IMF in Disarray

May 16th, 2011
in econ_news


Photo of Dominique Strauss-Kahn in custody (BBC).

 Econintersect:  The arrest of  IMF head Dominique Strauss-Kahn on sex charges has created monumental turmoil in intrenational financial circles.  It has also stood French politics on its head.  Strauss-Kahn was considered the frontrunner to oppose Nicolas Sarkozy in next year's French presidential election.  And conspiracy theories abound.  A Hollywood script could not have been written with more twists and turns than this real life story is developing.

Follow up:

From The Wall Street Journal:

European officials said they had been ready for Mr. Strauss-Kahn to arrive in Brussels on Monday and urge European Union governments to commit to a further slab of bailout money to tide Greece over for 2012 and 2013—and for him to suggest that further IMF help would depend on such a commitment.

"This is going to make things more difficult in terms of Greece," said a ranking IMF official who is closely following the negotiations with Athens. Although the outcome may ultimately be the same, given pressures from European and U.S. officials wanting to avoid contagion, the official said, "it could delay action."

John Lipsky,, second in command at the IMF, will be acting manager of the organization in Mr. Strauss-Kahn's absence.  However, Lipsky lacks the clout of his superior, according to the WSJ, and is in the final three months of service before his announced resignation takes effect in August.

The Gazette (Montreal) reported Sunday that allies of Strauss-Kahn, including his wife, Anne Sinclair, are claiming that the sexual assault that has been alleged is totally out of character for the 62-year old politician.  Entrapment is the common thread of the conspiracy theorists.  From The Gazette:

"I am convinced it is an international conspiracy," said Michelle Sabban, a senior councillor for the greater Paris region and a Strauss-Kahn loyalist.

"It's the IMF they wanted to decapitate, not so much the socialist primary candidate," she said. "It's not like him. Everyone knows that his weakness is seduction, women. That's how they got him."

Also from The Gazette:

A French government minister said Sunday he could not rule out that IMF head Dominique Strauss-Kahn's arrest for alleged sexual assault was the result of a set-up with political motives.

"We cannot rule out the thought of a trap," Henri de Raincourt, minister for overseas co-operation in President Nicolas Sarkozy's government, said in a broadcast interview.

"I am not ruling anything out," Raincourt added. "If this turns out to have been a trap, let me tell you that it would not be to the credit of those who set it."

Sources:  Wall Street Journal, BBC News and The Gazette (Montreal)

Hat tip to Sanjeev Kulkarni

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