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“IMF under Lagarde will not tackle global economic problems” - financial journalist

Published time: June 29, 2011 15:15
Edited time: June 29, 2011 23:56

Christine Lagarde’s appointment as the head of the IMF comes amid growing problems in the European economy. Journalist Daniel Ben-Ami says after her appointment the IMF will not start tackling the fundamental problems with the global economy.

­He said that it is unlikely a miracle will happen or the newly-appointed IMF head will find a way to pull Greece and other suffering economies out of crisis.

“I don’t think this will happen. I think what we are likely to see from Christine Lagarde is the same – which is the IMF trying to stabilize problems in the shorter term, and cut short-term deals, but not really tackling the fundamental problems with the global economy,” Daniel Ben-Ami, a veteran financial journalist and editor at Fund Strategy Magazine told RT.

Meanwhile, Christine Lagarde has lost no time in calling on Greek politicians to back reforms.

Straight after the official announcement of her appointment, Lagarde appeared on France’s main private channel TF1, calling on Greek MPs to pass an austerity plan to prevent the country from defaulting.

Christine Lagarde is the first woman to run the IMF. Her main competitor for the post was the Mexican secretary of finance, Agustin Carstens.

Meanwhile, Daniel Ben-Ami says her appointment was not a surprise.

“Although Christine Lagarde has just been formally announced as the new head of the IMF, I think their decision was really made weeks ago. The deal was cut between the big European players and America to make Christine Lagarde the new head of the IMF. And what we have seen in the last few weeks is much more than a PR campaign to say: yes of course we care about the emerging economies, but not so much that they can have the head of the IMF,” Daniel Ben-Ami said.

Quite the opposite, Ricardo Young, a host and analyst at the Voice of Russia radio, believes that selecting Christine Lagarde as head of the IMF is a good decision from both the financial and political perspectives.

“As you know, Christine Lagarde is a finance minister from France. She is well regarded in international monetary circles,” he told RT. “But she is also, quite frankly, a good politician. When she was touring Asia, she made some promises to the Asian countries there that she would try to incorporate more Asian people into the higher echelon of the IMF.”

Ricardo Young pointed out that bringing people from the developing countries, particularly those from Asia, into the higher positions in the International Monetary Fund is exactly what makes Lagarde the right person to look toward.

“She is obviously very qualified. She is highly regarded in international financial circles, but look what happened to her predecessor,” Young continued. “I think that those people who selected her, those who supported her also are sending a message that the IMF is not what her predecessor was involved in.

“Truly, the selection of a woman in this case is good for the IMF,” the analyst concluded.

­Claude Barfield, an international trade researcher in Washington, says that putting a European at the head of the IMF now, given the latest events in Greece, will only complicate matters.

“I have great admiration for Mrs. Lagarde personally, she’s had a distinguished career, [but] I think we have complicated matters by placing a European at the head of the IMF at this crucial time,” he told RT. “In terms of Greece itself, it’s just putting a bandage on a problem that is a gashing wound and that sooner or later you are going to face some sort of default – however Europeans want to describe it – by the Greeks, because you are not going to have any growth or relief.

“Mrs. Lagarde is then put in a very difficult situation,” Barfield continued. “She’s been a part of the European policy-making process. And while she has shown herself as an admirable negotiator, it is very difficult to see how a European, as head of the IMF would not be seen – no matter what she does – as too much involved in the process.”

­Lagarde will start her new job in July, two months after the departure of Dominique Strauss-Kahn, who has been charged with the sexual assault of a hotel chambermaid, and faces trial in a US court.