- The Washington Times - Monday, May 16, 2011

BERLIN — The timing couldn’t have been worse for the International Monetary Fund, whose chief, Dominique Strauss-Kahn, was ordered jailed without bail Monday in New York on sexual assault charges.

Three bailout packages for debt-stricken European countries, totaling billions, are on the table as European finance ministers gather in Brussels for two days of hammering out how to save the 17-nation Eurozone.

But the man who was supposed to shepherd them through this latest crisis was appearing in a Manhattan court, accused of attacking a maid who went in to clean his penthouse suite Saturday at the luxury Sofitel Hotel near Times Square. Prosecutors said they were investigating at least one other similar allegation against Mr. Strauss-Kahn.

The absence of Mr. Strauss-Kahn in Brussels leaves the group without its financial heavyweight and peerless negotiator.

“It’s like losing an experienced ship’s captain while navigating particularly difficult, uncharted waters,” said Jan Randolph, head of sovereign risk analyst at IHS Global Insight.

Mr. Strauss-Kahn, who was France’s finance minister when the euro currency was created in 1999, is an established authority on financial issues and is known for his political finesse in dealings with leaders of the Eurozone.

He often has been praised for his leadership of the IMF and is widely credited with helping negotiate the terms of the Greek bailout when the Eurozone faced its first currency crisis last year.

“Whatever else one might like to think of him, Dominic Strauss-Kahn does have the remarkable ability to cut a knife through dogmatic politics and diplomacy when it occurs,” said Howard Wheeldon, senior strategist at BGC Partners, a brokerage in London.

“His loss, be it temporary or otherwise, will clearly be formidable for a while, although, in my book, it will be manageable.”

Meanwhile, changes at the IMF already are starting, and a dispute is brewing over the selection of the next leader. John Lipsky, Mr. Strauss-Kahn’s deputy, has been appointed the interim managing director until his planned departure this summer.

Emerging economic powerhouses such as Brazil and China, with support from leaders such as British Prime Minister David Cameron, have disputed an arrangement between the United States and Europe that sees the World Bank leadership go to an American and the IMF’s to a European.

But some European leaders say the IMF post needs to stay in European hands.

“Obviously, Europe doesn’t have an automatic right to the director’s chair,” Mrs. Merkel’s spokesman Steffen Seibert told reporters in Berlin.

“But in the current situation when the IMF is especially needed to fight the crisis in some Eurozone states, the German government believes there are good reasons why there should be a good European candidate.”

And while the impact of Mr. Strauss-Kahn’s arrest on European financial matters is still being assessed, there is no question in most people’s mind that it is a disaster for French politics.

Mr. Strauss-Kahn, a Socialist, was the favorite to challenge conservative French President Nicolas Sarkozy, whose popularity has plunged in the polls, in 2012.

He is charged with attempted rape, sex abuse, a criminal sex act, unlawful imprisonment and forcible touching. The top count is punishable by five to 25 years in prison. Mr. Strauss-Kahn was arrested Sunday en route to Berlin to discuss bailout terms with German Chancellor Angela Merkel, whose country supplies the largest share of the Eurozone bailout money.

c This story is based in part on wire service reports.

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