2023-12-13 07:00:13
The President of the European Central Bank, Christine Lagarde, during the presentation of an honorary doctorate degree, at the London School of Economics, in London, June 15, 2022. PETER NICHOLLS/REUTERS
On June 20, 2018, the board of directors of the International Monetary Fund (IMF), chaired by Christine Lagarde, took a decision that seriously raised eyebrows internally. A loan of 44 billion dollars (nearly 41 billion euros), which would later be extended to 57 billion dollars – at the time the highest in the history of the Fund – was granted to Argentina. In the corridors of the IMF, unease reigns: such a sum is far too high for such a fragile country, which risks not being able to repay it. “Argentina will explode, and with it the IMF”, a senior official of the institution then worries. To bring this agreement into the official analysis grid, the IMF teams used growth hypotheses that turned out to be profoundly unrealistic.
These concerns have come to fruition. Argentina defaulted on its debt once again in 2020. It is now going through a serious economic and social crisis, which led to the election of libertarian populist Javier Milei on November 19.
Within the IMF, the turmoil caused by this 2018 decision prompted the internal audit body, the Independent Evaluation Office, to discreetly launch an investigation into this loan in July “unprecedented in size”. It must submit its report by the end of 2024 and in particular focus on “context in which the arrangement was put in place”.
The right person at the right time
The “context” in question was the Argentine political situation. The president at the time, the liberal Mauricio Macri, was in difficulty a year before the elections and needed help. At the White House, President Donald Trump made him an ally and supported the IMF to make an effort. A sign that the financial institution’s decision was eminently political, most of the loan was paid very quickly, before the vote was held.
According to our information, Ms. Lagarde did everything internally to have this loan approved. « Elle played politics, like all the other leaders of the IMF”, fumes Chris Marsh, former economist at the institution. Today, a spokesperson for Ms Lagarde recalls that the loan was “approved by the board of directors”.
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This political skill, striking the exact balance of different interests, is the common thread that guides his career. The following year, in 2019, his appointment as head of the European Central Bank (ECB) was part of a power game between European leaders: in Germany the Commission, in the person of Ursula von der Leyen; to France the ECB. The Frenchwoman’s excellent network with the powerful of this world, and her close proximity to Angela Merkel – with whom she even found herself washing dishes on the evening of a 2021 European Cup match -, allowed her to ‘be the right person at the right time.
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