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WRAPUP 6-Jailed IMF chief faces pressure to quit
May 17, 2011 / 6:21 AM / in 6 years

WRAPUP 6-Jailed IMF chief faces pressure to quit

* Austria,Spain finmins question Strauss-Kahn’s IMF position

* Strauss-Kahn in Rikers Island prison

* French Socialists to push on with primary campaign

* IMF in turmoil during euro zone crisis (Recasts to add European finance ministers)

By Basil Katz and Daniel Flynn

NEW YORK/BRUSSELS, May 17 (Reuters) - Dominique Strauss-Kahn faced pressure from European officials to quit as head of the International Monetary Fund on Tuesday after he spent his first night in a notorious New York jail.

With the IMF in turmoil following the arrest of its managing director on criminal charges including attempted rape, China and Brazil challenged Europe’s grip on the Fund’s top job.

In France, many Socialist leaders voiced outrage at the way Strauss-Kahn, a front runner for the French presidency, had been paraded handcuffed and unshaven by U.S. police before he has had a chance to defend himself in court.

But two European finance ministers questioned the viability of Strauss-Kahn’s continued leadership of an institution that is central to efforts to steady the world economy.

Asked whether the Frenchman should quit, Austrian Finance Minister Maria Fekter said after a European Union meeting: “Given the situation, that bail has been denied, he has to consider that he would otherwise do damage to the institution.”

Spanish Economy Minister Elena Salgado cast doubt on Strauss-Kahn’s judgment.

“It’s important to ensure the stability of institutions, but we also must trust Mr Strauss-Khan to use his best judgment. In this case at least, although in other cases, he does not seem to have done so,” she told Spanish radio.

Salgado told reporters in Brussels it was up to Strauss-Kahn to decide whether he should quit “but the crimes he is accused of are very serious ... My solidarity first and foremost is with the woman who suffered the attack, if that was what happened.”

Strauss-Kahn was arrested aboard an Air France plane on Saturday and charged with a sexual assault on a chambermaid at a luxury Manhattan hotel. He denies the accusations.

A judge denied him bail on Monday, remanding him to the city’s grim Rikers Island jail, where he spent the night.

In a significant move on Tuesday, China said on Tuesday that the selection of the next IMF boss should be based on “fairness, transparency and merit.”

China last year become the third-largest member country in the IMF, after the United States and Japan and leapfrogging European countries.

China’s Foreign Ministry declined to comment on the charges against Strauss-Kahn. But a spokeswoman, asked about how IMF leaders are chosen, said: “We believe that this should be based on the principles of fairness, transparency and merit.”

It is the first time that China has weighed in early and so publicly on an IMF selection debate.

All 10 managing directors to have run the Fund since it was created after the World War Two have been Europeans, including four Frenchmen, the most recent of them Strauss-Kahn.


An emergency Socialist leadership meeting in Paris staged a rare show of unity amid consternation over the probable loss of the center-left’s most popular contender to unseat conservative President Nicolas Sarkozy in next April’s election.

“Unity, responsibility, combativity, these are the three words which came up the most this morning,” Socialist party leader Martine Aubry told reporters after the session.

“There was emotion, of course, and the shock we all feel, but it is our responsibility to be up to the task,” she said.

Strauss-Kahn has neither resigned from the Washington-based IMF nor dropped out of the French race so far. But he seems bound to be sidelined by a prolonged legal case.

Sarkozy, whose approval ratings had slumped to a record low of 20 percent, received another campaign boost with news that his wife, singer and former model Carla Bruni, is expecting a child later this year. [ID:nLDE74G0MF]

Sarkozy urged center-right lawmakers at a closed-door breakfast to show “restraint and dignity” and refrain from comment on the Strauss-Kahn case, participants said.


More on the arrest [ID:nDSK]

Criminal procedure factbox [ID:nN15107742]

Factbox on possible successors [ID:nLDE74F1IO]

Analysis on IMF and euro zone [ID:nLDE74E083]

French politics impact [ID:nLDE74F0E1]





The Socialists agreed they would not change the selection timetable, which calls for candidates to register by July 13 for a primary election to be held in October.

French politicians and some commentators voiced shock and anger at the judge’s decision to refuse Strauss-Kahn bail.

Former Culture Minister Jack Lang described the treatment as a “lynching” that had “provoked horror and aroused disgust.”

The U.S. justice system, he said, was “politicized” and the judge appeared to have been determined to “make a Frenchman pay.” Other senior Socialists said that displaying the IMF chief in handcuffs escorted by burly policemen violated his right to be presumed innocent until found guilty by a court.

Strauss-Kahn denies the charges and his legal team has denied police accounts that he fled the hotel. He is next due to appear in court on Friday.

In an apparent hint at the defense’s strategy, his lawyer Benjamin Brafman told his arraignment hearing: “The evidence we believe will not be consistent with a forcible encounter.”

Apart from blasting the French presidential race wide open, Strauss-Kahn’s arrest has thrown the Fund into turmoil just as it is playing a key role in helping euro zone states like Greece and Portugal tackle debt woes.

The Washington-based IMF board, which was briefed informally on the case on Monday, has so far held off on deciding whether or not to remove him from his job.

Swedish Finance Minister Anders Borg joined a string of European officials on Tuesday in saying that a successor to Strauss-Kahn should come from Europe because of the IMF’s deep involvement in the euro zone debt crisis. [ID:nLDE74G1LB]

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