Economy

Strauss-Kahn's legacy at the IMF

AFP

When Dominique Strauss-Kahn took over at the International Monetary Fund (IMF) in 2007, many were questioning the institution's very purpose. After years of financial stability around the world, it appeared to be growing irrelevant. But it became one of the key players after the 2008 world economic crisis and Dominique Strauss-Kahn was at its helm.

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Amid a general cacophony, as leaders around the world reacted in panic to events, the IMF, under Strauss-Kahn's leadership, appeared to fill a vacuum in providing some clear practical competence.

The institution had been severely criticised for its response to the 1990s financial crises in Asia, but had learned valuable lessons about arranging debt repayment packages.

Strauss-Kahn was particularly important in tackling the Eurozone's debt crisis. He adopted a more flexible approach than the "tough love" line of his IMF

Dossier: Eurozone in crisis

predecessors, providing a counterbalance to the strict austerity policies advocated by northern European leaders.

He convinced them that the shock therapy favoured by the European Central Bank would lead only to deeper economic recession and potentially harmful social unrest.

He is widely credited with winning softer terms for the Greek bailout, and backing Ireland in its insistence that it should keep its low rates of corporation tax, despite pressure from Germany and his native France for an increase.

While most commentators agree that in the short term Greece, Ireland and now Portugal  need not fear a change in the IMF's position, in the longer term, under a new leader, possibly a non-European, the IMF could change tack.

Those who criticise Strauss-Kahn's line on eurozone debts, hope that the IMF under a new leader, will play a lesser role in Europe and force France and Germany to examine the consequences of Greece's inability to run its economy.

Strauss-Kahn's abilities, personality and experience were key to his success at the IMF, according to the chief economic editor of the Financial Times, Martin Wolf. He notes that Strauss-Kahn was one of the few international figures  Germany's Angela Merkel listened to.

He spoke fluent German and English, was considered a brilliant economist, and was a big hitter on the world stage. 

His huge network of friends and associates around the world, acquired after decades in politics including a stint as France's finance minister, added to his reputation as an international heavyweight. 

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