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Why Angela Merkel wants Christine Lagarde to be president…of the EU

June 20, 2014, 9:27 PM UTC

Christine Lagarde

Managing Director of the International Monetary Fund Just by taking office Lagarde ensured her spot in the history books. Besides being the first woman to head the IMF, she took the reins as Europe teetered. When she came on in 2011, the fund had more than $100 billion in outstanding loans to cash-strapped Ireland, Greece and Portugal. She also replaced the infamous Dominique Strauss-Kahn, who resigned after the NYPD arrested him for sexually assaulting a hotel maid (charges were later dropped). Yet by any measure, Lagarde has had a big impact in her own right. Her tenure at the world's lender of last resort has been marked by an unflinching willingness to take on European leadership, including friend Angela Merkel. She has argued that eurozone officials have put too great an emphasis on austerity and recommended making emergency funds more readily available to struggling countries.
Chris Jackson/WPA Pool—Getty Images

50greatest_logoEurope is not quite the basket case it was a few years ago. But with low-as-you-can-go-growth, mounds of debt, throngs of unemployed youth and a rising tide of Euroskepticism, the European Union, to put it kindly, is still in a tough spot.

As if the above didn’t make it obvious already, it’s also in need of a strong leader.

In theory, Europe has a spot at the top in which a real leader might sit and wield some gavel of authority, clarity, and resolute power—and that is the high office of President of the European Commission.

In reality, Europe has nothing of the kind. Which would explain why few but his immediate family and a handful of bureaucrats in Brussels know precisely who the current holder of that office is. (For the record, it’s Jose-Manuel Barroso, a former Prime Minister of Portugal, law professor, and one-time student at Georgetown.)

All of which brings us to Christine Lagarde, Managing Director of the International Monetary Fund (IMF) and No. 13 on Fortune’s 2014 list of the 50 World’s Greatest Leaders. There are some who now hope that Lagarde will emerge as a candidate for the European Commission presidency—whose role is to oversee the body that proposes and enforces EU laws—when the current office-holder’s second five-year term ends later this year.

One such booster, apparently, is Angela Merkel, Germany’s well-regarded Chancellor (and No. 2 on Fortune’s World’s Greatest Leader list), who reportedly pressed Lagarde to run for the job.

The path to the position is hardly straightforward. Merkel raised the matter with French President Francois Hollande, who generally speaking would be the one to put Lagarde forward as a candidate—something Hollande, who is loathe to lose a compatriot at the powerful IMF, is unlikely to do. So, technically, for Lagarde to be considered, she would likely have to be nominated by one or another pan-European political parties.

Later this month, European leaders will choose from such candidates. As per the EU’s purportedly more democratic rules, they must factor into their decisions the results of May’s parliamentary election. The emergent nominee must then win majority approval of the European parliament.

May’s election results suggest that the favorite may well be Jean-Claude Juncker, a former prime minister of Luxembourg and an old-school European federalist, who Merkel initially backed. The United Kingdom’s David Cameron, however, has been openly opposed to Juncker. Hence, the backroom negotiations that led to the conversation between Merkel and Hollande, according to reports.

Getting involved in all that politicking merely to join ranks with a mélange of underweight Eurocrats, may sound like a step back for Lagarde, whose star has been rising on the international stage ever since she replaced the disgraced Dominique Strauss-Kahn as the “World’s Banker” in 2011. And, well, it probably is.

Indeed, Lagarde has said she is not interested in the presidency. Her current job, after all, affords her a platform from which she wields considerable influence in a global conversation on the world’s most pressing issues—from rising income inequality to banking reforms to climate change.

Still, one can’t blame Merkel for trying. The German Chancellor and many other top European leaders have no doubt been spooked by the dramatic gains made by anti-EU parties in late May’s elections. Lagarde, meanwhile, is regarded as a consensus-builder who can contend with the increasing dissatisfaction among EU member states—in three years Britain plans to hold a referendum on its membership—and bring positive change to the organization.

If for some reason the EU Presidency doesn’t work out, of course, there’s always the role of President of the European Council. Or President of the European Parliament. Chances are you don’t know who holds these grand offices either. But hey, we’ll give you a hint: One of them used to be a Prime Minister of Belgium.