Strauss-Kahn resigns from IMF; Update: Europe demands EU chief for IMF

From behind bars at Riker’s Island, the head of the International Monetary Fund finally decided to part company with his organization, ending increasing speculation that the IMF might sever the relationship on its own.  Dominique Strauss-Kahn, charged with conducting a sexual assault on a hotel maid last weekend, said he would leave the IMF “with infinite sadness” to protect it in the weeks ahead:

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, who is facing attempted rape charges in New York, announced his resignation late Wednesday night. …

The resignation, while providing clarity to an organization reeling from the accusations facing its managing director, immediately sets off a scramble about who will lead the powerful organization and what that will mean for the global economy.

Under Strauss-Kahn, the Washington-based IMF has taken a muscular approach toward fixing Europe’s financial woes, advocating financial bailouts for ailing nations such as Greece and Portugal. Without Strauss-Kahn at the helm, Europe is at risk of losing a key source of financial support in its efforts to contain the debt crisis buffeting the continent.

Strauss-Kahn continues to deny all charges against him in his resignation, but circumstances left him little choice.  Treasury Secretary Tim Geithner called for his resignation, and without support from the US, leading the IMF would be difficult even under normal circumstances.  Leading it from Riker’s Island would be not just practically impossible, but would draw certain embarrassing comparisons to leadership of criminal organizations.  It was an untenable situation for the IMF, and had Strauss-Kahn delayed much longer, the IMF would almost certainly have acted on its own, at least to suspend Strauss-Kahn indefinitely.

The issue for the EU is whether it can reclaim the top spot at IMF.  For the moment, American John Lipsky is in charge, but the IMF won’t keep an American in that slot; the US gets the top spot at the World Bank by tradition, while Europe runs the IMF.  This arrangement to balance the influence of the West on global markets was already under increased criticism as non-Western powers like China and others emerging from the developing world want a shot at running both organizations.  Two years ago, the US and EU agreed to an “open, transparent, and merit-based process” for appointing leadership — but with the EU staggering through debt crises in several of its member states, it needs that spot perhaps more than it has in decades.  Don’t be surprised if the “very, very strong, able candidates from the developing world” get rejection letters this go-around.

In France, meanwhile, it seems that the initial round of America-bashing over the notion that a presumably great man like Strauss-Kahn could get arrested over a maid (sacre bleu!) has given way to a little more honesty.  Both National Journal and Time Magazine report today that Strauss-Kahn’s reputation as a womanizer glossed over a well-known cruel streak that didn’t exist with other mainstream French politicians.  National Journal also notes that the French presidential election may be the one thing least impacted by the scandal because of it:

Ironically, the arena least likely to be changed by Strauss-Kahn’s downfall may well be the one that is most being talked about: next year’s French presidential election. Although Strauss-Kahn had been polling well against incumbent President Nicolas Sarkozy as an undeclared candidate, there was talk in France that DSK might not have survived the rigors of an election campaign even if he hadn’t run into trouble in New York.

Apart from the African maid at the Sofitel hotel in New York, Strauss-Kahn to date has been publicly accused of sexual assault by only one other woman, Tristane Banon, a French journalist. But stories of DSK’s alleged aggressive behavior toward women have long been circulating in France. Even before his arrest, some of his wealthy backers in the financial community had suggested that his reputation was darker than that of previous womanizing French politicians, such as Francois Mitterrand or Valery Giscard d’Estaing. “This wasn’t the problem of a charismatic, powerful man attracting women. It was uglier,” according to one international financier who has been privy to those discussions.

Time finds a lawyer in France who says that there were more than one victim in his country, although they felt too intimidated to hold Strauss-Kahn to account, and another who related an almost identical experience:

When news of the arrest of Dominique Strauss-Kahn broke in France, Emmanuel Pierrat remembered the young woman who came seeking legal advice about half a decade ago. She said she had had an encounter with Strauss-Kahn and, says the lawyer Pierrat, “wanted to know whether I thought what I heard would form the basis for a solid legal case against him.” Pierrat says the news out of New York City last weekend was “something I had heard before” because of what the young woman several years ago had described as “the modus operandi of the attacker, [whom] she said was Strauss-Kahn.” Says Pierrat: [It] “was almost identical to the details [described by] the woman [who said she was] attacked Sunday in New York.” …

Recalling his experience with the client to TIME, Pierrat says he told the young woman that he believed she had a case. “There were sufficient elements for a legal complaint to be filed and for a judicial investigation into them to be granted,” he says. But in the end, the woman chose not to go ahead. Pierrat explains that it was “because she knew there’d be a lot of public and media attention, knew she’d come under pressure, be cast as a liar, a woman who was looking for trouble, get tagged as the villain who took down Dominique Strauss-Kahn — or tried to. She knew there’d be a high price to pay for trying to do the right thing and knew she would probably be tarred for it.”

“In addition to my client,” says Pierrat, “I also have a personal friend who came to me and described an unwanted, forceful sexual advance by Strauss-Kahn that she was forced to literally fight off. They’re all essentially the same account, the same kind of behavior, with only the places changed.”

Strauss-Kahn’s Socialists have insisted that the allegations don’t sound at all like their man.  But the extent to which his party covers for him can be seen in this anecdote, in which the mother of the one woman who did try to blow the whistle waited four years to finally back her daughter.  Why did she wait to blow the whistle?  Because to interrupt Strauss-Kahn’s journey to “greatness” would have been, er, rude:

A regional Socialist Party official stepped up on Monday to say that her daughter had come under sexual attack during a 2002 interview with Strauss-Kahn. The official, Anne Mansouret, repeated the allegations made by her daughter Tristane Banon during a 2007 TV program about how a well-known politician [Strauss-Kahn’s name was bleeped out] tried to overpower her with a sexual embrace. What took so long for Mansouret to back up her daughter and name Strauss-Kahn? She told French TV that she had dissuaded her daughter from filing charges because Strauss-Kahn was en route to greatness — and derailing the ascent of a fellow Socialist Party official would be bad form. She also said that because Strauss-Kahn’s second wife was Banon’s godmother, blowing the whistle on the alleged attacker would create rifts within Mansouret’s circle of family, friends and intimates.

This may be the most disturbing and revealing story in the entire scandal, apart from the attacks themselves.

Update: As I predicted, all of that talk of an “open, transparent, and merit-based process” went right out the window during the crisis:

The European Commission insisted Thursday that next leader of the International Monetary Fund must come from the 27-nation European Union, a stance backed by the Germany, the continent’s economic heavyweight.

Frenchman Dominique Strauss-Kahn resigned as IMF chief Wednesday, saying he wants to devote “all his energy” to fighting sexual assault charges in New York.

The move heated up cross-border debate over his successor, with Europe aggressively staking its traditional claim to the job to ensure that Europe’s debt crisis is given priority. Fast-growing nations such as China, Brazil and South Africa are trying to break Europe’s grip on an organization empowered to direct billions of dollars to stabilize the global economy.

Even without this public demand, it would almost certainly have worked out that way.  The EU cannot afford to let the Euro-centric IMF out of its control now or for the next few years.