Christine Lagarde, a non-conventional pick for the ECB presidency

Christine Lagarde, Managing Director and Chairman of the International Monetary Fund, gestures during a press conference in Kuala Lumpur, Malaysia, 24 June 2019. [EPA-EFE/FAZRY ISMAIL]

A lawyer by training, Christine Lagarde has been nominated to succeed Mario Draghi as president of the European Central Banck (ECB). The IMF director has an atypical profile, due to her lack of banking experience and question marks over her past. EURACTIV France reports.

Among the package of nominations proposed by the European Council, EU heads of states have chosen Christine Lagarde to lead the ECB.

For Lagarde, the ECB position has little in common with that of a lawyer who entered politics in 2007 when France was led by Nicolas Sarkozy’s right-wing government.

She made her mark with a certain brilliance as Economy Minister, particularly by seducing the British press, but shocked others through her outspokenness.

In the midst of the euro debt crisis, she famously demanded the Greeks to “pay their taxes”, triggering strong reactions among her detractors.

A little later, it was her privileged relationship with former French President Nicolas Sarkozy that propelled her as managing director of the International Monetary Fund in the midst of a scandal that sent Dominique Strauss-Kahn to prison for sexual assault in 2011.

Her IMF appointment seemed surprising at the time because the institution had so far been headed by economists. She was later reappointed without trouble in 2016, owing in part to her charm and excellent English.

However, her nomination to lead the ECB starting on 1 November does not seem self-evident. If her nomination is approved, it will be the first time that the ECB will be lead by a woman. But more importantly, it will also be the first time that the ECB is headed by someone with no prior experience as a central banker.

France has already headed the institution during the two-term mandate of Jean-Claude Trichet, who had previously been the director of Banque de France.

Neither an economist nor a banker, Christine Lagarde certainly brings the political weight of her international experience which has led her to already meet the majority of her future peers.

Question marks over her past

However, her past could be a cause for worry among European partners.

In 2008 and 2009, when she was economy and finance minister, French coffers experienced the worst looting ever during the VAT fraud on the carbon market. Between €2 and €5 billion passed from the her ministry’s pockets to those of mobsters, without the ministry even reacting.

She was then held responsible for mismanaging a legal affair, in which the French government paid over €400 million to the firebrand businessman Bernard Tapie.

The French Court of Justice accused her of forgery and misappropriation of public funds in the Tapie affair. Although she escaped punishment in 2016, she was nonetheless found guilty of negligence in this sulphurous case.

There are other potential issues with her candidacy. Her companion Xavier Giocanti is a Corsican businessman whose portfolio is not so compatible with the ECB. Among his many activities, he was president of an association that was condemned by the European fraud-fighting office OLAF. The European Commission later condemned him for mismanaging funds, for which he had to repay €1 million in subsidies.

For a time, he was expected to take over Marseille’s football club and did business with all kinds of interlocutors, who were rarely central bankers.

As Emmanuel Macron has pointed out on several occasions, the position of ECB president is eminently political and a crucial position for Europe. It is not without its pitfalls and remains complex even in the absence of crises.

[Edited by Frédéric Simon]

Subscribe to our newsletters