The economy of Christine Lagarde
By Ned Martel,
The world waited anxiously on Monday as Christine Lagarde took the stage at the Peterson Institute for International Economics. As managing director of the International Monetary Fund, Lagarde plays a pivotal role in stemming the economic crises that have hobbled much of the developed world. Too harsh an assessment and markets could jolt and stall the faltering recovery; too cavalier an approach and the urgency Lagarde sees as necessary for a turnaround could be undercut. She chose her words carefully.
“The global economy is still fraught with uncertainty,” she said. “The situation is a bit like a jigsaw puzzle. . . . We need all the pieces to come together.”
Lagarde, herself, is a bit of a puzzle. She’s Chanel suits and weekend denim, a French woman who has called the United States home during pivotal stretches of her life, a lawyer by training who’s in charge of a financial institution crucial to the globe’s economic pulse. Though connected to every possible political leader, and all manner of business stakeholders, Lagarde is, essentially, on her own. A graceful and sociable loner.
At 56, she denies herself the usual Parisian vices like alcohol or tobacco or even red meat. Her loved ones — a dashing Corsican companion as well as two grown sons from previous marriages — live far from her Washington residence. It has been years since she’s had time to tend her rose garden in a Normandy country house.
But she does have her routines. Wherever she travels — Riga one day, Tokyo a few weeks later, or back at her West End condo — she swims her laps to shake off the tensions of her grueling portfolio. But even this disciplined exercise routine has not shielded Lagarde entirely.
In April, Lagarde began her morning in New Delhi, pushing herself. She swam, extra hard, in a hotel pool. Next, she boarded a series of flights back to Washington. During a plane change in Paris, she felt the twinge in her knee, and it gave way to a snap, and then frightening, destabilizing pain. After landing in D.C., her travelling staff shuttled her to George Washington University Hospital. The emergency room flew into action. “It was quite dramatic,” Lagarde said in her office, a few weeks later.
She pointed to a tanned leg under a pink skirt. She showed the exact place where surgeons entered. After weeks of physical therapy, her knee bent easily as she stood. There was no visible scar. “I’m quite proud of it,” she said.
Christine Lallouette first arrived in the Washington area in 1973. She won a year-long scholarship to attend Holton Arms, the all-girls prep school in Bethesda. She was shaky on the language and not privy to senior-year inside jokes. She was taller than many. She smoked. She was used to having boys around, as the older sister to two brothers. And her father, a professor of English literature, had died only months before she left.
The 17-year-old girl stared down anything that was difficult, recalled Bob Tupper, her government teacher and a mentor to many over three-plus decades at Holton Arms. He recalled that she struggled with writing essays in English, that he pushed her, that she kept at it.
This past June, the Holton Arms Class of 2012 filed in two by two, hand in hand. Each wore a long white gown, made highly individual through strap styles and hem lengths. As the commencement speaker, Lagarde encouraged even more self-expression.
“In this era of recycling, you can use the dress three times,” she told them. “I did.” First she cut it above the knee and wore it to parties, she recalled, noting that her mother was mildly scandalized. Next she cut it even shorter, into a tennis dress.
She called these girls holding bouquets and coming down the aisle “brides of empowerment.” Not the most liberated phrase, but heartfelt. She told the graduates that she could barely scan the audience in front of her; if she saw Tupper’s face, she might cry.
Lagarde impressed upon the tech-savvy graduates how different her life once was, that the worldwide cyber-intimacy has rewards and costs. It’s a recurring theme of hers that problems in Florida real estate reverberate into a global debt crisis. But on a more personal scale, she explained that, even though she was an ocean away and grieving her father’s death, she was only allowed to call her mother every two weeks.
“Bonjour, cherie!” Lagarde said into her cellphone. When she heard it ringing repeatedly in her sunny, high-ceilinged office at the D.C.-based headquarters of the IMF. She stood up from a sofa and rushed to her desk to answer it. She had guessed correctly that her son, 26-year-old Pierre Henri, was calling. He has a new-media career in Paris and his brother, Thomas, 24, studies architecture in Chicago. She listened to her eldest’s talk about fun plans for that night, but she had to postpone their chat. “Je t’embrasse,” she said.
Lagarde’s first husband died, and she divorced her second. A careful arrangement with her ex allowed the two boys from different marriages to be raised together. One huge challenge of her two decades with the Baker & McKenzie law firm was a job transfer to Chicago, where she spent six years. The boys stayed in Paris, and she visited as often as she could.
President Jacques Chirac invited her to join his cabinet as a trade minister, and she stayed on when fellow conservative Nicolas Sarkozy won the presidency. Later, Sarkozy promoted her to finance minister. Visiting a group of business mavens in Marseille, Lagarde reconnected with Xavier Giocanti, a real estate entrepreneur and once a university classmate of hers.
They are all but married, and their relationship, she explained, is a showcase of the usual European North-South culture clash: She’s methodical and purposeful, he’s looser and robust. When Giocanti agrees with something, he mutters, “ca va,” whereas she takes him to task for not using the more proper “d’accord.” He has said, to titters in France, that he is responsible for her “plaisir interieur brut,” a phrase that’s perilous to translate.
Still, Giocanti remains in France. Lagarde diverts her unusual itinerary to see him frequently. But her life has deposited her once again, on her own, in the United States.
During her four-block walk from the West End to work, she often runs into her neighbor, Harry Reid, the Senate majority leader. She shops for fresh fruit and Greek yogurt at the Foggy Bottom Whole Foods. Many nights, she is stuck at the office late and drops by Rasika West End, a new Indian restaurant. “No abuse, no excess, right?” she said, admitting she allows herself an occasional glass of “very good wine.”
Jane Harman, the former congresswoman who now runs the Woodrow Wilson Center, is among several who have invited Lagarde over for dinner. “Just girls,” Lagarde called the groups, and keeps mum on the guest list. She didn’t know why these women in power have sought her out, but she wasn’t complaining. “My companion is very happy about that,” she said, “because if there had been plenty of men reaching out to me, I think he would be terribly worried.”
She has also dined with a group of the city’s economics writers and their spouses and graced many events at the French Embassy. “She wants to meet people. She doesn’t want to just say ‘hi hi bu-bye,’ ” French Ambassador Francois Delattre said. She brings macaroons from the bakery Paul to her hosts.
Other familiar faces include Sir Peter Westmacott and Susie Nemazee, the British ambassador and his wife, who have known Lagarde for years. Susan Schwab, who was her counterpart in the top trade job in the Bush Cabinet, has met up for meals at Blue Duck Tavern. They chose the patio, away from other diners, so they could be free to talk about everything on their minds: “We talk about finance, trade, leadership,” Schwab said. And sometimes shopping. “We talk about theater,” she added, “and we talk about guys.”
But Lagarde does not gallivant. Her selection as IMF chief was, in part, a correction: the IMF job became open only because Dominique Strauss-Kahn saw his career and later his marriage end, after allegations of sexual impropriety. Yes, she uses Facebook to post her whereabouts and Twitter to share a thought, but she projects, above all, a Gallic reserve.
“I hope you can understand, but I know many, many high-ranking, middle-ranking, low-ranking people around the world. I don’t have a carnet d’addresse,” she said. That phrase translates to “address book” but means a social network, in the old schmoozy sense. “I don’t keep record. I’m not leveraging that.”
On a Friday in June, Lagarde huddled happily with CNN’s Christiane Amanpour, getting ready for an in-studio interview. Each tall woman bent at the knees when greeting each other, like a curtsy, and exchanged high-toned, happy-to-see-you laughs. They volleyed back and forth with an inside joke about the news anchor’s “nail varnish,” and then donned game faces.
With cameras rolling, Lagarde clammed up, referring only to “action” that needs to occur “shortly.” Lagarde revealed nothing about the nailbiter that her team was negotiating right then: Spain was getting billions of loaned Euros from private banks, keeping panic at bay. No bailout reserves were spent, and Spain’s newish head of state would not suffer stigma.
Lagarde’s short, careful statements have carried weight. In “Inside Job,” Charles Ferguson’s Oscar-nominated 2010 documentary, Lagarde’s unamused, heavy-lidded expression said as much about the 2008 financial catastrophe as her words. (Asked to recall her reaction to learning, after the fact, that Lehman Brothers was bankrupt, Lagarde deadpanned: “Holy cow.”)
Afterwards, Amanpour remarked on how well the managing director had handled The Merkel Question; however it’s phrased, there’s always intrigue about the two women. The elegant lawyer who grew up near the English Channel is held up in contrast to Angela Merkel, a blunt chemist from what was then East German countryside who rose to become chancellor. The two women have an obvious affinity, but keep an obvious distance.
“She’s a very strong leader, a very courageous woman,” Lagarde said, when Amanpour asked about her on air. “She’s always keen to understand the situation. She has a strong sense of balance.” The fear, Lagarde said, is that anyone outside these tense sessions might “overdramatize” the dynamic, that Merkel might be misread as a figure who gets extra scorn because she’s female. “It’s surprisingly and very practically, a male-dominated world, where she stands out,” Lagarde said.
She often mentions her mother, Nicole Lallouette, a woman who monitored her daughter’s self-presentation closely: she should always be attractive, not seductive. Lagarde knows that the very presence of a woman changes behavior, but she does not like to be the only one in the room. Visiting an insurance multinational, she was the lone woman at a gathering, and she gently called out her hosts for this oversight. She told the men that having no female executive in their ranks is a sign of weakness.
Several men described her elegance as important but did not want that to sound leering or sexist; several women cited the same quality but insisted they didn’t want to sound silly or frivolous. The bright scarves she chooses, the gold earrings she designs with a jeweler friend, the floral and intoxicating Hermes perfume she wears (“Un Jardin sur le Nil”) are seen as grace notes that add up to something. “It’s not just about the Chanel dress; it’s about how you handle yourself in the dress,” Harman said. “She delivers messages in a way that people hear them. She’s not whiny or scratchy.”
Every once in a while, Lagarde has insisted that something in the world is very wrong. It’s a tactic she uses only sparingly. Last fall, at a speech in Jackson Hole, Lagarde called out European banks as unsound. Stakeholders, accustomed to Strauss-Kahn’s more relaxed mien, phoned her and told her she was out of line. A year later, it is seen as not only prescient but crucial, and her words subsequently have drawn much anticipation.
Steve Schwarzman, the chairman of Blackstone who once ran the Kennedy Center, notes that Lagarde “can deal with a lot of difficulty without getting frazzled herself or allowing other people to be emotional about the issues that they’re dealing with. She’s quite a soothing presence and at this point quite knowledgable.”
Leading up to a meeting she hosted in Washington last April, Lagarde traveled the world, asking finance ministers and central bankers to put forward $800 billion that could be held in reserve, to reinforce that the IMF had the means to intervene, no matter how big the crisis.
She traveled “with a very large pocketbook,” she joked, soliciting contributions from Russia, China, Saudi Arabia, and Brazil. Each head of state has his or her own adversaries to placate back home, some faction of domestic resistance. Lagarde’s message: Now is the time for action. Her fear: it might be too late. One foreign minister told one of her deputies that his country chipped in “only because it was Christine who asked.”
It was on that last leg of her rain-making trip that her knee gave out, and the D.C. surgeons stitched her meniscus back together. Giocanti came for a week to tend to her. Her son Thomas flew in for three days. Each pushed her around in a wheelchair, and then jumped on bikes and toured Washington, leaving her alone to prepare for a momentous gathering of finance ministers and central bankers. With their support, she managed the biggest event on her calendar — and the painful injury. For her own recovery, she knew that sometimes she needs to ask for help.