Brussels/Washington - European leaders raced on Friday to
nominate a successor for fallen International Monetary Fund (IMF) chief
Dominique Strauss-Kahn before a Group of Eight summit in France next week, with
French Finance Minister Christine Lagarde in pole position.
Strauss-Kahn will leave jail on bail on Friday and be placed
under round-the-clock house arrest after being indicted for the alleged
attempted rape of a New York hotel maid last Saturday. He denies the charges
and has vowed to prove his innocence.
German Chancellor Angela Merkel all but endorsed Lagarde on
Friday, telling a Berlin news conference: "Among the names mentioned for
the IMF succession is French Minister Christine Lagarde, whom I rate
highly."
But diplomats said some European Union countries questioned
whether the highly regarded corporate lawyer, who would be the first woman to
head the IMF, could be anointed before a special court for ministers decides
next month if she should be investigated in a pending French legal case.
Since Strauss-Kahn resigned on Wednesday, EU governments
have rushed to find a European replacement before emerging nations, which have
long demanded a bigger say in running the Washington-based global lender, can
mount a bid for the job.
Jean-Claude Juncker, who chairs eurozone finance ministers, and Italian Prime Minister Silvio Berlusconi endorsed Lagarde on Thursday.
Diplomats said European Council President Herman van Rompuy, who chairs summits of the 27-nation EU, and European Commission President Jose Manuel Barroso were trying to secure an agreement on her name after the three biggest European powers - Germany, France and Britain - threw their weight behind her.
"There have been preliminary contacts to check if
Christine Lagarde has the support of other countries because she is considered
the best candidate in Europe," one diplomat said.
"It has to be a quick decision. It would be best to
have consensus before going to the G8," he said.
Leaders of the Group of Eight industrialised nations - the
United States, Russia, Japan, Canada, Germany, France, Britain and Italy, plus
the EU - meet in the French seaside resort of Deauville on May
26 to 27.
Strauss-Kahn leaves vacuum
Strauss-Kahn, a global high-flier seen as having a strong
shot at the French presidency until his arrest, spent the last of four nights
at New York's notorious Rikers Island jail on Thursday.
The package of conditions set by a judge on Thursday to let
him leave jail - $1m cash bail, a $5m insurance bond and house arrest at a New
York apartment under armed guard and electronic monitoring - was due to be
signed on Friday.
Once out of the Rikers cell and in the apartment, he will
have unlimited access to his lawyers to prepare his defence and will be joined
by his wife and daughter.
The Europeans argue it is essential to keep global finance's
top job while the IMF is so deeply engaged in helping eurozone states such as
Greece, Ireland and Portugal deal with massive debt problems.
Some officials said the absence of Strauss-Kahn's persuasive
leadership had contributed to disarray in Europe this week over whether Greece
should restructure or "reprofile" its debt, with the European Central
Bank and Juncker publicly at odds.
John Lipsky, the IMF's American No 2 who is now the acting
chief, said on Thursday members agreed "the process of selection of the
managing director should be open, transparent and merit-based".
While US Treasury Secretary Timothy Geithner called for an
"open process that leads to a prompt succession", sources in
Washington said the United States, the IMF's biggest financial contributor,
would back a European.
Together, the United States and European nations hold more
than half of IMF votes, giving them a big say over who leads it.
The IMF board was due to hold a regular meeting on Friday to
approve its part of a €78bn bailout for Portugal but it was unclear
whether it would discuss the process for choosing a new managing director.
Testing tradition
The case marks a spectacular fall for Strauss-Kahn, who was
highly regarded for his part in tackling the global financial crisis of 2007-09
and the key role he was playing in efforts to manage Europe's debt crisis.
His lawyer Benjamin Brafman said at a hearing on Monday the
evidence "will not be consistent with a forcible encounter."
But prosecutor John McConnell said the maid who accuses
Strauss-Kahn of trying to rape her, a 32-year-old immigrant from Guinea, had
told a "compelling and unwavering story".
An arraignment hearing is set for June 6, when Strauss-Kahn
will formally answer the charges, but a trial may be six months or more away.
If convicted, he could face 25 years in prison.
"I deny with the greatest possible firmness all of the
allegations that have been made against me," Strauss-Kahn wrote in his
resignation letter.
A Reuters poll of economists showed 32 of 56 thought Lagarde
was most likely to succeed Strauss-Kahn.
Lagarde declined on Thursday to say if she was interested in
the post but told reporters: "Any candidacy, whichever it is, must come
from Europeans jointly, all together."
Chairperson of the US law firm Baker & McKenzie in
Chicago before she joined the French government in 2005, she is a fluent
English speaker and has experience balancing the demands of rich and developing
countries.
But Lagarde is also under scrutiny.
A public prosecutor has recommended that she be investigated
for allegedly abusing her authority to go around the justice system and push
through a €285m arbitration settlement with businessman and ex-minister
Bernard Tapie, overruling finance ministry experts at key stages. She denies
wrongdoing and says she is victim of a smear campaign.
The Court of Justice of the Republic, a special jurisdiction
created to try ministers for offences committed while in office, will rule in
mid-June whether she should face a full inquiry.
Diplomats said Belgium, whose finance minister, Didier
Reynders, may harbour his own IMF ambitions, was among smaller countries that had
queried whether Lagarde could be nominated before the Tapie case is cleared up.
"We must be absolutely certain that the candidate is
able to serve until the end of the mandate this time," one diplomat said.
China and Japan called for a transparent process to choose a
successor on merit, but a European source said Beijing was privately supportive
of Lagarde.
Russia and other ex-Soviet states backed the Kazakh central
bank chief, Grigory Marchenko. Another possible candidate could be former
Turkish Economy Minister Kemal Dervis, an economist with IMF experience.
But emerging countries appeared unlikely to unite behind a
rival candidate.