Barring a last-minute surprise, it looks like the International Monetary Fund’s shareholders will make the mistake of choosing Christine Lagarde, France’s finance minister, as the institution’s managing director. It’s probably too late to ask them to think twice -- but they should anyway.
The IMF’s heavy involvement in the euro zone rescue process was controversial from the start.
The European Central Bank and some euro zone members -- including, ironically, France -- were originally opposed or reluctant to call for the organisation’s help.
And as the potential size of the euro zone debt mess has become more apparent, some members of the IMF board are questioning the size of its commitment. There may come a point when the IMF needs to reassess its role in Europe.
Can one trust Lagarde, who has been an interested participant in the crisis from the start, to make fair and balanced decisions on the IMF’s action?
The IMF is also, and should be, a place of vigorous intellectual debate about the direction of economic policies. It’s hard to see Lagarde forming a personal view, say, on the desirable level of inflation, a debate launched a couple of years ago by IMF chief economist Olivier Blanchard.
Or lightly orienting the organisation away from the “Washington consensus”, as Dominique Strauss-Kahn did.
This is not to say that an IMF boss should have a blind ideology, trying to force the reality into his or her preconceptions. But strong views and original ideas, yes.
In four years as finance minister, Lagarde has barely opined on global financial imbalances, China’s currency policy or capital controls -- all issues crucial to her future role. Finally Lagarde leaves France’s budget deficit in the same state as Portugal’s -- although it still enjoys the same ratings as Germany. Will she be the best placed to call for the euro zone to abide by strict fiscal discipline?
And will she recuse herself in the -- unlikely, but not impossible -- event that France one day has to turn to the IMF for help? Lagarde certainly will not be the worst leader the IMF has ever had. But in the current moment, the institution needs more than a passable consensus-builder.
The author is a Reuters Breakingviews columnist.
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