* France's Lagarde is favored as new IMF chief
* U.S. wants fast decision on Strauss-Kahn successor
* "He wasn't strong-armed" to quit - IMF source
* Strauss-Kahn was front-runner for French president
(Adds prosecutor's quote, details)
By Basil Katz and Lesley Wroughton
NEW YORK/WASHINGTON, May 19 Dominique
Strauss-Kahn won bail on Thursday but faced one more night in a
New York jail, hours after he quit as head of the IMF under the
cloud of sex crime charges.
His resignation intensified a race for global finance's top
job. It has gone to Europe for 65 years and the favorite is now
French Finance Minister Christine Lagarde but fast-growing
developing economies want to put up their own candidate.
A judge granted Strauss-Kahn $1 million bail and ordered
him to be detained in a New York apartment. He will be subject
to electronic monitoring under the watch of an armed guard,
costing him $200,000 a month, a prosecutor estimated.
Prosecutors argued vehemently the French national should
remain behind bars, calling him a flight risk.
"The defendant in this case has shown a propensity for
impulsive criminal conduct," said prosecutor John McConnell.
He said the hotel maid who accused Strauss-Kahn of trying
to rape her on Saturday, a 32-year-old immigrant from Guinea,
had told a "compelling and unwavering story."
Strauss-Kahn denies the charges and his lawyers say he will
plead not guilty. His bail package was due to be signed on
Friday and an arraignment hearing, when he will formally answer
the charges, was set for June 6.
The case represents a spectacular fall from grace for a man
held in high esteem for his role in tackling the financial
crisis of 2007-09 and being central to ongoing efforts to keep
Europe's debt crisis under control.
Dressed in a blue shirt and gray jacket, Strauss-Kahn
looked tired and whispered occasionally to his lawyer during
Thursday's proceedings. He was flanked by seven guards as his
wife and one of his daughters watched from the public gallery.
The charges that Strauss-Kahn tried to rape the maid and
committed other sex offenses, plus the prospect of a lengthy
legal process, have ruined his once strong-looking chances of
winning France's presidential election next year.
One of his attorneys denied he would flee.
"I have to say that the prospect of Mr. Strauss-Kahn
teleporting himself to France and living there as an accused
sex offender, fugitive, is ludicrous on its face," lawyer
William Taylor told the judge.
"He is an honorable man ... He has only one interest at
this time and that is to clear his name."
Analysis of Lagarde's chances [ID:nLDE74H1TS]
Factbox on possible successors [ID:nLDE74F1IO]
More on the arrest [nDSK]
Criminal procedure factbox [ID:nN15107742]
BREAKINGVIEWS columns [ID:nLDE74F0LF] [ID:nLDE74F0G7]
Graphic on IMF votes r.reuters.com/taw59r
Strauss-Kahn and IMF graphics r.reuters.com/caj69r
In his resignation letter, composed at New York's notorious
Rikers Island jail and released by the International Monetary
Fund overnight, Strauss-Kahn vowed to fight the charges.
"I deny with the greatest possible firmness all of the
allegations that have been made against me," he wrote.
A trial could be six months or more away. If convicted, he
could face 25 years in prison.
A senior source at the IMF said Strauss-Kahn had tendered
his resignation as managing director of his own accord. "He
wasn't strong-armed," a source familiar with the events said.
One Strauss-Kahn attorney, Benjamin Brafman, has said the
evidence "will not be consistent with a forcible encounter."
A lawyer for the alleged victim, who has gone into hiding
to avoid media attention, told Reuters she opposed bail.
"The idea that the man who did this to her is now on the
street, so to speak, and able to do what he wants to do in the
world is something which is frightening to her," attorney
Jeffrey Shapiro said.
LAGARDE EMERGES AS IMF FAVORITE
Lagarde emerged as the favorite to take over the IMF
leadership even as China and other nations stepped up a
challenge to Europe's grip on the job.
U.S. Treasury Secretary Timothy Geithner called for an
"open process that leads to a prompt succession," although
sources in Washington said the United States, the IMF's biggest
financial contributor, would back a European for the post.
The crisis at the IMF comes at a sensitive time given its
role in helping euro zone states such as Greece, Ireland and
Portugal deal with huge debt problems. Europeans argue that
shows why it makes sense for them to retain the post.
"The tradition can be changed but not now," said Herman Van
Rompuy, who as president of the European Council represents the
European Union's member countries.
The succession issue will probably be discussed at a summit
of Group of Eight leaders in France next week. Together, the
United States and European nations hold more than 50 percent of
the IMF's voting power, giving them say over who leads it.
A Reuters poll of economists showed 32 of 56 think Lagarde
is most likely to succeed Strauss-Kahn.
The prime ministers of Italy and Luxembourg publicly backed
her on Thursday. Diplomats said she also had backing from
France, Germany and Britain, Europe's three biggest economies.
"If the Europeans very strongly endorse Lagarde, that will
help, whereas I'm not sure the developing countries will
coalesce around one person," said Stephany Griffith-Jones,
financial markets program director at Columbia University.
Lagarde is a fluent English speaker and has experience of
balancing the demands of rich and developing countries because
France is chair of the Group of 20 nations this year.
She was expected to get U.S. backing, not least because
Washington wants to keep the number two IMF job and the
leadership of the World Bank, the Fund's sister organization.
In veiled warnings against another U.S.-European stitch-up,
China and Japan both called for an open, transparent process to
choose a successor on merit. Canada agreed but conceded that a
European was likely to get it, a government official said.
Lagarde, 55, declined to say if she was interested but told
reporters: "Any candidacy, whichever it is, must come from
Europeans jointly, all together."
Several European diplomats said she had been quietly
canvassing support in the expectation that Strauss-Kahn would
stand down within weeks to run for the French presidency.
A former head of the U.S. law firm Baker & McKenzie in
Chicago before joining the French government in 2005, Lagarde
is also under something of a legal cloud herself.
A French public prosecutor recommended this month she be
investigated over an arbitration case involving businessman and
former politician Bernard Tapie. Judges are expected to decide
in mid-June whether to order a full-scale inquiry.
One non-European candidate could be former Turkish Economy
Minister Kemal Dervis, 62, an economist with IMF experience.
In a poll released in France on Wednesday, 57 percent of
respondents thought Strauss-Kahn, a Socialist politician, was
definitely or probably the victim of a plot.
But French politics has moved on to the search for a
challenger to unpopular conservative President Nicolas Sarkozy
next year. Former Socialist leader Francois Hollande is now the
center-left front-runner but party leader Martine Aubry is
under pressure to enter a Socialist primary.
(Additional reporting by Emily Kaiser in Singapore, Tetsushi
Kajimoto in Tokyo, Sam Cage and Andreas Rinke in Berlin,
Elizabeth Pineau in Paris, David Milliken in London, David
Morgan and Mark Felsenthal in Washington, Noeleen Walder and
Mark Hosenball in New York, John O'Donnell in Brussels; Writing
by William Schomberg, Matt Daily and Paul Taylor; Editing by