IMF chief Dominique Strauss-Kahn’s arrest costs Europe key ally in Greek debt talks

Crucial negotiations to reschedule Greek debts have been undermined by the arrest of International Monetary Fund (IMF) chairman Dominique Strauss-Kahn on charges of sexual assault, analysts have warned.

Richard Tyler
Telegraph [UK]
15 May 2011

Markets are expected to react negatively on Monday to the news of Mr Strauss-Kahn’s detention in New York.

The former French finance minister had been a key ally for the European Union as Greece, Ireland and Portugal all sought billion pound bail-outs to pay their debts.

Europe’s finance ministers are due to meet in Brussels on Monday to hammer out the final details of a €78bn (£69bn/$111.6bn US) IMF-backed bail-out for Portugal and discuss further funding for Greece.

Mr Strauss-Kahn had been due to brief German chancellor, Angela Merkel, on Sunday on the IMF’s position as well as attend meetings in Brussels.

Economists said Mr Strauss-Kahn’s absence could not have come at a more sensitive time. Concerns are growing that Greece will fail to hit IMF imposed targets to qualify for June’s €3.3bn payment from last year’s original €110bn [$178bn US] bail-out. Simon Ward, chief economist at fund manager Hen-derson, said: “I would think that the Portuguese bail-out is pretty much locked down, but the question of additional support for Greece remains. This will complicate negotiations and I would expect the markets to react negatively.”

Mr Ward said Mr Strauss-Kahn, who has denied the sexual assault charges, had been “crucial” in securing US-backed funding of the rescue deals. “He has steam-rollered any opposition to the European bail-outs and has been a crucial figure,” said Mr Ward.

The article continues at the Telegraph.

H/T Free Republic

Update: How the police found Strauss-Kahn

Update 2: France Reacts Strongly to IMF Chief Arrest on Sex Assault Charges, at VOA News

Update 3: Past Victim: Strauss-Kahn Was a ‘Chimpanzee in Heat’, at JammieWearingFool.

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