  if unemployment increases  another 2 or 3 % in europe the poverty bomb will explode.we already now to-day  in which bas shape europe is with no future of change. we know what will happen in coming months and years.still they preach that horrible austerity machine because  they don't understand anything about social needs ,only their own,living a party life between business jets, big cars ,expensif lunches. their world has nothing to do with ours.they think that nothing can happen without them??? dangerous.we must prepare for a very difficult future in europe  because those functionaires live in an ivory belgium the government stands still; we have reached the highest levels worldwide of taxation. ther  is  s no oxygen anymore to do something. we are starting to sell off buildings and other stuff to fill the gaps. we are still increasing taxes on so-called easy taxable goods like cigarets or ftraffic fines or increased bank taxes. you can't call such stupidity management   nor people  with guts to do something. its only a matter now to stay in place hopefully getting far away from the belgian government and finding good friends to get a job in europe.they ate all cripled by the european dictatorship and no one dares to undertake.

we are like paralysed by a leadership witth no guts, no sense of the future, no dynamism,nothing ,just a bunch of functionaires following rules ,good or bad.their own future is save and that's what counts.its a great disappointing story europe the way these guys make a puzzle of it that noone understands anymore


It is difficult that euro zone crisis shall end up soon.

Main reasons why there financial crisis take place -- [1] excess fiscal & current account deficit [2] Banks have not appropriately disbursed loans taking in to consideration risk weighted assets, asset -liability position,& banks which are city based ,have little exposure hence limited loan diversified portfolio.[3] Govt do not aggressively control avoidable expenses [4] do not concentrate on promoting export & services [5] vulgar salaries are uncontrolled [6] no country has kept their contingency /disaster fund which can extend help in emergancy

Global warming /climate change has added fuel in to fire since  it has affected economy, crop,

Finally global slow down has  affected euro zone crisis  since there are less opportunities for export 7 services to grow, Banks to become financially sound

j.villain1 2 Like

Christine Lagarde will always have my respect for going public with what was going on with the financial meltdown started by the collapse of Lehman Brothers. While every one else in power was trying to obviscate what was going on she was out telling the truth.


If the IMF have been 'sorting-out' Eurozone problems then it's clear why they have got worse. After all the IMF experience of toppling Governments and destroying economies isn't exactly relevant to solving problems.

IMF/World Bank Policies

To reduce poverty is their stated goal

Yet the policies they demand

Always leave assisted countries

In a deeper, darker hole

So why demand policies

That always do fail

That always float like a brick

That, like lead, do sail?

Is their faith in doctrine

Honestly that strong

That policy must always be right

And reality always wrong?

Or is their real aim

Opposite to what they claim

Is it to continue poverty

And power to maintain?

You can never reduce poverty

By concentrating wealth

You do not spread diseases

To protect the public health

So the question that must be asked

Is how to tear away their mask

And now force them to fulfil

Their official stated task?

We can start by recognising

That money in healthy economies

Like blood in a healthy body flows

And severing your arteries

Is worse than body blows.

So let countries pay their debts

Like donors giving blood

Instead of descending like vampires

And leaving corpses in the mud.

David Chalk


Maybe it can happens. But we need have try together with him. Everything is possible. In the future and wise.