IMF's Latest Poor Choice: LaGarde as Head

With the board of the International Monetary Fund scheduled today to elect a successor to Dominique Strauss-Kahn as managing director, signs are strong that the top job at the IMF will go French Finance Minister Christine LaGarde.  Although Mexico’s Central Bank President Agostin Carstens has waged a strong campaign for the directorship, signs are strong that with solid support from her fellow Europeans, the U.S., and Russia, LaGarde’s election is fait accompli.

“And that is very unfortunate, because Europe does not deserve to hold that office again,” Daniel Hannan, Member of the European Parliament from Great Britain, told HUMAN EVENTS during a recent visit to the U.S.

An internationally-known conservative writer and thinker, Hannan has long been one of the harshest critics of the Euro as the single currency for the 27-nation European Union.  He noted that “When the IMF steps in to rescue an impoverished country, it usually does two things. First, it mandates a devaluation, allowing the stricken state to price itself back into the market. Second, it agrees a privatization and deficit reduction programme aimed at tackling the underlying reasons for the debt. In the eurozone bailouts, it did neither of these two things – which is why, a year later, we are back where we started, with Greece needing another rescue package.” (The current pricetag on the bailout for Greece is $157 billion).

Turning to the sensational arrest of the former IMF boss known as “DSK” for allegedly assaulting a hotel employee last month, Hannan told us: “Look, someone is innocent until proving guilty and I agree that a lot of what has been reported about [the arrest and alleged assault] does not seem to make sense.

“But, aside from that, the IMF dropped all of its usual criteria and conditions in the Eurozone bailout.  DSK has presided over a nine-fold increase in the IMF’s total liabilities.  As if there were not already enough debt in the world.”

As for LaGarde, Hannan noted that she has fully supported the rescue packages. He specifically cited her quote (December 17, 2010) that “We violated all the rules because we wanted to close ranks and really rescue the euro zone.  The Treaty of Lisbon was very straightforward.  No bailout.”

In Hannan’s words, that quote alone “should have ruled her out.”

There are others who second this view.  Legarde’s point of view, former IMF chief economist Simon Johnson told Business Week, was “’Let’s do a full bailout.’”  Business Week also pointed out that in running for the top job at the IMF, LaGarde has said that Greek debt restructuring is “off the table.”

Hannan feels strongly that the “role of the IMF should be to encourage fiscal rectitude from its debtor countries, not to prop up the single currency.  [LaGarde’s] statements to the contrary are, ultimately, the arguments against putting another French Euro-integrationist in charge.”