After Dominique Strauss-Kahn’s arrest, emerging economies eye top IMF job

Testing their new clout in the world economy, developing nations began pressing Tuesday to strip Europe of its traditional hold on the top job at the International Monetary Fund, as pressure mounted on embattled managing director Dominique Strauss-Kahn to resign.

Treasury Secretary Timothy F. Geithner added what may be a decisive voice to the debate Tuesday when he said during a speech in New York that Strauss-Kahn’s arrest on sexual assault charges means he is “obviously not in the position to run the IMF.” Geithner called for acting managing director John Lipsky, the agency’s No. 2, to be more formally recognized as the IMF’s interim head.

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IMF chief Dominique Strauss-Kahn was placed under a suicide watch in jail while the hotel maid who accused him of attempted rape said through her lawyer that she had no idea who he was when she reported him to the police. (May 17)

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May 16 (Bloomberg) -- Benjamin Brafman, the lawyer for International Monetary Fund Managing Director Dominique Strauss-Kahn talks with reporters following Kahn's arraignment about the court's decision to deny him bail.

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It was the most explicit statement yet by a U.S. official about the matter, and while not a direct call for Strauss-Kahn’s resignation, it added to the sense that his grip on the job is slipping.

In China, Brazil and Turkey, officials of the three large, fast-growing and influential emerging economies used Strauss-Kahn’s arrest to argue that his successor be chosen by merit and not geography, setting the tone for a potentially divisive battle over the IMF’s executive suite. European officials, struggling through a continental debt crisis and relying on the IMF for help, insist they retain the managing director’s job at least for the next few years.

But both the Brazilian and Chinese foreign ministries issued statements Tuesday saying it was time to end the World War II-era “gentleman’s agreement” that guaranteed Europe the managing director’s post. Turkey’s finance minister, meanwhile, said he felt fully qualified to succeed Strauss-Kahn, a Frenchman, and said many other economists and finance officials from developing nations could say the same.

“Our hope is that in the coming period, IMF heads will come from developing countries like Turkey, like Russia,” Turkish Finance Minister Mehmet Simsek said in an interview on the Kanal 24 television station, according to wire service reports. “As far as myself, I don’t have even the tiniest shortage in terms of experience of knowledge.”

Strauss-Kahn has been charged with seven counts and faces a possible 25-year sentence after an alleged sexual assault on a hotel worker at the Sofitel in New York City. He remains in jail at New York’s Rikers Island as a grand jury considers whether there is sufficient evidence to indict him. His next court appearance is scheduled for Friday.

While he retains his post at the IMF, there is a widespread expectation that he will resign. “We have not had contact with the managing director since his arrest in New York,” said IMF spokesman William Murray. “Obviously, it will be important to be in contact with him in due course.”

Tuesday saw the first high-level calls for him to step down. The finance ministers of Austria and Spain said Tuesday that he should consider resigning given the severity of the charges and the likelihood of a long legal battle.

At a gathering of European finance ministers in Brussels, Austrian finance chief Maria Fekter said Strauss-Kahn “has to figure out for himself that he is hurting the institution.”