Head of IMF Arrested in NY; what next for bailouts and elections?

southsiderosie

The New York Times is reporting that Dominique Strauss-Kahn has been arrested in New York under suspicion of sexual assault. While at this point these are just allegations, I wonder about the political fallout here:

No matter the outcome of Saturday’s episode, it will likely throw the French political world into turmoil and the Socialist Party into an embarrassed confusion.

Mr. Strauss-Kahn, a leading member of the party, has been considered the front-runner for the next presidential election in France in May 2012. Opinion polls have shown him to be the Socialists’ most popular candidate and running well ahead of the incumbent, Nicolas Sarkozy, who leads the center-right party.

France has been waiting for Mr. Strauss-Kahn to decide whether to run for his party’s nomination in a series of primaries, which would mean giving up his post as managing director of the fund.

The view in France was that if Mr. Strauss-Kahn wanted to run, he would have to make his intentions clear early this summer, and most politicians and analysts have been predicting that he would not be able to resist the chance to run the country.

Mr. Strauss-Kahn contested for the nomination five years ago, losing to Ségolène Royal, who ultimately lost a second-round runoff to Mr. Sarkozy. Mr. Sarkozy then arranged for Mr. Strauss-Kahn to get the I.M.F. job, in part to remove a popular rival from France’s political landscape.

Mr. Strauss-Kahn was the French minister of economy under the Socialist prime minister Lionel Jospin from 1997 to 1999, and he has also been a professor of economics at the Paris Institute of Political Studies.

The French elections will be very interesting, especially considering the resurgence of the National Front under Marine Le Pen. This could potentially lead to a situation like the one in 2002 where the National Front made it into the presidential run-off. I can't imagine that the Socialists will put him forward at this point, but I don't think their bench is too deep either.

I also have to wonder what this means for the IMF's relationship with the ECB, and their institutional role with the European bailouts. I would imagine that the impending leadership crisis at the IMF will be an unwelcome distraction at a critical time; the Irish government earlier today called for a reduction in the interest rates with an eye towards future restructuring for their IMF/EU debt, and the situation in Greece seems to be getting increasingly dire.

Ultimately, I'm not sure how much this would affect Ireland's relationship with the IMF in the medium term, but if there is more political space for the National Front in the French elections, I would suspect that this campaign season will be even more euro-skeptical than it was already shaping up to be - and that may be really bad news for Europe's small peripheral countries, Ireland included...or maybe not bad news, if you think a rollback of EU institutions would be a positive thing.

Any predictions?

later12

Interestingly (or amusingly in our case) DSK's affiliation with the IMF and his left leaning beliefs have made him the subject of suspicion in the past, even in the often socialist country that is France. It was possibly the greatest barrier to his Presidential success prior to this event. Does it say a lot about Ireland, and our political philosophy, that we often seem to consider him a right wing conservative?!

Also on the French elections, it's worth pointing out that DSK was not the automatic socialist candidate, particularly having been absent from the country and in light of how his role is seen in France. And the FN were always going to be strengthening in the run up to elections as they have been doing for some time - but the socialists are not their natural competition, their ideological competition is in the UMP. So this development is of dubious importance only.

Anyway... with regards to the IMF... embarrassing but not particularly relevant to their operations. I don't really see it detracting from their credibility, this is a DSK issue alone.

Having said that, it will be interesting to sit back and watch how some people, on here or in the media, will linevitably attempt to use it as a publicity tool to suit their unrelated position on the IMF-European debt crisis mechanism.

mike65

Not realy politics unless Nicolas Sarkozys office set this up.

later12

There is political relevance, in fairness.

If DSK were the next President of France it is pretty fair to say that Ireland would have one more compassionate ear in Europe than it does currently from Sarko and the UMP.

yahoo_moe

I expect Noonan's already on the phone arranging a 'public support for interest rate drop' deal...

oppenheimer1

Imagine had this happened here? The head of the IMF arrested in Ireland... Maybe someone should entrap the rest of the troika!

nuac

Career fatal stuff in these politically correct days. Pityas he seemed to have some potential in the IMF and in politics.

later12

nuac wrote: »

Career fatal stuff in these politically correct days.

Politically correct? The accusation is attempted rape.

trishasaffron

Fascinating. Many are the allegations that he is a serial romancer but I never heard anything more sinister than that!

He is far and away the most popular politician for young French people - will be interesting to see how they react. I'll be over there next week-end and am already looking forward to reading the coverage...............................

LaBaguette

Not all young French people really - he is popular with urban, middle- and higher-class educated young people, mostly. Although some comments suggested that his being in NY, thinking with his cock, having massive high end cars and being busted will make him a lot more popular with rap fans

There's some debate over it having been set up by the UMP or something similar. Some Young UMP guy tweeted the news an hour and a half before the first US paper did, and more broadly, right-wing papers and websites were on this way earlier than anyone else.

I'm not a big fan of conspiracy theories, but the size and the timing of this (i-e just after a few other affairs in the French press, and in the run up for the election) does look dodgy. It would be a great laugh if the UMP was actually behind this

bmaxi

Is this not the second of Sarkozy's presidential rivals to fall foul of the law? If I was a cynic I'd smell a rat. Oh wait, I am.

LaBaguette

Who are you thinking of ?

nobody3

This is all part of the currency wars. The EU wants the euro to fall so a scandal involving the IMF which is supporting the euro bailouts will be just another tactic to reduce the value of the euro.

Germany and France see the euro as too strong, and are looking for ways to reduce its value without putting any further pressure on their economies. It also paves the way for an ECB rate hike to cool domestic demand without impacting forcing the value of the euro higher.

enda1

Strangely he is accused of forcing the woman to perform oral sex, this would be an accusation of rape under Irish law, no?

The American's are so quick to release information about the case, its shocking. In such a politically sensitive case, there should be as few to no revelations as possible about the accused or the apparent crime until the court case is brought/charges made. I hate the American system in these situations.

Was talking to a French person today who said they'd never vote for him because he is Jewish and therefore would side with the Isralies in the contentious Middle East issues - funny that it wasn't DSK's communist leanings that put him off.

JustinDee

southsiderosie wrote: »

Ultimately, I'm not sure how much this would affect Ireland's relationship with the IMF in the medium term, but if there is more political space for the National Front in the French Any predictions?

Predictions? Whatever happens will have nothing to do with this charge. Strauss-Kahn didn't lend Ireland the money. The IMF did.

JustinDee

enda1 wrote: »

Was talking to a French person today who said they'd never vote for him because he is Jewish and therefore would side with the Isralies in the contentious Middle East issues

Thats a pathetic attitude to take. You'd think the French would have learnt about antisemitism by now.

Sunnyisland

Bit of topic, but at least the American police are not afraid to arrest high profile politicians or businessman unlike here in Ireland.

enda1

JustinDee wrote: »

Thats a pathetic attitude to take. You'd think the French would have learnt about antisemitism by now.

I said a French guy, not all the French. It was more an anecdote really, but yeah, shitty attitude.

Inverse to the power of one!

later10 wrote: »

Politically correct? The accusation is attempted rape.

Politically correct as in even if proven innocent his political career is over.

The seriousness of the charges is not in question.

This really is a strange one tho, hard to believe anyone in his position could do something so stupid.......must have been like that dj from Cork.... :pac:

southsiderosie

JustinDee wrote: »

Predictions? Whatever happens will have nothing to do with this charge. Strauss-Kahn didn't lend Ireland the money. The IMF did.

And he is the head of the IMF - and one who has seemingly acted more in the interests of the crisis countries than Germany or the ECB. The Economist's take (this is just an excerpt):

Whatever the fall-out on French politics, Mr Strauss-Kahn's arrest has left the IMF reeling. One insider called it a “disaster”. Although he had been expected to leave within a couple of months, Mr Strauss-Kahn, unless quickly exonerated, will now presumably be forced out far sooner.

That leaves the fund without a political heavyweight at the top in the midst of important negotiations with European policymakers over Greece’s debt crisis. Mr Strauss-Kahn was due to meet with Germany’s Chancellor Angela Merkel today and attend a crucial meeting of Euro group finance ministers on May 16th. At those meetings the fund’s boss was to make clear that the IMF would not go along with more dithering or fudges over Greece’s debt mess. Europe would have to come up with more money for Greece fast, or its debt will need to be reprofiled. Even if the fund sends another messenger, its heft in the euro debt mess is significantly diminished without a heavyweight at the top.

If Mr Strauss-Kahn goes, the fund’s first deputy managing director, John Lipsky, would take charge. Not only does Mr Lipsky lack Mr Strauss-Kahn’s (erstwhile) political stature, he is himself a bit of lame-duck: only three days ago, on May 12th, Mr Lipsky announced that he planned to leave in August. In a short statement released on May 15th, the IMF’s spokeswoman had no comment on Mr Strauss-Kahn’s arrest, but said that “The IMF remains fully functioning and operational.” That may be true. But there are going to be some gaping holes at the top.

JustinDee

southsiderosie wrote: »

And he is the head of the IMF - and one who has seemingly acted more in the interests of the crisis countries than Germany or the ECB. The Economist's take (this is just an excerpt):

In other words, the pundit writing that editorial piece doesn't know either. It won't make a difference who is at the top. The World Bank continued on after Wolfowitz was nudged out over expenses. Nothing to suggest any different with Strauss-Kahn.

jmayo

oppenheimer1 wrote: »

Imagine had this happened here? The head of the IMF arrested in Ireland... Maybe someone should entrap the rest of the troika!

Well he would be ok if he was treated like all the other high profile financial types.
Hell he wouldn't even be arrested.

enda1 wrote: »

Strangely he is accused of forcing the woman to perform oral sex, this would be an accusation of rape under Irish law, no?

Yeah but according to an ex US president oral does not count as sexual relations.

southsiderosie

JustinDee wrote: »

In other words, the pundit writing that editorial piece doesn't know either. It won't make a difference who is at the top. The World Bank continued on after Wolfowitz was nudged out over expenses. Nothing to suggest any different with Strauss-Kahn.

Wolfowitz wasn't kicked out in the middle of the biggest financial crisis since the Great Depression.

Let's think about this slightly differently: would you still think it would make no difference if the head of the ECB had to leave office suddenly - or Angela Merkel for that matter? The IMF is supposed to be negotiating with Greece this week. I think the leadership of these institutions matters, especially since there are unresolved disagreements between the IMF and ECB over how to handle the European crisis.

Regardless of the IMF situation, I think the implications may be more serious for the French national elections next year. Marine Le Pen is happy to give the two fingers to the rest of Europe, and the Germans are increasingly sick of the peripheral states. If the two core countries of the EU aren't committed to its currency or institutions, it is hard to see how either can survive in the long term. Whether this is a good thing or not is up for debate, but the German and French economies are big enough that they will be ok. I'm not sure we can say the same for Portugal, Ireland and Greece.

later12

jmayo wrote: »

Well he would be ok if he was treated like all the other high profile financial types.
Hell he wouldn't even be arrested.

Frankly, that's not credible.

The reason why there have been so few arrests in Ireland in relation to white collar crime appears to be down to the fact that much of what went on may not have been illegal - there is a lot of ambiguity surrounding the illegality.

However, there is no such ambiguity surrounding serious sexual assault, and no reason to believe that ''high profile financial types'' would not be arrested for such a serious level of assault. I'm sure everyone is familiar with Eugene O'Neill's case, for example, whatever you might think about how it was dealt with, it certainly was dealt with and he received no preferential treatment.

Although we like to describe ourselves, rather masochistically, as having been 'raped' in economic terms, please do not compare white collar crime with rape.

nacho libre

Inverse to the power of one! wrote: »

This really is a strange one tho, hard to believe anyone in his position could do something so stupid.......must have been like that dj from Cork.... :pac:

It's not hard to believe at all. He probably was arrogant enough, much like the former Israeli President, to think his position meant he was untouchable. It wouldn't be a surprise if he has previous, if so other victims probably kept quiet because they feared no one would believe them.

Sand

nacho libre wrote: »

It's not hard to believe at all. He probably was arrogant enough, much like the former Israeli President, to think his position meant he was untouchable. It wouldn't be a surprise if he has previous, if so other victims probably kept quiet because they feared no one would believe them.

He would have got away with it if he had managed to get in the air and back to France. As the Roman Polanksi case has shown, France doesnt extradite French citizens to the US for sex crimes.

later12

Sand wrote: »

He would have got away with it if he had managed to get in the air and back to France. As the Roman Polanksi case has show, France doesnt extradite French citizens to the US for sex crimes.

That doesn't mean he would have got away with it; his hearing would most likely just be heard in France, which is pretty standard practice for French citizens who have been charged with criminal acts abroad.

Stheno

According to the BBC as head of a UN Agency he is entitled to diplomatic immunity but hasn't claimed it

jmayo

later10 wrote: »

Frankly, that's not credible.

The reason why there have been so few arrests in Ireland in relation to white collar crime appears to be down to the fact that much of what went on may not have been illegal - there is a lot of ambiguity surrounding the illegality.

So please explain the following cases where there is no doubt that illegal fradualent activity was carried out and I don't even recall them being arrested nevermind facing prosecution.

michael lynn
thomas bryne
breifne o'brien
ruairi o'ceallaigh

BTW most of us and in most functioning corporate environments would indeed believe self support share schemes, insider trading are indeed illegal.
But we all know as in Fyffes case insider trading is no problem here. :mad:

later10 wrote: »

Although we like to describe ourselves, rather masochistically, as having been 'raped' in economic terms, please do not compare white collar crime with rape.

BTW I do not equate the two.

CelticRambler

Sure we all know he's guilty - didn't he organise and participate in the gang-bang of one Roisín Dubh only a few months ago. In fact, isn't he still robbing her savings to give to his friend Angela, the same wan he was dashing off to on Saturday.

Then again, there's an awful lot of Irish in the NYPD, isn't there? And Barak O'bama is coming over to see us soon. What are the chances we might be able to profit from a bit of extraordinary rendition and find ourselves with a hostage to save our fortune?

Sand

Stheno wrote: »

According to the BBC as head of a UN Agency he is entitled to diplomatic immunity but hasn't claimed it

If he claimed it he might be admitting that he couldnt clear his name based on the evidence. It would finish him politically and as a public figure, and theres no guarantee the IMF would back him in the application of the immunity. He may still feel he will be found innocent - either because he knows hes innocent, or potentially he is arrogant enough to believe hes innocent.

metrovelvet

I can't believe he's in Rikers. Wow. We really are democratic.

nacho libre

Sand wrote: »

If he claimed it he might be admitting that he couldnt clear his name based on the evidence. It would finish him politically and as a public figure, and theres no guarantee the IMF would back him in the application of the immunity. He may still feel he will be found innocent - either because he knows hes innocent, or potentially he is arrogant enough to believe hes innocent.

His political career is finished either way. Even if he were to be found innocent, he will be seen as toxic politically.
I'm surprised there hasn't been a thread on CT about Sarkozy being behind all this.

later12

jmayo wrote: »

So please explain the following cases where there is no doubt that illegal fradualent activity was carried out and I don't even recall them being arrested nevermind facing prosecution.

michael lynn
homas bryne
breifne o'brien
ruairi o'ceallaigh

Michael Lynn is a fugitive, his arrest has been ordered, and a bench warrant is in place. There is an ongoing investigation with the others, to my knowledge, and there have been numerous successful legal challenges against these people already.

Like I said, the reason why some of the people involved in white collar crime in Ireland may never be charged with anything is because of the ambiguity of legislation in this regard.

You suggested that if DSK were in Ireland he would be ok so long as he were treated like other ''financial types''. Firstly, that's a childish comparison because you cannot compare white collar crime with rape on a like basis. Secondly there is nothing to suggest that were men like Michael Lynn or Thos Byrne suspected of rape, and arrested on that basis, that they would be let off the hook.

BTW most of us and in most functioning corporate environments would indeed believe self support share schemes, insider trading are indeed illegal.

It isn't a question of whether the public 'believes' these things ought to be illegal or not with respect to retrospective cases, it is a matter for the courts and the DPP.

Permabear

This post has been deleted.

cyberhog

Strauss-Kahn has resigned.

"It is with infinite sadness that I feel compelled today to present to the Executive Board my resignation from my post of Managing Director of the IMF," he said in a statement issued Wednesday. "I think at this time first of my wife—whom I love more than anything—of my children, of my family, of my friends."

...

"I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me."

http://www.nytimes.com/2011/05/19/business/19imf.html?_r=1

southsiderosie

The NY Times is speculating that Christine Lagarde may be a potential candidate, although I've also read quite a few articles suggesting that it may be time for a IMF chief from an emerging economy to take the helm. The FT listed her as the best Minister of Finance in Europe a few years ago, and she's worked in the US, so she seems to be a known commodity on both sides of the Atlantic. Plus given Sarkozy's approval ratings, now may be the time to transition into something else...

later12

Thank goodness he resigned. That could have been a PR nightmare.

thebman

Is he still going to run for the presidency in France if he is found not guilty?

Would turn things around a lot if he got it given Sarkosy has been against an Irish reduction in interest unless we move on corporation tax.

I imagine it would help any move towards an EU wide approach to the bail out crisis if he was elected.