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French Finance Minister Lagarde Chosen To Lead IMF

French Finance Minister Christine Lagarde, the new managing director of the IMF.
French Finance Minister Christine Lagarde has been selected to head the International Monetary Fund after winning majority approval from the 24-member board over Mexican Central Bank Governor Agustin Carstens.

Lagarde, 55, who becomes the first woman to lead the international lending body, replaces disgraced former chief Dominique Strauss-Kahn, who resigned in May after being accused of sexual assault by a chambermaid in a New York City hotel. He is awaiting trial and under house arrest in Manhattan.

Largarde's five-year term will begin on July 5.

In announcing the board's decision in Washington today, IMF spokesman David Hawley said the vote was 'by consensus" -- an indication that it wasn't unanimous -- and said the board "looks forward to working with Miss Lagarde and her effectively leading the institution as its next managing director."

Speaking to reporters in Paris after she was chosen, Lagarde said, "I feel very proud, very moved, and just a little bit sad, because it's a whole chapter of my life for France that I now have to move away from."

Lagarde's selection ensures that a European will remain in the top spot at the IMF as the euro zone crisis deepens.

In a statement, Lagarde said, "The IMF has served its 187 member countries well during the global economic and financial crisis, transforming itself in many positive ways. I will make it my overriding goal that our institution continues to serve its entire membership with the same focus and the same spirit."

As the board of directors was voting, violence broke out on the streets of Athens as citizens protesting planned government austerity measures clashed with riot police.

The IMF and European Union have jointly offered debt-stricken Greece a bailout package conditional on deep cuts and budget reforms.

The Greek parliament is due to vote on a $40 billion package of spending cuts and tax hikes soon.

Greek officials said at least three civilians and 21 police officers were injured in the protests. Elsewhere in the capital, tens of thousands of striking workers marched peacefully, though police made several arrests.

Stiff Competition

Among the 24 directors who represent the Fund's 187 member countries, China and Russia, along with the United States, had indicated before the vote that they would support the French finance minister. Her selection seemed assured enough for U.S. Treasury Secretary Timothy Geithner to issue a statement this morning in which he said, "Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy."

The campaign for Strauss-Kahn's successor has been one of the most competitive in the history of the fund, which has had a European head for 64 years.

Emerging economies lobbied hard for the selection of one of their own for the job. A May 24 statement by the bloc known as BRICS -- Brazil, Russia, India, China, and South Africa -- criticized what it said was Europe's "obsolete" grip on the world lender and repeated its long-standing opposition to the World War II-era "gentlemen's agreement" in which a European heads the IMF and an American leads the World Bank.

The bloc argued that the global financial crisis -- which was triggered by a housing-market and banking crisis in the United States and Europe -- showed the need for a fresh perspective that reflects "the growing role of developing countries in the world economy."

In her May 25 candidacy announcement, Lagarde said she wasn't putting her name forward "because of the fact that I am a European or because I've been engaged in setting up those financial institutions that have helped in the bailouts that we've put in place."

Lagarde becomes the first person to lead the IMF who isn't an economist. She led the Chicago-based law firm Baker & McKenzie before entering French politics in 2005. She speaks perfect English -- in both a British and American accent -- and spent much of her career in the United States.

As one of the longest-serving ministers under French President Nicolas Sarkozy, she made the country's labor market rules more flexible.

Forbes has listed her among the world's most powerful women.

written by Heather Maher with agency material