The IMF Leadership

The IMF seems to have a growing role in the world financial system, and we have been watching as their bid to create a single financial system and a single currency gains momentum. Therefore we watch the IMF carefully:

Arrest of IMF chief to complicate EU bailout talks

The arrest on sexual assault charges of International Monetary Fund (IMF) chief Dominique Strauss-Kahn, a supporter of eurozone bailouts, is set to complicate Greece's bid to extend its EU-IMF loan as euro finance ministers gather in Brussels on Monday (16 May).

Tipped to become French President Nicolas Sarkozy's main rival in the 2012 elections, Strauss-Kahn was detained in New York on Sunday shortly after boarding a flight to Germany, where he was to hold talks with German Chancellor Angela Merkel ahead of the eurozone talks on Monday.

The US court is to hold a first hearing later today, after a 32-year old maid accused him of trying to rape her in a luxury suite in the Sofitel hotel

The news came as a shock to the IMF, with top officials grappling to cope with the leadership crisis on Sunday.

Deputy IMF chief John Lipsky, an American official, stepped in as acting managing director, while Egyptian economist Nemat Shafik is to replace Strauss-Kahn at the eurozone ministers' meeting in the EU capital.

The scandal is also likely to impact the appointment of his successor.

The Strauss-Kahn Charges

The arrest of Dominique Strauss-Kahn on charges of sexually assaulting a hotel cleaning woman in New York City is a personal humiliation for the French politician, but it is also a black mark on the International Monetary Fund that chose to overlook his previous sexual behavior. It will be fascinating to see how the grandees of French and international financial politics handle this one.

We'll see if those tolerant IMF officials consider the New York charges to be consistent with their admonitions. Yesterday the fund named its number two official, the capable U.S. economist John Lipsky, as acting managing director. Under Mr. Strauss-Kahn, the IMF promoted multiple European bailouts and we doubt that will change.

The charges are roiling France, where Mr. Strauss-Kahn was the favorite to be the Socialist nominee for President next year and was even leading in the polls against Nicolas Sarkozy.

Mr. Strauss-Kahn's humiliation would leave the Socialists without a presidential front-runner. It could help Martine Aubry, the party chief and godmother of the 35-hour work week, who remains as hardcore a Socialist as there is these days. That is not a winning platform. Mr. Sarkozy, who supported Mr. Strauss-Kahn's candidacy for the top IMF job in part to get him out of the country, would appear again to be the favorite.

One has to wonder if this could be a set-up by his rivals - or if these charges are true:

Some in the French press and even a French government minister are suggesting that the 62-year-old Socialist Party panjandrum may have been set up by his rivals. The charges are stunning enough—and French politics is strange enough—that we suppose anything is possible, but such a conspiracy would have to include a large number of players.

The facts of the case as reported by New York police so far do not look promising for the IMF managing director

.

IMF to remain 'fully functional' after Strauss-Kahn arrested in New York

In response to the arrest, which rocked France at its core, the IMF said it would remain 'fully functioning and operational.' "Mr. Strauss-Kahn has retained legal counsel, and the IMF has no comment on the case; all inquiries will be referred to his personal lawyer and to the local authorities," said Caroline Atkinson, Director of External Relations at the IMF.
As Strauss-Kahn remains in police custody in New York, the IMF has appointed John Lipsky as Acting Managing Director.

It seems clear that we will see new leadership within the IMF - and that represents an interesting change - potentially.

Who will step forward, and what will his/her agenda be?

In these last days, any such changes to significant groups such as the IMF is of great interest...Stay tuned on this one; we need to watch these developments closely.