The IMF on Sunday named Strauss-Kahn’s second-in-command, former banker John Lipsky, as his replacement. But Lipsky was planning to step down at the end of the summer, and while a European has long led the IMF, countries such as China and India are considering nominating one of their own for the top spot. That could also have wide ramifications for the organization, whose emerging market members have complained that it shows more generous treatment toward European countries than those in the developing world.
Strauss-Kahn, 62, was charged early Sunday in New York with attempted rape, a criminal sex act and unlawful imprisonment. Authorities allege that he attempted to rape a housekeeper at the Sofitel in Midtown Manhattan where he was staying; police said she later picked him out of a lineup. He planned to plead not guilty, according to his attorney, Benjamin Brafman, who has defended a number of high-profile clients.
Strauss-Kahn appeared Monday before a New York judge, who ordered him held in jail at least until his next court hearing,the Associated Press reported.
A former French finance minister and member of the Socialist Party who served in Parliament, Strauss-Kahn was considered a potential challenger to French President Nicolas Sarkozy in next year’s election.
But after detectives at John F. Kennedy International Airport removed him from a Paris-bound flight 10 minutes before takeoff Saturday afternoon, French political leaders said he would not be able to be a candidate in the Socialist Party presidential primary.
Strauss-Kahn’s absence may be felt most immediately in the IMF’s work with the European Union to prevent the debt crisis engulfing several countries from getting out of hand.
His arrest “comes at just the worst possible time for Europe,” said Eswar Prasad, an international economics professor at Cornell University. “As the world economy stumbles its way to recovery, this could be a pretty serious blow that sets things back.”
A $155 billion loan provided to Greece in spring 2010 is proving insufficient to keep the country out of insolvency. Strauss-Kahn had been considering modifying the terms of the loan to lighten the load on Greece while discussing the potential of a new $85 billion loan to Greece with the European Union.
He was slated to meet with Europe’s finance ministers in Brussels on Monday to weigh the further aid to Greece and work through details of an IMF-backed bailout of Portugal. The organization said IMF Deputy Managing Director Nemat Shafik, who oversees the group’s work in various European Union countries, will attend instead.