This Greek catastrophe isn’t Lagarde’s fault but her career is starting to look like toast

The Greek drama took a turn few of us expected last week, when the world thought compromise was imminent. What happens after Sunday’s referendum is anyone’s guess — but recrimination is already flying, much of it aimed at IMF managing director Christine Lagarde. Having inherited the Greek headache from her predecessor Dominique Strauss-Kahn after his resignation in 2011, she has always talked tough — but now stands accused of setting aside IMF rules, as well as long-established blueprints for debt relief and the views of many of the Fund’s own economists, in order to stay aligned with the European Commission and the European Central Bank in the ‘troika’ of bailout negotiators.

Underlying these criticisms is the implication that, as a former French finance minister, Lagarde has allowed Europe’s political imperative — preservation of the euro at all costs — to overwhelm IMF principles. More usually thought to be dominated by US influence like its Washington neighbour, the World Bank, the IMF is being painted as Europe’s stooge. If the failure of the troika to negotiate a durable settlement at an earlier stage leads to the wipeout of Greece’s €24 billion debt to the IMF, nations -poorer than Greece will find funding harder to access in future. It’s also increasingly unlikely that Lagarde will be reappointed when her term ends next year — or perhaps even that the job will go to another European, as it has done since the fund was created in 1946.

Much of my sympathy is with Lagarde, who has always struck me as a woman of formidable integrity and intellect. Of course the troika needed to present a united front when Europe’s wider financial stability was at stake — and as with any bad debt, national or personal, responsibility rests far more with the borrower than the lenders. This cataclysm has been caused by profligate and dishonest Greek politicians, abetted by Brussels — but there’s bound to be collateral damage, and I’m sorry to say that Christine Lagarde’s career is beginning to look like toast.