IMF and an arrogant elite

AFTER a year when hardworking citizens rose up against the inequalities and neglect of globalisation, there is one person who perfectly personifies the privileged Establishment and she remains firmly entrenched in office. She is the French head of the International Monetary Fund (IMF), Christine Lagarde.

In December she was convicted by a high-level court in France of being negligent in public office by authorising a multi-million-euro government payment to a controversial tycoon.

But not only did the court not hand down any punishment but the IMF board – representatives of the most powerful finance ministries around the world – said it retained ‘full confidence’ in her leadership. Thus Lagarde has been left to serve out the rest of her five-year term as head of the world’s economic and financial enforcer.

The sad fact is that the way Lagarde escaped any penalty speaks volumes about how behemoths such as the IMF, other global organisations, governments and a host of unelected elites operate under different rules to the rest of us.

The case centred on her time as France’s finance minister when she approved £340m of public funds being spent on an out-of-court deal in favour of businessman Bernard Tapie following the botched sale of sportswear maker Adidas. The money given prompted widespread indignation in France. Lagarde’s independence as the IMF’s managing director has been under scrutiny for some time. In 2016 she predicted economic disaster if the UK pulled out of the EU. She also has been accused of being too close to fellow European leaders in efforts to prop up the European single currency.

Madame Lagarde is in many ways the epitome of the European elite who the British people saw through and voted to escape from their clutches. Her intervention in the referendum campaign and willingness to become a Project Fear prop for the Cameron government was not the first time that she had damaged the IMF’s reputation for independence.

Earlier in her tenure as boss of the IMF, she became embroiled in the Greek and eurozone crisis even though as a former French finance minister there were grave conflicts of interests and she ought to have stepped aside and left the negotiations to her American deputy.

The fact that she has now escaped punishment from the French courts and been exonerated by the IMF board is symptomatic of the way France has, for years, put pressure on institutions to bend the rules to protect its own. At risk at the IMF is the credibility of an institution largely designed by the great British economist John Maynard Keynes to foster global prosperity and financial good practice after the shattering shocks of the Second World War.

THE manner in which the political establishment quickly moved to close ranks and keep Lagarde in her post reinforces the view of people across the world that the elites have lost touch with ordinary people.

Already we’ve seen the frustrations of the economically disenfranchised boil over in Britain’s referendum, followed by the wave of unrest in America which propelled Donald Trump to the White House. This year we are likely to see unprecedented support for anti-Establishment and far-Right parties in elections in the coming months in France, Holland and Germany.

Lagarde owed her job at the IMF in the first place to the fact she was parachuted in thanks to the strong arm tactics of the French government.

At the time, the then IMF chief Dominique Strauss-Kahn had been forced to quit after being charged (and then acquitted) with a sexual assault on a chambermaid in a New York hotel. Yet the French government insisted that the remainder of his term must be served by another French person.

In spite of the cloud over Lagarde’s integrity, leading finance directors ignored commonsense and conspired to keep her in office when her contract came up for renewal in the spring of 2016. Our then Chancellor, George Osborne, was the first to propose her reappointment.

Following Osborne’s support, she was criticised for saying the IMF would publish a report in the weeks just before the UK’s referendum which would say Britain would face plummeting house prices, a stock market crash and a new recession if voters decide to leave the EU.

To her supporters, as the first woman managing director of the IMF, Lagarde was widely respected and her celebrity has led her to be risibly described as the ‘rock star’ head of the IMF. Yet some attitudes towards her have been insufferably fawning.

For example, at one recent press conference in Washington, a questioner from China congratulated her on the elegance of her outfit in an exchange which lasted for several excruciating minutes.

Not all former IMF insiders have been unforgiving about her behaviour. In an excoriating blog, economist Peter Doyle said the public would see ‘another politician with power over them [who] has played by a different set of rules’.

The unrepentant Christine Lagarde stands as a symbol for the arrogant, unaccountable elites who have ruled for too long.