IC: The IMF released a report several months ago saying that Greece’s debts were going to have to be restructured or forgiven and that this was inevitable.

2 Greece’s shipping industry is responsible for more than 7 percent of its GDP. Greek companies control nearly 20 percent of the world’s shipping fleet.

CL: I don’t want to offend people. They are trying to change that culture. But there was a culture—at a certain level in society—of not contributing to society by paying taxes. Under the constitution, the entire shipping industry is tax-exempt. 2 And over time, the definition of what was shipping gradually enlarged. One of the proposals on the table is to restrict the definition of the shipping industry and move it into paying tax. It’s a bit bizarre. At one point 18 months ago, the shipping industry was volunteering a contribution to the tax authorities of Greece because it wasn’t paying any. That doesn’t happen in many places.

CL: It might. It might. The consequence of Greece being in a single-currency union is that it effectively loses one tool against recession. It cannot use devaluation, as other countries outside a currency zone can use it. You depreciate, you become more competitive. So you have to restore your productivity in two ways: You work on your unique labor costs, as happened in Portugal, Spain, Ireland and Greece. And you improve the overall economy by restructuring it to make it more agile and prone to innovation. This is a choice Greece has yet to make. The other point about Greece, which I think makes it a special case in the eurozone, is that there was a culture of … [pauses]

IC: But isn’t the problem with a currency union that if one country makes bad choices, everyone is at risk? It seems very likely that even if Greece survives this particular crisis, it’ll happen again.

CL: First of all, I understand why you are opposing Greece on the one hand, Germany on the other hand. But you have other countries where the variation of the strength of the economy and the balance of payments could have been obstacles to integration. Ireland, Portugal, and eventually, Spain. And clearly those three show that you can restore a situation where countries can continue to operate.

IC: Greece and its creditors have reached a deal, which includes a bailout in exchange for tax hikes and spending cuts, to avoid a major Greek default and keep the country in the euro. But given that Greece and Germany remain on the same currency, which some people think of as the original sin, what is going to keep these problems from recurring?

CL: No, no, no, she does. We work together. First we text message, and then we talk when we are both available.

IC: I am doubly sorry then. He has some line about when there is a problem in Europe you don’t know who to pick up the phone and call.

Isaac Chotiner: Henry Kissinger or someone, I can’t remember who (and I apologize for quoting him to you) said—

IC: So when you are talking to Angela Merkel or the German finance minister, do you think they know restructuring debt is inevitable, and their opposition is about the German electorate?

CL: I think it was more of a political problem. With that level of debt, with that schedule of repayment, with the lack of attractiveness of Greece as a financial destination—everybody knows [restructuring] has to happen.

IC: Did they dislike it because they disagreed on the economics, or because restructuring Greek debt would be a huge political problem?

IC: This is the last Greece question. When the IMF released that report—

3 Established in 2012, the ESM was created to provide financial support for struggling European countries in the event of fiscal emergencies.

CL: You know, it is very easy in retrospect to say that. But at the time, and I wasn’t in the IMF then, we had no European Stability Mechanism. 3 And each of us, in our countries, did not want that isolated case playing out throughout the entire European Union. Are you going to write a book on Greece?

IC: But even that was pretty late though, right, compared to when the crisis started?

CL: We pushed very strongly for the first restructuring of private sector debt in winter 2011 or 2012.

IC: Do you think that the IMF could or should have said this five years ago? Could that have made a difference, given the misery Greece has endured?

I have noticed that when a woman speaks, people start chatting or looking at their emails or doing something else. It is very, very strange.

CL: She doesn’t need my advice. She is a strong woman. As she put it, she has skin as thick as an old crocodile.

IC: Do you have any advice for women running for office, like Hillary Clinton, about how to deal with these issues?

CL: Oh, people don’t interrupt me when I speak. If they do, I am going to give all my comments looking at that person. [Another mock death stare.] It produces a freezing effect quite quickly. It’s rude. Either you are in the room or you are not in the room. I tell people, “Turn your thingie face down.” [Pretends to slam her phone face down on the table.] The only person able to use it is the head of communication. Sometimes people cheat and I see them.

IC: What about when you speak, in terms of things like being interrupted? Do you find a difference there?

CL: Yeah. I brought up my children, one in France, and I had child care, publicly funded, from three months to three years. I had to get some family support, but all of that is much more accepted. It may not be the same in all countries. In Germany there is a bit of a cultural bias against women who do not raise children for a period of time. But here, when I talk to young mothers, they have a terrible time finding support.

CL: Well, she is better off saying what she thinks about it, but I think she has had a different experience with inequality and discrimination. And that is what she explains about herself. Being born and raised in Eastern Europe, there was no discrimination between girls and boys. Everybody had to go to school. She says that she never faced discrimination in the Eastern European system. Which is not to say that she praises it.

CL: I think Thatcher was the last one, at least on the European scene. I have discussed it with her, but she has a different take on that.

IC: Have you ever talked to Merkel about this? She is one of the three or four most powerful people in the world, arguably, and I can’t think of the last time that was true.

CL: Look out for that. I am often chairing some of those meetings, and when I see that happening I knock on the microphone. [Pretends to give a death stare across the room.]

CL: [Very long pause.] No. I don’t feel treated differently, but I am still in doubt as to whether it’s the institution I represent and the authority it carries, or whether it has to do with respect for me as there would be respect for a man. There is still a little doubt in my mind as to whether there is a slightly dismissive response to my views because I am a woman. I might be unfair because I think that people in meetings and large groups have often been respectful and have often deferred to the views of the IMF as I express them. But one thing I will say is that in many forums that I have shared, I have noticed that when a woman speaks, people start chatting or looking at their emails or doing something else. It is very, very strange. If you participate in mixed large groups …

IC: I want to transition: You have talked about being a woman in a leadership role. Do you ever feel that world leaders or central bankers treat you differently because of your gender?

CL: Well, first of all, the way those meetings take place, there are a lot of pre-meetings beforehand to lay the groundwork. Then the full session begins and you have statements of different kinds made. And there is a roadblock. So someone says, “Let’s have a breakout session,” and people try to make progress. And then you come into the full session. The length of those breakout sessions will almost invariably tell you the size of the obstacles. We had two nights in a row in mid-July shortly after the debt analysis in Greece. The last bilateral took a lot of time. Two or three hours. And eventually it was completed with four actors in the room. I won’t tell you who they were.

IC: It must be fascinating having people from so many different countries and cultures. Here you have the Fed, and it’s just a banker from Dallas and one from Kansas City. But there you have [Greek Prime Minister] Alexis Tsipras and Merkel.

IC: Were you in the room for a lot of these negotiations?

CL: I don’t think there is austerity at the moment. There is no fiscal contraction today. Spain has done pretty well. The U.K. has had a very heavy-handed approach—sorry, I shouldn’t say that. It has had very heavy-handed communication on fiscal consolidation. But bottom line, has austerity worked? A well-balanced discipline has actually worked.

IC: Do you think there is some lesson learned in Europe that austerity in a time of crisis doesn’t work?

IC: I can’t wait until the Republicans get hold of that line.

CL: No, no, no, no, no. Thick skin. Old crocodile is a bit unkind. I don’t want to say that. But you need a thick skin in the world of politics, and you need a thicker skin when you are a woman.

IC: You took over the IMF at a time when your predecessor, Dominique Strauss-Kahn, had had issues with—

CL: Sex. 4 4 To recap, just in case: Strauss-Kahn resigned from the IMF after being accused of sexually assaulting a woman who worked at the New York City hotel where he was staying. Criminal charges were eventually dropped; he settled a civil suit with the hotel employee. It was a disaster.

IC: I was going to say gender, but your word is less euphemistic. When you came in, did you feel like you had to set a new tone?

CL: I will never forget the first town hall meeting I had when I joined. I arrived in the United States on July 4th, spent the night at a hotel room that was so sad, and I was thinking, what on Earth am I doing? I went to work on July 5th and the first town hall at the IMF headquarters was either that afternoon or the following morning. And the ambiance, the anxiety—it was a very strange feeling of anxiety, frustration, expectations. It was something I had never experienced before. And I felt we had to move on. They had to get over it. They had spent the last couple of months, since May 15th, looking every morning at what was new about the scandal. For a group of people of high-caliber intelligence, it was a bit debilitating. So I thought: let’s focus on quality work. And then [Strauss-Kahn] asked me if he could come and say farewell because he hadn’t been able to in the circumstances. And I thought, yes, that is the way to heal.

IC: The Fund also released a report on inequality and economic growth.

CL: We released two reports, actually.

IC: How is battling inequality part of the IMF’s mission?

CL: I think the conclusions of the work we did were, number one, that excessive inequality was counterproductive to sustainable growth. And everyone wants sustainable, strong, balanced growth. Well, if we are logical about that goal, then we cannot have excessive inequality, which helps justify the fact that the IMF is doing growth and research on that. The second report said that redistribution was not necessarily anti-growth. There was that conventional wisdom that redistribution was not conducive to entrepreneurship, opportunity, and our findings were to the contrary.

IC: Do you worry that with things like this—

CL: We have to, by virtue of our mandate— [Loud laughing and talking from a nearby table] Americans are so noisy. It’s really bizarre, no? It’s always like that. [She and her aide discuss moving to another room.] Anyway, I think they will gradually lower their voices. That’s what normally happens.

IC: You could try giving them death stares.

CL: Yeah, they would turn their backs on me. So, I think doing work and analysis on inequality is critically important, but we have to restrict our work to the mandate of the IMF. 5 I cannot take the institution into territories that are not allocated by the charter, because the backlash will be instant. 5 The Fund’s mandate was “updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability,” according to the IMF’s website.

IC: Do you worry about that when the IMF comments on inequality or global warming?

CL: Or gender. I think we have carried the day. The board is convinced—or most of the board is convinced—that it’s necessary to study the impact of gender, inequality and climate change. So I think that is okay, but it has not been easy. Two years ago we had a number of board members who were very skeptical about the direction of that research. I think we are there now. I mean, when you demonstrate with numbers that having women contribute to the society and economy is actually going to raise GDP, by a factor of anywhere from 23 percent when you look at Saudi Arabia and India, to 3 percent in America, it is fairly compelling. 6 6 According to an According to an IMF report , if the number of women in the workforce were equal to that of men, GDP would increase by 5 percent in the U.S, 9 percent in Japan, and 34 percent in Egypt.

IC: Right. It’s shocking that if you don’t let women drive, the economy suffers.

CL: Yeah.

IC: Speaking of things that may not immediately seem like they are in the IMF’s purview: the refugees in Europe. How have you been involved in the issue?

CL: I will give you an example. We have a program in place with Jordan. Jordan has increased its population by 25 percent by welcoming refugees from Syria. Their fiscal consolidation program was completely changed so the Jordanians could cope with the flow of refugees. The second thing that we are doing, and hopefully it will help the Europeans, is some analytical work on the economic impact of migrations and the ways in which refugees are either welcomed or not, and how much that can help countries where the aging of the population is becoming a big economic issue.

IC: The Germans seem to think this could be an opportunity in some way.

CL: They are right.

IC: You do think they are right?