WASHINGTON - French finance minister Christine Lagarde on Tuesday became the first woman to lead the International Monetary Fund as it recovers from a sex scandal involving the man she'll replace.
When Lagarde begins a five-year term next week, Lagarde will take charge of a melting pot of international elites — one that was known for male-dominated clubbiness well before the scandal involving Dominique Strauss-Kahn, her predecessor.
In her remarks to French television, she spoke to the cultural shift her selection represents.
"While I was being questioned for three hours by 24 men, I thought, 'It's good that things are changing a little,'" she said, refering to her interview for the top job at the international lending institution.
Not everything will change. Lagarde will become the 11th European to lead the IMF, extending a streak that began with the organization's creation in 1945. Among the challenges that await her, she must prod fellow Europeans to take painful steps to prevent a default by Greece.
She'll also face pressure from developing nations that want a greater voice at the IMF.
"I am deeply honored by the trust placed in me," Lagarde said in a statement in Paris after the vote.
Should Lagarde, 55, succeed in changing the IMF's culture, it may have less to do with her gender and more with her experience in corporate America.
Before she entered politics in 2005, Lagarde led the Chicago-based international law firm Baker & McKenzie for five years. American management tends to be less tolerant of sexual scandals and more likely to educate its staff on reporting harassment. At the IMF, Lagarde is likely to stress accountability and establish channels for reporting workplace grievances.
Her selection became all but assured once the Obama administration endorsed her earlier Tuesday. She had also won support from Europe, China and Russia. Mexico's Agustin Carstens challenged her, but his candidacy never caught fire.
Lagarde said her first priority is to unify the IMF's staff of 2,500 employees and 800 economists and restore their confidence in the organization.
She also said she wants to meet with Strauss-Kahn, if permitted to by the U.S. government. Strauss-Kahn resigned last month after being charged with sexually assaulting a New York City hotel housekeeper. He has denied the charges.
"I want to have a long talk with him, because a successor should talk with their predecessor," Lagarde said in the interview on French television channel TF1. "I can learn things from what he has to say about the IMF and its teams."
Lagarde will be the first IMF leader who isn't an economist. She has spent much of her career in the United States and speaks impeccable English.
As one of the longest-serving ministers under French President Nicolas Sarkozy, she made the country's labor rules more flexible. Forbes has listed her among the world's most powerful women.
Most urgently, she will be expected to help stabilize Europe's debt crisis.
"This will put her in the position to work more closely with her European counterparts and push them if needed," said Domenico Lombardi, a senior fellow at the Brookings Institution and a former member of the IMF's executive board.
Lagarde probably won't have much impact on the next round of assistance likely to be provided to Greece, which is currently being negotiated, analysts said.
But eventually, European leaders and the IMF will be forced to forge a permanent solution to Greece's crisis. That could happen as soon as next year, said Michael Mussa, a senior fellow at the Peterson Institute for International Economics.
It's likely to involve restructuring some of Greece's debt, which means that European banks and governments are likely to take losses, he said. That will test Lagarde's political and negotiating skills.
"There's going to be a lot of issues that need to be resolved," Mussa said. "And the question of who will ultimately get stuck with the cost is one of the toughest ones."
Under an informal arrangement dating to the end of World War II, a European has always lead the IMF and an American has run its sister organization, the World Bank.
Lagarde helped lead negotiations for a bailout package last year that combined European Union and IMF funds in a pool to aid highly indebted European countries. Some experts say Europe's leaders have been too timid in responding to the crisis and have been discredited by their failure to solve it for good.
"Everyone's credibility was damaged by advancing a plan that was not viable from the get-go," said Barry Eichengreen, an economics professor at University of California, Berkeley.
Lagarde moved to address that criticism last week when she met with IMF's board. She told the board there was "no room for benevolence when tough choices must be made, and there is no option that does not start with difficult but necessary adjustments by the Greek authorities."
A default by Greece would reverberate well beyond Europe. Such dangers help explain why even some developing countries, like China, backed Lagarde's candidacy, Lombardi said. China owns billions in euro-dominated bonds. It has no interest in seeing the European debt crisis worsen.
Lagarde is also expected to appoint a Chinese official, Zhu Min, to a top deputy position, Lombardi said. The United States will likely keep the No. 2 spot at the IMF. It was held by John Lipsky, who will leave the IMF in August.
She also will be expected to boost morale among the staff in the wake of the Strauss-Kahn scandal. Strauss-Kahn was also reprimanded in 2008 for having an affair with a subordinate, though he faced no disciplinary action.
Lagarde's support for gender equality in the workplace might help her put her stamp on the organization, said Susan Schadler, a former IMF deputy director who is a senior fellow at the Centre for International Governance Innovation.
"The IMF's culture is no different than any institution in the financial sector: It's dominated by men," Schadler said. "But I would imagine she would be a good influence and improve the environment."
Analysts say the IMF's culture is evolving, however gradually. Lagarde's appointment puts two women in key roles at the organization. In April, Nemat Shafik, an Egyptian economist, was named a top deputy.
Shafik said last month that the IMF is boosting its efforts to recruit women. The fund wants 25 per cent to 30 per cent of its management positions to be held by women by 2014, Shafik said.
Other analysts noted that as a European and as a woman, Lagarde is both a conventional and a bold choice to lead the IMF. Like her predecessor, she represents the French elite. But as the first woman to lead the organization, she represents a break with history.
"She's the old guard and the new guard," said David Bosco, an assistant professor of international politics at American University.
