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By

Simone Filippetti journalist of Il Sole 24 Ore
(with additional reporting by Marianna Civitillo)

In politics one should never retreat, never retract and never admit a mistake.

Napoleon

THE SUMMER OF MONEY

The river Main flows gently across the city of Frankfurt as the sun rises and shines bright upon a new, warm and sunny summer’s day. It is July 2nd 2019 and the news of the day is that for the first time in history, a woman, a Frenchwoman to be precise, has been elected as President of the European Central Bank. Her name is Christine Lagarde. A hard task awaits her: succeeding the powerful central banker Mario Draghi, the man who (possibly) saved the Euro in 2011.

In hindsight, the election of the Parisian-born lawyer to one of the most prestigious and respected positions in the world doesn’t seem like the most remarkable news of the year: it’s just a handover between technocrats inside an economic institution.

LIBERTE’, EGALITE’, LAGARDE’!

Oh city, you will make history kneel.
Bleeding is your beauty, dying is your victory.

Paris Bloqué, Victor Hugo

Here it is, L’Hexagone on the other side of the Channel.

The place of a thousand and one poems, and just as many contradictions. The land of freedom, equality, fraternity (according to Eugène Delacroix at least), of economy and economists. France has historically been a country of great significance and expansion, both for revolutionary thinkers and for technological advancement. The country that to this day, much like the UK, still counts many colonies but nevertheless, as opposed to the UK, a country that has somehow always been quite closed up, enclosed, confined in its own self and in its own ways.

France is the land of rebellion but also of relaxation that at its core has the perfecting of the “art” of living: There lies an almost magical romanticism in France, an aura of tenderness in Paris, la ville de l’amour. A city that exudes and sends out, to all who roam its streets at dawn, a tender feeling similar to a gentle breeze in the spring months, light enough to make everybody want to wander, strong enough to make anybody fall in love. Paris has been a sort of “safe haven” for both its loyal, and somewhat pedantic Parisiennes, and for the great American minds of the roaring post-war years, who found in its bright and avant-garde sentiment a welcoming stage and a home away from home. The city on the river Seine has been the adoptive city of geniuses, dreamers, and illusionists - from Picasso, to Hemingway, to Dalí. The home of many – among which, home of American literature graduate, lawyer turned politician, Christine Madeleine Odette Lagarde.

A WOMAN OF “FIRST TIMES” IN A “MEN’S WORLD”

Christine Lagarde came into the world sixty-six years ago. In 1956, when radios first played Heartbreak Hotel, and when Hollywood star Grace Kelly married Prince Rainier of Monaco, France’s neighbouring sovreign city-state. After graduating from American Holton-Arms School for girls, her bright mind together with her fluency in both English and French of course, granted her a position as a congressional assistant at the U.S. Capitol. Those were some of the most delicate and politically difficult years in American history, those were the years of the Watergate scandal.

Lagarde, fully trained as a lawyer now, joins the famed Illinois firm Baker & McKenzie. Here, Christine works as an international labour lawyer for 18 long years before – and this is her first “first time” title - being made the first ever female chairman in the Chicago-based law firm.

THE “SECOND CITY”

Well, sort of. Chicago, otherwise known as the “Second City,” overlooks one of the five Great Lakes in the country, Lake Michigan, and has gained its fame as a very “European” city due to its rich history and its thriving cultural, financial, and intellectual scene.

Re-built on the rubble of the Great Fire of the late 1800s, the cosmopolitan “Windy City,” is a global hub for USA’s fast-moving economy, commerce, and technology. In the urban, mid-western city, home of another powerful woman, former first lady turned author Michelle Obama, Christine Lagarde grows up to become the bright and witted woman she appears as today – growing her business acumen together with her international ways. So much so that later in her career, the American government will not stop backing her political endeavours.

The turn to politics soon arrives. In the new millennium Lagarde accepts a position first as trade minister, then as minister of Agriculture in PM’s François Fillon government, shifting from Chicago’s metallic skyscrapers to the ritual Wednesday morning meetings at the historical Palais de l’Élysée, Nicolas Sarkozy’s residence during his 2007-2012 Presidency.

Lagarde’s second “first time” starts with Dominique Strauss-Kahn’s resignations as President of the International Monetary Fund (IMF). In 2011 the Paris-born politician becomes IMF’s first ever female leader after allegations surfaced that fellow French economist Strauss-Kahn had sexually assaulted a New York hotel maid. The scandal outburst forced the high-profile Socialist party member and former Minister of Economy to resign from his post and to settle the case with (according to the Associated Press), a payment of over five million dollars.

Despite American support with fellow Chicago “adoptive child” President Barak Obama, like a curse, the high position doesn’t come free of trouble for Christine either.

In 2011 the world’s economy was still poised on the edge of collapse after the 2008 financial crisis. The loan defaults, the unstable assets market, the US housing market, mortgages, easily accessible loans, and the overall failure from banks to provide serious, balanced, and reliable financial grounds were the prime factors that contributed to the strongest modern-day crisis, which in some ways, (and sadly) managed to outdo even the Great Depression of 1929.

Lagarde had a job. Her job was to lift the global economy, starting with Greece and all other Mediterranean countries after it. However, due to lack of transparency and, we might even say, some greed, Christine Lagarde was accused of negligence in her position as head of the Fund. The accusations wouldn’t stop her though, and on July the 2nd 2019, Christine earns her third “first time” badge as she’s nominated to succeed Mario Draghi as the next President of the European Central Bank. The title is an important one of course, but is she the right person for it? Since accepting the position, Lagarde has been heard appealing for a stronger unity amongst Europeans as the only chance for the continent’s economic change and financial growth. Is that really the only way?

“After Italy has been made, all that remains to do is making the Italians” said patriot and writer Massimo d’Azeglio after the unification of Italy in 1861. The European Union was “made” in 1993, is it possible that, to this day, we still have to “make” the Europeans? And will we ever manage it?

ITALY AND THE EUROZONE: DRAGHI IN THE REAR

In a recent article, Italian newspaper “il Sole 24 Ore” talks about Christine Lagarde’s predecessor, Mario Draghi, and the legacy left to the Italian (and European) people. Journalist Marco Fortis in his accounts on the Draghi-era, asks himself, and subsequently tries to answer the question of how and why the government of the “brilliant” economist Mario Draghi and his loyal ministers was made to “fall”. According to the statistics, the GDP of the “Dolce Vita” country had been growing to incredible standards considering and despite the looming financial market decline.

The former head of the European Central Bank (ECB) and now former Prime Minister, in charge of the 67th government of the Italian Republic, had brought to the country’s politics a different approach, one which Italians were hitherto not used to.

Draghi, just as he had done in the ECB before, brought with him cohesion together with a steady and somewhat reassuring hand. An approach that Italian politics has seldom seen before. His government helped the country remain stable while seeking to emerge from the financial disaster that events like the Covid-19 pandemic, the war, and general unrest brought upon the land and its people.

THE WAR OF THE DIGITAL CURRENCIES: HYPOCRISIES IN THE EUROZONE?

It’s the post-pandemic year. It’s the Russia-Ukraine war year. It’s the bear market and recession year. It’s 2022, the year labelled by analysts as "the worst year in the history of the Euro."

One thing is crystal clear to everybody: the significance of the Euro as a currency has been diminishing. This has been almost a constant over the course of the past two decades, but has intensified over the last 12 months.

The growing divergence in monetary policy objectives between the western world’s foremost financial institutions, I.e. the Federal Reserve and the European Central Bank (ECB) has been one of the primary factors contributing to the “common currency’s” depreciation against the US dollar in 2022.

Significant detrimental effects have been inflicted upon the world as a direct result of the ongoing conflict between natural-gas giant Russia and the Ukraine resulting in a considerably lower level of "consumer confidence". This, specifically in the Eurozone, has reached an all-time low now as the population’s mistrust in institutions and governments appear like it is here to stay.

And what do people rely on when the fear of a crash is near? When that feeling of banks and monetary institutions not helping creeps in? When people don’t know where to store their hard-earned savings and how to make them grow? Well, they gamble. No, not just any gamble, there’s no Elvis’ bright lights of Vegas, no Sinatra’s lady luck, no green-felt tables or hard red plastic dice rollin’ and smokin’. It’s a market investments gamble, more specifically, cryptocurrency. Since its inception in 2009 and its more widespread use in 2013, the digital currency market has grown by billions of dollars and consequently made a lot of people very, very rich. This was to the detriment of more “traditional” forms of investments and banking as cryptocurrency’s struggle to cut out the middleman (banks) and “bank the unbanked” (the poor, those who are not able to open regular bank accounts) has created a “us vs them” situation that the powerful of the world do not seem to appreciate, and therefore label as “dangerous”.

This is exactly where the “problem” seems to lie.

In an infamous interview on a Dutch TV show in May 2022, Christine Lagarde, mother of two, stated that "in my very humble opinion, cryptocurrency is not worth anything at all" to then add that according to her views, digital currency is “worth nothing, it is based on nothing, there is no underlying asset to act as an anchor of safety” effectively hinting at the “scam” nature of the cryptography-based alternative to traditional currency. She then differentiated cryptocurrencies from the potential implementation of the digital "Euro Project" venture, which, according to her, will be available to the public from 2026. Christine detailed how the value of the latter is "safe and stable" as it will be a form of digital currency backed by the ECB institution.

Whether one fears it (like the ECB), loathes it (like Andrew Bailey of Bank of England), loves it (like Elon Musk), one still has to face it: cryptocurrency is here to stay.

FRANCE VS ITALY: THE SHOWDOWN

Just like Italy has now elected its very first female Prime Minister – Giorgia Meloni, could France be on the road to a first female President? And could this first female president be the woman of “first times” Christine Lagarde? Certainly, with her extensive background, impressive CV, and great aspirations, the position of Président de la République Française and Head of State is very alluring for Madame Lagarde, a woman of vigour. But also, a woman of opposition.

Recently Lagarde has been heard commenting, in a less than pleasant way, on neighbouring Italy and on its neo-elected and first ever female Prime Minister, Giorgia Meloni.

Oh, sure the conversation, or better, the “friendly” debate, between Italy and France is a renowned one. Which one of the two has the best art and artists? The best wines? Prosecco or Champagne? Best fashion houses? Schiaparelli or Chanel? The best cheeses? Sure, the two stunning countries share a mountain range (and a thriving history) but that’s about it today. Especially lately, since political tensions between the “boot” and the “cousins” over the Alps seem to be widening and deepening.

Both countries have something that “belongs or refers back” to the other.

For example, Italy’s (complicated) royal family, the Savoia, of course hail from the Burgundy region of France. While France, by the hands of its megalomaniac 19th century leader, Napoleon Bonaparte, still to this day holds the foremost Italian master, Leonardo da Vinci’s, Mona Lisa painting.

Now, the Italy vs France debate doesn’t seem like its anywhere close to ending, especially since that Football World Cup final – 2006 when the skies above Berlin were hued of wonderful and powerful  “azzurro”.

Almost as if bemoaning, Christine Lagarde can often be heard hinting at Italy in her speeches.

Just recently, she has been caught reminding the “Mediterranean Boot” that the ECB has emergency monetary policies schemes in place for all countries members of the Euro area. However, the schemes, she stated, will not be used to “save” countries that make “policy errors” as it is in place for “financially prudent” countries only.

While Giorgia Meloni has appeared to have taken in the words of the French economist and has assured the Italian people that her government won’t be taking any risks due to the fragile financial state the country finds itself in, her political partner disagrees. Lega Nord leader and now vice-premier Matteo Salvini has advocated for increasing Italy's deficit.

Although the newly elected Italian coalition is yet to formally disclose its stance, as a unit, on the European Union, historical data shows that neither Meloni nor Salvini are pro-Union, with these very sentiments having intensified since the outbreak of the pandemic disaster and the “crash” of the general economic systems.

 On the EU side, the ambitious pledge the Recovery Fund's made to support the Eurozone’s financial and cultural growth in these times of struggle, such as transitioning to a greener, more sustainable economy, the digitalization of the Euro, and many other promises of reforms, still show that ahead lies a winding and difficult path.

The future of the Eurozone seems to be uncertain at present. Its economic recovery, especially now that populism and right-wing sentiments are expanding and productivity growth, now that monetary weapons are less available, is certainly deflating.  However, while the Eurozone, 30 years in the making, is slowly crumbling, Time Magazine awarded Christine Lagarde the status of top “100 most influential people of 2022.”

Not everybody is so happy with her. Ask Yanis Varoufakis: his book Adults in the Room: My Battle with Europe’s Deep Establishment,  the Greek economist and former left-wing Prime Minister outlined a less pompous image of Ms Lagarde, offering an unapologetic account of his years spent dealing with the European and international political caste. He gives an unfiltered explanation, which nobody denied, on how the real powers, unelected and unaccountable, run the European Union. In his best-seller, Varoufakis, reminds his readers of the importance of unity of EU. Something which his colleague Lagarde lacked of. One among the adults in the room, during the excruciating Greek crisis, the Frenchwoman is now the most important adult in the EU. Will she manage the European continent as she, and others, did with Athens?

 

 

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