Christine Lagarde is failing again

Christine Lagarde, the president of the European Central Bank, has one of the most glittering CVs in European politics. The ex finance minister of France, and former managing director of the International Monetary Fund, earns £365,000 a year for running the show at the ECB. But is she any good?

An internal poll of staff at the Bank, leaked to the press, suggests not. It found that more than half of employees rated her leadership of the organisation as either ‘poor’ or ‘very poor’. Her own people reckoned she put self-promotion ahead of the institution (‘Quelle surprise’ as they would say in her native country), pushed an irrelevant political agenda, and had little knowledge of the markets or the economy. ‘Lagarde is generally reported as being an autocratic leader. Many respondents resent the negative atmosphere that this leadership style has instilled in the institution,’ the ECB’s International and European Public Services Organisation (Ipso) concluded in a report.

But, heck, why would anyone be surprised? In many ways, Lagarde is the epitome of the kind of technocratic political animal that increasingly dominates global politics and glides from job to job.

A lawyer by training, she has wielded enormous power for fifteen years now. As a result, she is no doubt likely to be supremely confident of her own abilities. Yet the trouble is that, while her career trajectory looks impressive, her record is remarkably poor. As France’s finance minister, she squandered the opportunity for reform, even though that was the platform Sarkozy was elected on. As a result, Lagarde effectively lost him the presidency.

At the IMF, she helped impose an austerity regime on Greece that triggered a collapse in output even larger than the Great Depression. She then went on to record some of the biggest losses in the Fund’s history with loans to Argentina (a decision that financial history would suggest rarely ends well).

At the ECB, she has allowed inflation to run out of control, responded too late, and has now pushed the zone close to recession by tightening policy too quickly. 

Technocrats like Lagarde pride themselves on their managerial competence. The problem is there is not much sign of it. Even her own staff don’t think she is any good – and it seems the euro-zone economy is paying the price of her ineptitude.