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Decoding the lawyer's rhetoric

business Updated: Jul 09, 2011 23:06 IST
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The silver brooch and signature scarf, in a bright shade of purple, certainly set Christine Lagarde apart from the dark-suited men who ran the International Monetary Fund before her. But it took only a day on the job for the quick-witted lawyer to lapse into fund-speak, the IMF lingo that masquerades generalisation as revealing commentary. Yet at a few points in her inaugural news conference, she gave away more than it seemed. Here's a thumbnail analysis:

What she said: "It doesn't hurt to be overly concerned, but to try to anticipate consequences of any of the measures being considered - we've been burnt once (by the 2008 economic crisis)."

What it means: Many economists feel Greece and perhaps other European nations will never be on a sound footing unless they restructure what they owe to bondholders in a default. The European Central Bank has been opposed to this idea and said a default might ruin Europe's economy. The IMF has, depending on the circumstances, supported defaults in other countries. While Lagarde arrives having pledged fealty only to the IMF, and with a promise to be tough on Europe, it looks as if she has imported the ECB line into the IMF's executive suite.

What she said: "I am not going to brag about my qualifications or lack of qualifications. The proof of the pudding is in the eating, and we will see how it goes. . . . Without being too poetic about it, not all conductors know how to play the piano, the violin or the cello. I will try to be a good conductor."

What it means: Without overtly announcing it, Lagarde redefined the job of managing director from a sort of academic first-among-equals to an in-house referee. She acknowledged she would not be able to "second guess" the technical work of the staff but would ask questions and try to be more inclusive in seeking the opinions of different staff members, not just the ranking people with whom her predecessor, Dominique Strauss-Kahn, kept in closest contact. Squaring that with the IMF's hierarchical culture may be a challenge, and her lack of formal economic training risks making her a captive of the advice she gets.

What she said: Diversity "should be reflected in our employment policy, in our training policy, in the way in which we build teams, in the way which we organise recruitment so that people are not clones of each other."

What it means: The larger developing nations, particularly in Asia, complain that the Western developed economies are not open to their advice. Those countries were key to Lagarde's selection as managing director. Some of Lagarde's most extensive comments were on diversity, but instead of emphasising conventional issues, such as hiring more women or people of different races, she said she wants to make the fund a more intellectually diverse place. Interpret this as a call for fewer Ivy League wonks and more graduates from top universities in China, India, Brazil and elsewhere in the developing world.

What she said: "We are facing a landscape that is in a better shape than two years ago but with clearly an uneven process of recovery and specific issues of a divided nature given the division we are seeing between the advanced economies on the one hand, the emerging markets on the other, and with the least developed or low-income countries, however we want to call them, with specific issues and yet a path to recovery that is obviously pronounced."

What it means: Lagarde stumbled most when she delved too deep into the IMF's rhetorical summation of the state of the world. In this and other comments, what she gives away is no secret. The fate of the developed world, particularly Europe, is now the fund's pre-eminent concern and the centre of the greatest risks to global economic stability. The problems in the developing nations are less systemically threatening. As for the poorest countries, don't expect their situations to change anytime soon.

(In Exclusive Partnership with The Washington Post)