Lagarde tipped as IMF candidate

France’s hard-working and chic finance minister, Christine Lagarde, has emerged as Europe’s likely candidate to lead the International Monetary Fund.

The IMF insists that the departure of Dominique Strauss-Kahn has not hurt its day-to-day operations, but is clearly under pressure to find a successor fast to lead a body that provides billions of dollars of loans to stabilise the world economy.

A new chief would also draw attention away from the scandal surrounding Strauss-Kahn, who quit to face charges in New York that he tried to rape a hotel maid.

German Chancellor Angela Merkel said today that she “very much appreciates the French finance minister.” She insisted she was not announcing Lagarde’s candidacy, just sharing her views.

Merkel says the next IMF chief should be a European, since the fund is deeply involved in tackling the eurozone’s sprawling debt crisis. Germany’s view is critical, since as the continent’s powerhouse it funds much of the bailouts to other eurozone nations.

The IMF may face a choice between choosing its first woman leader or its first leader from the developing world.

Emerging economies see Europe’s traditional stranglehold on the position as increasingly out of touch with the world economy, but have not yet united around a candidate.

Lagarde, 55, has a clean-cut image and has been praised for her acumen in helping steer Europe through the global financial crisis and its more recent debt woes. She speaks impeccable English and spent much of her career in the United States as a lawyer.

One of the longest-serving ministers under French President Nicolas Sarkozy she eased French labour laws and helped France weather its worst recession since the Second World War better than many other developed countries.

Italian Prime Minister Silvio Berlusconi openly endorsed Lagarde for the job, saying she would make “a great choice”.

Sarkozy has said a European should get the job but has not spoken publicly about Lagarde, possibly because that would feed domestic conspiracy theories that Strauss-Kahn’s troubles are part of a plot by political rivals. Strauss-Kahn, a Socialist, had been seen as the strongest likely contender in France’s presidential election next year, while the conservative Sarkozy’s poll ratings are dismal.

Questions have surfaced about Lagarde’s role in getting arbitration for maverick businessman Bernard Tapie, who won €285m as compensation for the mishandling of the 1990s sale of sportswear maker Adidas in 2008. Lagarde was finance minister at the time. No formal investigation has been announced, but prosecutors are looking into the matter.

Germany, Europe’s biggest economy, appeared hard-pressed to offer any candidate who would combine major-league political clout with the necessary economic experience.

John Lipsky, the IMF’s acting managing director, said its 24-member executive board is seeking a new leader, but there is no indication yet when a decision will be made.

The United States, which has the largest share of votes for a single country in the IMF, has declined to publicly say which candidate it favours.

Candidates from outside the EU include Turkey’s former finance minister, Kemal Dervis, who has also spent decades at the IMF; Singapore’s finance chief, Tharman Shanmugaratnam and Indian economist Montek Singh Ahluwalia.