Christine Lagarde And The Battle Of Syntagma Square …

• June 29th, 2011
• Posted by EUEditor

In the moment that the International Monetary Fund confirmed the French Finance Minister, Christine Lagarde (picture), as its new head; in debt-ridden and conflict-torn Greece, the capital city became a battle-ground.

LEADERSHIP FOR A CRISIS

The IMF, a partner with the European union in shoring up the Greek budget against a near-boycott by global lenders, has been without a permanent head since last month.

It was missing the leadership of Dominique Strauss-Kahn, the fourth French person in the role of Managing Director, since his forced resignation last month, charged with a sexual offence in New York, (see EUAustralia Online, “One Queen, a ‘ladies’ man’ …”, 18.5.11). ….).

The 24-member IMF Board announced (28.6.11) from its Washington headquarters that it had chosen his compatriot, Christine Lagarde, the first woman in the job, by consensus.

It described her opponent, the Mexican central bank governor, Augustin Carstens, as well qualified, but did not resort to a vote after both American and European representatives, plus China and Russia, declared to continue with long-standing agreement, and nominate an MD from Europe.

Supporters of Dr Carstens among the 187 member countries, including Australia and Canada, had argued for a change to recognise the growing claims of emergent economies.

Christine Lagarde, 55,  said she was “honoured and delighted” with the new appointment.

From the conservative side of politics, as Finance Minister of France since 2007, she immediately addressed friends in the Greek Opposition, calling on them to support the country’s austerity program.

Ms Lagarde, as IMF chief must administer the rather toxic medicines prescribed by the organisation for the ailing economy of Greece.

CRISIS IN THE STREETS

As she was being confirmed in the job, thousands turned out in Athens to support a two-day general strike, many declaring themselves made-desperate by the sudden stripping of state  assets and government funded jobs.

(See also EUAustralia Online: “Greek vote …”, 22.6.11; “Greek crisis unrelenting”, 18.6.11).

Hundreds on the radical wing of the protest used tools to prise rocks out of the gutters and pelt the police, injuring several, and bringing on tear gas attacks in a running battle over several hours.

The chaotic scenes in Syntagma Square, before the parliament building, demonstrated the paralysis of faith in the country already mired in recession and close to default on its national debt.

The Pasok Party government after surviving a confidence vote last week has gone to parliament now with a further installment of the austerity plan for job cuts, new taxes and asset sales.

The measures have been demanded by the EU and IMF in return for alternative finance at viable rates.

WATCHING THE PROCESS

European leaders have been anxiously watching.

A meeting of the Eurogroup at Brussels last week declared Greece had made “considerable progress” over its first year under austerity.

The group, made up of the Finance Ministers of the 17 countries using the Euro currency, have been watching the parliamentary process in Athens – concerned about a possible debt default, a crisis of confidence, and contagion to other EU economies.

They said (20.6.11):

“The Greek authorities are embarking on a significant and necessary adjustment effort … (with progress) particularly in the area of fiscal consolidation.

“Ministers are also conscious of the serious challenges that Greek citizens are facing in these difficult times…

“Debt sustainability hinges critically on Greece sticking to the agreed fiscal consolidation path, the plans of collecting €50-billion (A$68.16-billion; xe.com, 28.6.11) in privatisation proceeds until 2015, and the structural reform agenda which will promote medium-term growth…

“Given the difficult financing circumstances, Greece is unlikely to regain private market access by early 2012.

“Ministers agreed that the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year-by-year funding within the program — while avoiding a selective default for Greece.”

Representative of leading banking and finance institutions have been meeting in Rome to discuss the proposals for such a roll-over and restructuring of the debt.

Reference

European Commission, Brussels,“Statement by the Eurogroup on Greece”, MEMO/11/426, 20.6.11.

WSJ (Dow Jones), NY, “Incoming International Monetary Fund chief …”, 28.6.11. http://online.wsj.com/article/BT-CO-20110628-711376.html, (28.6.11).

IMF, Washington, “IMF Executive Board Selects Christine Lagarde as Managing Director”, Press Release 11/259, 28.6.11. http://www.imf.org/external/np/sec/pr/2011/pr11259.htm, (28.6.11).Picture

Christine Lagarde, wikipedia

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