December 1, 2023

In Her First Week at the I.M.F., a New Leader Stresses Diversity and Respect

On Tuesday, she met at the fund’s headquarters in Washington with employees still shaken by the abrupt resignation of her predecessor, Dominique Strauss-Kahn, after he was charged with the sexual assault of a hotel maid. On Friday, she holds her first board meeting to consider another round of emergency financing for Greece.

“I thought it was necessary to come back to D.C. very promptly simply because there are so many issues to address,” Ms. Lagarde said by way of introduction at her first official news conference. “It cannot wait for another summer holiday. Here I am, and for good.”

When Ms. Lagarde last met with reporters here, during the fund’s annual spring meetings, she made a point of speaking mostly in French. On Wednesday, settling into her new international role, she spoke in English even when addressed in French.

She mostly dodged questions about Greece, saying that she would not prefigure Friday’s meeting, but she did provide a measure of her thinking on the fund’s mission and priorities.

Mr. Strauss-Kahn, a member of the Socialist Party in France, expanded the fund’s focus on financial stability to include broader goals like reduced unemployment. He argued that the benefits of prosperity did not necessarily flow to the broader populace.

Ms. Lagarde, by contrast, is a political conservative. She said that she needed time to study the fund’s policies before offering her own opinions. But she sounded a note of caution, saying that she supported a move toward “comprehensive” measures of efficacy, but that the fund “should not become a specialized boutique to reduce unemployment.”

The fund was created by the United States and its allies after World War II as a lender of last resort for troubled governments. Since that time it has always been run by a European, though the United States maintains effective control.

Ms. Lagarde campaigned to replace Mr. Strauss-Kahn largely on the strength of Europe’s determination to maintain that leadership. But her victory required the support of emerging economies, who want to play a larger role. Ms. Lagarde indicated Wednesday that she was likely to expand the number of her deputies to four from three to make room for the elevation of a Chinese official at the fund, Min Zhu.

Ms. Lagarde also said during her campaign that a female executive would be an advantage for the fund, reducing what she described as the testosterone level.

Mr. Strauss-Kahn was allowed to remain atop the fund after the disclosure of an affair in 2008 with a subordinate, a decision that some considered a mistake.

A number of women have come forward in recent months to describe the fund as a problematic workplace, where some superiors felt free to press subordinates for dates and little effort was made to prevent or to punish sexual harassment. Officials at the fund have disputed their characterizations, and a group of several hundred female employees signed a public letter defending the fund as a workplace.

On Wednesday, Ms. Lagarde said that increasing the diversity of the fund’s staff would be a priority. “Together with diversity comes respect for everybody,” Ms. Lagarde said, “and it’s been the case in the past that people have been respected and I will make sure that they continue to be respected no matter what their differences are.”

The fund has made a number of recent changes to improve its workplace culture, including instituting a more restrictive policy on relationships with subordinates. Ms. Lagarde’s contract includes a new injunction, “You shall strive to avoid even the appearance of impropriety.” And Ms. Lagarde noted Wednesday that she would soon attend a new ethics program now required for all employees.

She will make $467,940 in her new job, plus a stipend of $83,760, all of it untaxed.

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Atop I.M.F., Contradiction and Energy

Considered the Socialist party’s leading candidate for president of France, Mr. Strauss-Kahn identified three threats to his aspirations in an interview with the newspaper Libération, held on April 28 but published only this week. “Money, women and my Jewishness,” he said. “Yes, I like women,” he went on. “So what?”

Mr. Strauss-Kahn added, “For years they’ve been talking about photos of giant orgies, but I’ve never seen anything come out.”

Today, Mr. Strauss-Kahn sits in a jail cell on Rikers Island in New York, his reputation — and any political ambitions — perhaps irreparably tarnished by his arrest on charges of attempted rape of a hotel maid in Manhattan last weekend.

It is a humbling comedown for Mr. Strauss-Kahn, whose rise on the world stage has been marked by contradictions.

As managing director of the International Monetary Fund in Washington since late 2007, Mr. Strauss-Kahn has returned the agency to relevance by helping engineer a $1 trillion bailout for Europe — but only after an initial humiliation when he was reprimanded for a brief affair in 2008 with a subordinate.

A prominent Socialist, he has held powerful positions in previous French governments despite his wealth, lavish lifestyle and his reputation as a womanizer.

A man with an impressive intellect, great charm and restless energy, his flaws have been accepted because of his accomplishments. “Even the chatter about women was discounted enormously by everyone around him,” said Steven C. Clemons, director of the American Strategy program at the New America Foundation who first met Mr. Strauss-Kahn in 1998 and was impressed by his forceful personality.

“I don’t think there was a conspiracy of silence,” Mr. Clemons said. “The discussion I always heard about him was he’s one of the titans, that he’s such an extraordinarily different person, that rules don’t apply to him in the same way.”

One former I.M.F. official said that, had Mr. Strauss-Kahn been a less senior person, he might been fired or at least “sent to Siberia” because of the affair with his underling. He survived an investigation, in part, this person said, because the culture at the I.M.F. dictated “no rules” for the managing director and because there was little appetite to rid the agency of a charismatic and effective leader when an international financial crisis looming.

Mr. Strauss-Kahn arrived at the I.M.F. at what would be an opportune time for him and the agency, which had become an international organization with little clout since the Southeast Asia financial crisis in the mid 1990s. A former finance minister for France in the late 1990s, he had a deep knowledge of international economics and was on a first-name basis with most of Europe’s top leadership.

He played a pivotal role as Europe’s debt crisis deepened last May, and leaders were deadlocked over what to do. In midnight phone calls, Mr. Strauss-Kahn pressed them to take action. Quickly, he urged, before things got worse. His insistence helped overcome their hesitance, and they agreed to a set up a $1 trillion rescue package to help Greece and other troubled countries, with the I.M.F. contributing to the bailout fund. And as countries like Germany pushed for harder austerity terms, he was consistently vocal in saying that could backfire by slowing economic growth too much — which seems to be the case in Greece today.

“The only real strength of the I.M.F. is the ruthlessness of truth-telling,” Mr. Strauss-Kahn said at the time.

“Early on, the Europeans were in complete denial. I think his main accomplishment will go down as persuading them that they had to deal with Greece before it was too late. And he did that not by bullying them, not by banging the table, but much more by coaxing and persuading them,” said Simon Johnson, who was the I.M.F.’s chief economist from March 2007 to August 2008.

It was a seminal triumph for the I.M.F. and a moment to savor for Mr. Strauss-Kahn, who was already winning plaudits after the inauspicious start resulting from the affair.

Sheryl Gay Stolberg, Graham Bowley and Binyamin Appelbaum contributed reporting.

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