France is in shock and the IMF is in turmoil: the head of the fund, expected by many to be his country’s next president, is accused of attempted rape
MARCHED off a plane; arrested; charged with seven offences, including attempted rape; taken before a New York court; sent to Rikers Island jail. The transformation within two days of Dominique Strauss-Kahn from would-be president of France and managing director of the International Monetary Fund into prisoner 1225782, a suspect awaiting trial, prompted gasps of disbelief and consternation the world over, particularly in his native land (where Mr Strauss-Kahn is often known simply by his initials).
Mr Strauss-Kahn is yet to be tried and unless he is convicted his innocence has to be presumed. In a letter of resignation to the IMF’s board on May 18th he denied “with the greatest possible firmness all the allegations that have been made against me.” But the sorry affair looks certain to wreck his political future, has thrown France’s 2012 presidential election into confusion and has left the fund reeling.
The criminal complaint filed by Manhattan’s district attorney goes into excruciating detail. It says that at around noon on May 14th the alleged victim, a maid at the posh Sofitel Hotel, near Times Square, entered Mr Strauss-Kahn’s room to clean it, where she was ambushed. According to the complaint, Mr Strauss-Kahn shut the door, preventing her from leaving. He grabbed her chest and tried to remove her tights. He forced her to engage in oral sex.
She escaped and told hotel staff, who called the police. Police discovered Mr Strauss-Kahn’s whereabouts by chance, when he rang the hotel from Kennedy airport to ask about things he’d left behind. Soon afterwards he was hauled out of the first-class section of an Air France flight to Paris. He was brought to the New York Police Department’s sex-crimes unit in East Harlem, where the maid, an immigrant from Guinea, identified him in a line-up. Handcuffed, he made the “perp walk” in front of rolling cameras and flashing bulbs.
Mr Strauss-Kahn looked tired and rumpled when he appeared in court on May 16th. The most serious charges—two counts of “criminal sexual acts”—carry a maximum sentence of 25 years in prison. His lawyer, Benjamin Brafman, who has represented both stars, such as Michael Jackson and Sean “Diddy” Combs, and mobsters, expected him to be freed on $1m bail, but John McConnell, the assistant district attorney, argued that “he has almost no incentive to stay in this country and almost every resource to leave it,” although he had already given up his passport. France has a limited extradition agreement with the United States. Bail was denied. As The Economist went to press, Mr Strauss-Kahn was appealing against this decision.
Outside the court, Mr Brafman addressed waiting journalists. He said that it was “quite likely” that his client would “ultimately be exonerated”. Mr Strauss-Kahn is due in court again on May 20th.
Mr Strauss-Kahn’s compatriots reacted with shock and disbelief. The news was splashed across every front page and beamed non-stop on French television-news channels. Martine Aubry, the Socialist Party leader, called it a “thunderbolt”. Others spoke of a “cataclysm” and a “bombshell”. This was, after all, the man widely expected next month to declare his candidacy for the Socialists’ primary for the presidential election in 2012. Although he was working in Washington, no party rival had come close to Mr Strauss-Kahn’s poll numbers since the start of the year (see charts). He was by far the best-placed candidate to beat the unpopular President Nicolas Sarkozy in a second-round run-off and looked likely to top a first-round poll. He had a communications team ready in Paris to run his campaign; in Washington, talk had already turned to finding a successor at the IMF.
Forbidden from political comment by IMF rules, and therefore protected from the petty squabbles of daily French politics, “DSK” had acquired an almost mystical aura in his home country. For the Socialists, who have failed to win the presidency since François Mitterrand’s re-election in 1988, he was the saviour who would return and lead them to victory. For moderate voters let down by Mr Sarkozy’s half-hearted reforms, he was the face of a modernising left that could help France to face up to the reality of 21st-century global capitalism.
As the news sank in, shock gave way to incredulity and talk of a set-up. The charges were impossible to believe, insisted Mr Strauss-Kahn’s supporters. His wife, Anne Sinclair, a well-liked French former television presenter, declared that she did not believe “for a single second” that her husband was guilty. Michèle Sabban, a Socialist politician from the Paris region, said that she was “convinced that there is an international plot” behind the affair. Even Mr Strauss-Kahn’s detractors expressed their doubts. Henri de Raincourt, a minister from Mr Sarkozy’s party, said that “one cannot exclude thinking about a set-up”. Fully 57% of people questioned by CSA, a polling firm, on May 16th thought that Mr Strauss-Kahn was the victim of a trap.
Such thoughts may have been fuelled by a virulent recent press campaign in France against Mr Strauss-Kahn’s wealthy lifestyle, with details of his and his wife’s swanky properties in Marrakech, Paris and Washington. A photograph of him in Paris getting into a friend’s Porsche set off a heated discussion about whether it is possible to be socialist and rich.
The French, unused to the American criminal-justice system, have been particularly shaken by the sight of an unshaven, handcuffed Mr Strauss-Kahn being led away by New York’s finest. Under French law, suspects may not be shown handcuffed, nor their faces exposed. Jack Lang, a Socialist grandee and former culture minister, called such images a “lynching”. Bernard-Henri Lévy, a celebrity philosopher (this is France), lamented that Mr Strauss-Kahn was being “thrown to the dogs”.
It will be months before the facts of what occurred in the Sofitel are tested in court. In the meantime, Mr Strauss-Kahn faces two other difficulties. First, the charges have prompted various other revelations about his relationships with women, none of them flattering. Second, lengthy legal procedures will surely make a political comeback impossible in time for 2012, even if Mr Strauss-Kahn is exonerated.
On the first point, stories of Mr Strauss-Kahn’s behaviour range from tales of the enthusiastic pursuit of seduction to allegations of something much darker. It was an open secret long before his arrest that Mr Strauss-Kahn, a former finance minister and economics professor, was an inveterate womaniser. Mr Sarkozy is known to have told a private gathering some months ago that the IMF boss would not survive having his private life put under the microscope. Mr Strauss-Kahn himself told journalists at Libération, a newspaper, over a recent lunch that his electoral weaknesses in France were “money, women and being Jewish”. Consensual liaisons, however, are a long way from the alleged events of May 14th. “As much as he is human and has a weakness for women, I simply cannot imagine that he would do something so stupid,” says an ex-colleague.
Mr Strauss-Kahn’s “weakness” had caused a stir soon after his arrival at the IMF in 2007. The next year an inquiry into an affair he had with Piroska Nagy, an economist at the fund, concluded that he had shown a “serious error of judgment”. But it cleared Mr Strauss-Kahn of any abuse of authority and the fund judged that there was “no harassment”. Both parties did indeed call the affair between boss and subordinate consensual. Yet in a letter to the IMF’s executive board, Ms Nagy also said that Mr Strauss-Kahn was “a man with a problem that may make him ill-equipped to lead an institution where women work under his command”.
Much more troubling is a story involving Tristane Banon, a 31-year-old French writer. It emerged this week that Ms Banon had considered filing charges against Mr Strauss-Kahn for sexual assault in 2002 when she went to interview him for a book. Her mother, Anne Mansouret, a Socialist politician, says that, at the time, she advised her daughter against doing so because it was “delicate” and they were close to the Strauss-Kahn family. Ms Banon described the assault in detail on an obscure television show broadcast in 2007, but Mr Strauss-Kahn’s name was beeped out. Ms Banon’s lawyer, David Koubbi, said this week that she was intending to press charges against Mr Strauss-Kahn.
Parts of the French media are now deploring their own failure to pursue Ms Banon’s allegation—and other tales about politicians. Convention says that the public interest stops at the bedroom door (see Charlemagne). The French are famously indifferent to their politicians’ private lives, which are protected by strong privacy laws: affairs are tolerated, if not de rigueur, for public figures. Reporters knew, for instance, that Mitterrand secretly kept a mistress and their daughter lodged at the taxpayer’s expense, but for years published nothing. Under the same code, Mr Strauss-Kahn’s womanising was only obliquely referred to by a comedian here or a blogger there, and never followed up. Now such self-censorship is being revisited. “The protection of private life should not be a pretext for hiding entire sides to the personality of politicians who are candidates to lead the country,” wrote Pierre Haski, co-founder of Rue89, a popular news website.
How long and how deeply France will search its soul, no one knows. What is certain is that next year it must choose a president. The Socialist Party has been knocked sideways by the arrest of its front-runner. Manuel Valls, a fellow Socialist presidential aspirant, said he had tears in his eyes at the sight of Mr Strauss-Kahn in the dock. As the party staggers back to its feet, all candidates for its primary to elect a nominee need to declare by July 13th, ahead of a vote in the autumn.
Mr Strauss-Kahn and Ms Aubry had an informal pact not to run against each other. Ms Aubry, who was the architect of France’s 35-hour working week and sits squarely on the left of the party, has at times looked relieved that this would excuse her from a difficult contest. But with her supporters pressing her to stand, it will now be hard for her not to do so. Her rivals would include Ségolène Royal, the party’s defeated candidate in 2007. But the strongest is François Hollande, Ms Royal’s former partner, who has quietly been gaining ground. A poll this week suggests that Mr Hollande is the most popular replacement for Mr Strauss-Kahn among Socialist voters, drawing 49% support, against 23% for Ms Aubry and 10% for Ms Royal. Laurent Fabius, an ex-prime minister and party grandee, might also try his chances.
A former party leader with a reputation for consensus-seeking, Mr Hollande lacks magnetism. Next to the hyperactive, mercurial Mr Sarkozy, however, his bid for the title of “normal president” could carry a certain appeal. He has been studiously cultivating an image as a man of the people—though he, like Ms Aubry, Ms Royal and Mr Fabius, was educated at the Ecole Nationale d’Administration, France’s elite postgraduate civil-service college—by riding about on a scooter and spending time in deep rural France. In a country hostile to flashy displays of wealth, he once declared, “I don’t like rich people.”
The effective disqualification of Mr Strauss-Kahn does not make a Socialist victory in 2012 impossible. But it does make the re-election of Mr Sarkozy look more likely than it did a week ago, and the president’s team has been under strict orders not to appear triumphant. Much depends on which candidates line up in the first round. If the Socialists now tack left, this could open a space in the centre for an alternative candidate, such as Jean-Louis Borloo, a former environment minister who has quit Mr Sarkozy’s party. The arrest of Mr Strauss-Kahn could also strengthen Marine Le Pen, the leader of the far-right National Front. Polls already suggested that she might make it into the second-round run-off, just as her father, Jean-Marie, did in 2002. In transforming his once-untouchable fringe movement into a serious party, she has made a potent appeal to voters fed up with the antics of the political class. Mr Strauss-Kahn’s arrest feeds neatly into Ms Le Pen’s narrative of a corrupt elite ignoring the concerns of ordinary voters.
So much for the job Mr Strauss-Kahn might have had. What of the one he used to have? John Lipsky, the IMF’s second-in-command, has taken temporary charge. The IMF’s day-to-day business, negotiating rescue packages with troubled governments, is led by teams of technocrats and will continue. On May 16th the IMF announced the disbursal of €1.6 billion ($2.2 billion) to Ireland as part of the rescue package agreed on in December.
Nevertheless, the fund is in a pickle. It is embarrassed by Mr Strauss-Kahn’s arrest and because its handling of his affair with Ms Nagy has been called into question. A March 2008 report commissioned by its Internal Evaluation Office (IEO) concluded that the fund lacked “clear and protected arrangements for reporting possible misconduct” by its boss and “clear disciplinary arrangements” should such misconduct occur. The fund also finds itself without a man who, whatever his personal failings, has been a highly capable managing director.
As a political heavyweight, Mr Strauss-Kahn was perfectly suited to negotiating with European policymakers over the Greek debt crisis. The Greeks trusted him. He is said to be one of the few non-German policymakers to have had influence over Angela Merkel, Germany’s chancellor. Such qualities will be hard to replace—and may be especially important now that the fund’s biggest clients are all European countries. The €51 billion it has agreed to lend Ireland and Greece exceeds the combined size of its 20 programmes with non-euro-area countries. And on May 17th it agreed to supply a third of the €78 billion rescue package for Portugal (see article).
Furthermore, Mr Strauss-Kahn’s departure has thrown the fund’s succession planning into disarray. He was expected to leave anyway to run for the French presidency; now the choice of a replacement is more urgent and more complicated. Even before he resigned, the fund’s board was being pressed to appoint a non-European for the first time. Governments in emerging economies have long argued for this. On May 17th a spokeswoman for the Chinese foreign ministry said China wanted the choice of leading officials to be based on “fairness, transparency and merit”—code for a break with the convention. A senior Brazilian official has said his country favours an emerging-market candidate. So has South Africa’s foreign minister.
Situation vacant
Those being talked about include Augustin Carstens, governor of Mexico’s central bank and a former fund official, Kemal Dervis, a Turkish ex-finance minister, and Trevor Manuel, a former South African finance minister. Montek Singh Ahluwalia, an Indian ex-head of the IEO, and Stanley Fisher, governor of the Bank of Israel and a former number two at the fund, have also been mentioned. But both are over 65 and thus too old under current rules.
The Europeans, however, are unlikely to give up the boss’s chair easily. Christine Lagarde, France’s finance minister (who would be the IMF’s first female boss), and Axel Weber, a former president of the Bundesbank, are mentioned most. Mrs Merkel has said that there are “good reasons” to replace Mr Strauss-Kahn with another European, such as the fund’s involvement in the euro-zone crisis. Not everyone agrees: when Asian or Latin American countries were supplicants of the fund, such an idea would have had short shrift.
Others think a compromise candidate, from a rich country outside the euro zone, might stand a chance. Mark Carney, head of the Canadian central bank, who won praise for guiding his economy through the economic crisis, might be such a man.
Before his fall, Mr Strauss-Kahn had done more than any other recent managing director to restore the IMF’s reputation. A few years ago the fund’s very relevance was being questioned. But his early and prescient endorsement of fiscal stimulus during the crisis was taken seriously and acted upon. He convinced the governments of both rich and emerging economies to contribute over $500 billion to the fund, tripling the size of its war-chest from its pre-crisis level. His championing of the need to insulate the poor from the effects of fiscal austerity has, many believe, led the fund to become kinder and gentler. Now it is Mr Strauss-Kahn’s reputation that needs urgent repair.
From The Economist print edition
