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Dominique Strauss-Kahn

IMF chief arrest may hit Europe

Monday, May 16, 2011 - 02:35

May 16 - The arrest of IMF chief Dominique Strauss-Kahn comes at a sensitive time for the IMF, as it and the EU are bailing out several deeply indebted euro zone countries. Joanna Partridge reports.

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Front page news in Greece, and around the world - the arrest of Dominique Strauss-Kahn, accused of trying to rape a hotel maid. Strauss-Kahn, who denies the charges, is the managing director of the International Monetary Fund and his New York arrest comes at a particularly sensitive time. EU and IMF officials are discussing Greece's current bailout deal and the problems of other indebted euro zone countries. This newspaper claims "the maid creates obstacles for Greece" but an EU spokesman says that isn't the case. SOUNDBITE: Amadeu Altafaj, Spokesman for the European Commissioner for Economic and Monetary Affairs Olli Rehn, saying (French): "There's absolutely no question: decisions which are under way will not be impacted and this will not have an impact on the programmes being applied at that time.'' Strauss-Kahn has been central in pushing Europe to tackle its debt woes - and had been due to meet German Chancellor Angela Merkel on Sunday and join European Finance Ministers on Monday to discuss the euro zone debt crisis. And the news saw European shares hit their lowest level in over a week on Monday - and the euro traded close to a seven-week low against the dollar. Although the arrest is unlikely to affect the decision on the latest instalment of aid for Greece, due next month, discussions about extending repayment deadlines may be delayed, says economist Eric Chaney. SOUNDBITE: Eric Chaney, Chief Economist at Axa Investment Managers, saying (English): "If Greece is not solvent, then restructuring is a necessity. And the question is when and how and in this regard, the IMF has a very important role because the IMF is the economic expert on insolvency, so in all economic analysis, there is a political dimension and I guess that Strauss-Kahn's role is important in this regard." Strauss-Kahn's arrest has also blown the French election race wide open - as he'd been expected to run against Nicolas Sarkozy in the presidential election. As for the IMF, some are already looking to a future without Strauss-Kahn at the helm. Greeks fear his successor could impose stricter bailout terms on Athens. For now, the IMF's second-highest official, John Lipsky, will fill the void at the top, but Nick Parsons from National Australia Bank says speculation about his successor is already rife. SOUNDBITE: Nick Parsons, Head of Markets Strategy, National Australia Bank, saying (English): "It does appear that Christine Lagarde, currently the French Finance Minister, is in pole position, is the bookmakers' favourite for that job." But there are growing rumours that a non-European could be the next IMF chief. Analysts say with continuing Asian growth an eastern successor is possible, although US appeal remains vital as they're the biggest contributor. Joanna Partridge, Reuters

IMF chief arrest may hit Europe

Monday, May 16, 2011 - 02:35

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