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May 26 2011 06:45 Reuters

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Paris - Group of 8 (G8) leaders will discuss aid for North African states after recent popular uprisings and ways to end the conflict in Libya at a summit starting on Thursday, but could get sidetracked by wrangling over who should be the new International Monetary Fund (IMF) chief.

The G8 economic powers gather in the northern French resort of Deauville on Thursday and Friday for talks on global issues, ranging from the world economy to Iran's nuclear programme and Syria's crackdown on pro-democracy protests.

The summit is expected to approve a multi-billion dollar aid package for Tunisia and Egypt, whose authoritarian leaders have been ousted in popular revolts, and seal an agreement to back other Arab states seeking democratic change.

The failure so far of Western military action to halt the conflict in Libya will also be high on the talks agenda.

Still, little real progress may be made if delegates are distracted by the IMF leadership race sparked by the dramatic departure of Dominique Strauss-Kahn, who is charged with sexually assaulting a New York hotel maid.

"They are likely to talk about it at the G8," said a source at the IMF, speaking on condition of anonymity. "Any decision will probably be taken among the G7 countries as the Brics (Brazil, Russia, India, China and South Africa) seem unlikely to be able to unite behind a common candidate."

The international lender has promised a merit-based process to replace Strauss-Kahn, a French former finance minister, and has set a June 30 deadline to pick a successor.

While the IMF succession is not on the Deauville agenda, the issue is dominating international politics, with Europe rallying around France's Christine Lagarde as a candidate and emerging market nations keen to push an alternative for a position held by a European since 1945.

Russian President Dmitry Medvedev and South Africa's Jacob Zuma, one of 10 African leaders who will attend the Deauville summit, are likely to defend the Brics stance.

Middle East push

US President Barack Obama will meet individually with Medvedev, French President Nicolas Sarkozy and Japanese Prime Minister Naoto Kan during the summit. A week after outlining his vision for the Middle East, Obama will likely push his ideas for reforms in the aftermath of the "Arab spring".

The Egyptian and Tunisian prime ministers - who are seeking $25bn and $12bn respectively in aid - are attending the summit. A special session will flesh out an economic plan for them and a G8-Arab partnership for the future.

"We have to act in the short term because democratic movements could be hurt by increasing economic difficulties," French Foreign Minister Alain Juppe told parliament.

Key for regional stability will be to find a political solution to the crisis in Libya, where three months of coalition air strikes have failed to dislodge leader Muammar Gaddafi or cripple his army, which is fighting ragtag rebel forces.

Arab League chairperson Amr Moussa and United Nations secretary general Ban Ki-moon will both be in Deauville.

Russia, a critic of the Naro-led action in Libya, may push its own ceasefire plan after last week welcoming Gaddafi envoys to Moscow for talks and receiving Libyan rebels on Monday. France has said it wants Russia to be part of a wider "friends of Libya" group to come up with a political transition.

"All aspects of the revolution in the Arab world will be discussed and there will naturally be reflection and proposals for action," a French presidential source said. "Libya will be discussed because many of the countries involved in the G8 are involved in the military action."

The Deauville summit begins with a working lunch on Thursday and wraps up on Friday afternoon.

imf  |  g8  |  christine lagarde  |  dominique strauss-kahn
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