Christine Lagarde: 'There should never be too much testosterone in one room'
The Monday Interview: France's image abroad has not always been enhanced by Nicolas Sarkozy. Which makes Christine Lagarde's value to her country all the greater. John Lichfield met her
Monday, 7 February 2011
Christine Lagarde, one of the most powerful women in the world, says she would like to spend more time with her "beautiful roses" in Normandy. She says she would like to spend more time cooking for her family or making apricot and quince jam.
What? Is the first woman ever to become finance minister of a large industrial country, a former "FT finance minister of the year", tired of politics? Is she bored with defending the embattled euro and – since France currently holds the presidency of the G8-G20 – saving the planet?
Or is it simply that the elegant Ms Lagarde is weary of the world of suits? Does she think that politics, and especially financial politics, should be left to the boys after all?
Not at all. Christine Lagarde believes that women in high places are essential. Men, left to themselves, will usually make a mess of things. The 2008 financial collapse was, at least in part, she says, driven by the aggressive, greedy, testosterone-fuelled mood of male-dominated, hi-tech trading rooms.
Ms Lagarde spoke to The Independent in her large office with sweeping views over the Seine, in the modern university-like campus of the French finance ministry at Bercy, in eastern Paris. "Gender-dominated environments are not good... particularly in the financial sector where there are too few women," she said. "In gender-dominated environments, men have a tendency to... show how hairy chested they are, compared with the man who's sitting next to them. I honestly think that there should never be too much testosterone in one room."
Christine Lagarde, 55, the Finance Minister since 2007, has become, next to President Nicolas Sarkozy, the best known face of the French government outside France. Because she speaks fluent English, and is comfortable and eloquent on television and radio, she is a frequent performer on the BBC, CNN and other non-French networks.
She is a different kind of French politician for other reasons. Ms Lagarde did not clamber into the French elite by the narrow, winding, stairs of the "grande ecoles" or tribal, party allegiance. She joined a large American law firm Baker and McKenzie in Paris in 1981 and rose, by the elevator of her own talent, to be its global chairman in Chicago.
Ms Lagarde, lawyer-turned-politician, says she now regards France, and the French people, as her "client". For the last year, her client has also been the ailing euro.
She is confident, she says, that the euro will now survive, and thrive, but she admits that there was a weekend last May when she feared that it might collapse. She also spoke of France's ambitious plans for regulating the world financial system and why these should be seen as a way of saving international markets from their own excesses, and not a French "dirigeiste" conspiracy against "Anglo-Saxon" interests.
A distinction can and should be made, she suggests, between the kind of excessive speculation in "virtual" markets which produced the 2008 crash and "real" markets linked to a "real world".
Ms Lagarde, a divorcee with two sons, also spoke a little of her career, her family and her beloved country retreat, north of Rouen, in upper Normandy. It turns out that one of the forgotten victims of last year's euro crisis – and all those weekend ministerial meetings – was Christine Lagarde's gross domestic product of home-made jam. Perhaps than many politicians, she knows the "real world". She was born Christine Lallouette on 1 January 1956 in Paris. Her father, Robert, a university lecturer, died when she was 17. Her mother, Nicole, a teacher, was left to bring up Christine and her three younger brothers.
As a teenager, Christine Lallouette was on the French national synchronised swimming team. She was educated in Paris and Le Havre and then spent some time in the US, including a stint as an intern on Capitol Hill. Back in France, she trained as a lawyer and made two unsuccessful attempts to enter the elite French civil service college, the Ecole Nationale d'Administration (ENA).
Had she been successful, she now agrees, it is "very unlikely" that she would have fought her way through the male-dominated world of French politics to reach her present, eminent position. Instead, at 25, she joined the Paris office of Baker & McKenzie, a law firm present in 35 countries. By 1999, she was chairman at company HQ in Chicago, the first woman to hold the position. In 2005, she was headhunted to become Trade Minister in the French government. After a one month stint as Agriculture Minister in May 2007, she became Finance Minister and is now a few months short of being the longest-serving finance minister of the Fifth Republic (ie since 1958).
Is the euro crisis now over? For the whole of last year, the financial markets were one step ahead of EU governments in speculating against the Greeks, the Irish, the Portuguese and against the survival of the euro itself. Berlin and Paris have been using the present uneasy calm to try to jump ahead of the markets. "We're working at the moment on what I call the foundation strengthening of the eurozone," Ms Lagarde said. "Our deadline is the March council [EU summit] and we'll deliver on time."
The Germans have given up their opposition to the idea of euroland-wide economic governance. The French have accepted that all euroland members should become more German: through corporate tax harmonisation, constitutional limits on deficits and curbs on pay rises. Other countries are squealing. Ms Lagarde says "compromise" will be needed on all sides, but not too much...
The euro was given "fragile foundations" by its "founding fathers", she said. "Founding fathers not mothers, notice. Regrettably there was no woman at the table at the time... We are now working on [foundations] which are bigger, which are stronger."
Looking back, she says, the insistent speculation against the euro last year was not, as some suggest, a deliberate assault on the European currency by euro-hating "Anglo-Saxon markets". Nor was it truly a question of the markets being "worried" by Greek or Irish debt. "Markets love volatility," she said. The markets simply saw an opportunity to create, and then profit from, volatility which the weak, founding rules and the inherent tensions in euroland made it impossible to calm.
Was she ever worried that the euro might not survive? "I think during the weekend of the 9th and 10th of May, yes," she said. "We put together this bilateral loan and bilateral instrument to support Greece. Much to our regret we then saw that the markets were still... undermining confidence in the zone and in the currency... Over the weekend, from Saturday to the early hours of Monday morning, we worked hard to put together the financial stability fund. It was a make or break then. Yes, I certainly had that feeling."
And now? British and American commentators remain obsessively negative about the euro's prospects but Ms Lagarde points to signs that "the markets" themselves are betting on the currency's long-term survival. A recent offering of bonds denominated in euros for the new European stability fund was "oversubscribed by a factor of nine or 10", she said. "I think the maturity of the bond was 10 or 15 years," she said. "It shows that [the markets] assume that in 10 years' time the euro will still be there."
Ms Lagarde's Norman roses may continue to be neglected this spring and summer, whether the euro crisis revives or not. France holds the presidencies of the G8 and G20 groups of developed and rapidly developing countries. President Sarkozy has outlined an ambitious agenda for new global regulation of financial markets to be discussed at the Cannes summit in November.
Some of the ideas – especially the proposal for what she calls a "teensy-tiny" tax on each international financial transaction – have already been shot down by market fundamentalists in Britain and the US.
The "transaction tax" idea is not dead, she insists. A group of countries may go ahead in the hope of shaming others. The idea was originally conceived by the American economist James Tobin as a way of "putting a little grain of sand in the currency transaction machine in order to reduce the volatility" of markets. This may still be justified, she said, but the real reason for pushing ahead now is the need to raise the $100bn a year promised, from 2020, to help poor countries invest to cope with climate change.
"There are multiple transactions going on every day, at lightning speed ... and that could constitute a very large [tax] base if everyone was to play the game. We could assess a teensy tiny, minute tax... on every transaction."
There was much opposition to the idea, Ms Lagarde admitted, "but we could very well try a coalition of the willing. If it's just France on its own it's going to be difficult, but if it were a larger a number of countries then we could show that it works."
But wouldn't that just mean that traders would shift their operating bases to those countries which did not charge the tax?
"It's possible, it's possible. So we need to explore who is prepared to play the game," she said. "We need to see what public opinion thinks about those that always say 'no, no, no, you've got to leave financial transactions alone'."
One of the other ambitious French proposals for G8-G20 is to regulate "futures trading" in commodities from oil, to wheat, to copper, to cocoa. Immoderate speculation in commodities is blamed by some people (not all) for the recent sharp spikes in food and metal prices. Mr Sarkozy and Ms Lagarde spent much time at the Davos World Economic Forum last month assuring other delegates that their idea was not to ban futures trading but to curb new and dangerous forms of speculation.
But isn't all futures trading speculative by its very nature? Yes, says Ms Lagarde, but there is legitimate speculation and there is speculation which has lost all touch with physical reality. In some futures markets, she says, the amount of money in play at any one time can be "35 or 40 times" the value of the entire stocks of that commodity available in the world.
This, she says, is "scary" and reminiscent of the kind of virtual trading in "credit default swaps", or insurance policies on debt, which lay behind the 2008 economic collapse. Then, the value of the "default swaps" traded on US mortgages exceeded, by several times, the value of the entire American economy.
Ms Lagarde has two sons aged 22 and 24. Her delight, away from work (when she can get away from it) is to spend time with them, and her new partner, in upper Normandy.
"I love cooking," she said. "Not for myself alone. Cooking is about giving. And I've got a beautiful rose garden that I absolutely adore. I haven't seen much of my roses this summer. I long for the time when I can... (she broke off wistfully)."
"And I couldn't make any jam this year, which I always do." What type of jam? "Oh, all sorts of berries, and apricots. And quinces."
For at least another year, it seems, the only jam to bother Christine Lagarde will be the one the world is in.
A life in brief
Born 1 January 1956, Paris.
Family Both her parents were teachers. She is divorced with two grown-up sons and lives with her partner.
Education Graduated from Le Havre university before attending Paris X law school and later completing a master's degree at the Institut d'études politiques d'Aix-en-Provence.
Career After being called to the bar, Lagarde joined international law firm Baker & McKenzie. In 2005 she was appointed minister for foreign trade and, after a brief stint as minister for agriculture and fisheries, became the first female finance minister in a G8 country. Forbes recently listed her as the world's 43rd most influential woman.
She says "I hate to say there are female and male ways of dealing with power, because I think each of us has a male and a female part. But based on my own experience, women will tend to be inclusive, to reach out more, to care a little more." (Forbes, September 2009)
He says "Her lightning-quick wit, genuine warmth and ability to bridge divides while remaining fiercely loyal to French interests have been a source of admiration." (Timothy Geithner, US Secretary of the Treasury, Time, April 2009)
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