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“We have to be cautious. The large part of the worst is not yet behind us.”
- Dominique Strauss-Kahn to Reuters during a visit to Kazakhstan in June 2009.
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It was September, 2007. The mood was gloomy at the International Monetary Fund (IMF). The IMF, widely regarded as the global rescuer for many a distressed economy, was desperately in need of a rescue of its own. The organization was struggling for an identity, as economies were faring well and no longer willing to seek loans from the IMF, attached with strict conditions.
It was at this perilous juncture that Dominique Strauss-Kahn took over as IMF managing director. He not only steered the organization through this rough patch, but at the height of the global financial crisis last year, he ensured that the IMF was once again in the forefront. In 2008, just a year after its very existence was threatened, the IMF was restored to the role as monetary guardian angel. It provided loans to economies such as Iceland and the Ukraine which were almost on the verge of collapse, and sent aid packages to struggling countries like Pakistan and Hungary.
At the G20 meeting earlier this year, stunned by the global meltdown, leaders from the G20 countries asked the IMF to take on a greater role as the world’s financial policemen, in a bid to ensure that the mistakes of the past credit crisis would never be repeated. With this, the transformation was complete. The IMF had risen again. And for the most part, it was Strauss-Kahn who deserved the pat on the back.
As a former Minister of Economics, Finances and Industry for France, Dominique Strauss-Kahn or DSK as he is popularly known, brought with him unstinting commitment, and the innate ability to revitalize and infuse life into stumbling institutions. Under his tenure, beginning in 1997, Strauss-Kahn turned the French economy around, creating 300,000 jobs in 1998. He reduced a rising budget deficit, and helped launch the Euro. Importantly, Strauss-Kahn has been known to move through different roles with élan. Born in Neuilly-sur-Seine, France, in 1949, Strauss-Kahn holds a PhD in Economics from the University of Paris, and has been a professor, corporate lawyer, Minister, and even ran for the Socialist Party’s nomination for the French presidential election.
It hasn’t been all smooth sailing though for Strauss-Kahn. In 2008, tabloids reacted with glee when allegations swirled that he abused his position as chief while having an affair with Piroska Nagy, an economist with the IMF. Strauss-Kahn was cleared of harassment or favoritism but publicly apologized for what the IMF termed a ‘serious error of judgment’. Since then, Strauss-Kahn has moved past these distractions. The chief is now leading a campaign for more loans to the IMF, warning that funds could run out in six months, and he believes that emerging powers should have a greater voice in the IMF’s functioning.
And the world powers have been listening. With the IMF set to be placed at the center of a unified, globalized finance system, Strauss-Kahn’s job has only just begun. As the Group of Eight finance ministers met in Lecce, Italy in the second week of June, they were already discussing how the IMF could help map out an exit strategy that would involve eventual scale back of the massive stimulus programs, a reduction of budget deficits and the tightening of monetary policy. Strauss-Kahn is ready.
Contradicting the G8 finance ministers, who were proclaiming ‘green shoots of recovery,’ Strauss-Kahn warned that the global economy remained fragile. It was a view that was supported by others including the European Bank for Reconstruction and Development, and EU Competition Commissioner Neelie Kroes. “Before the exit strategy, we have to exit the crisis,” Strauss-Kahn told Reuters. The G8 better take note.
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