May 16, 2011
When police plucked Dominique Strauss-Kahn from an airplane Saturday afternoon in New York, the International Monetary Fund chief was en route to Europe, the continent that has surprisingly become his highest-profile client.
Mr. Strauss-Kahn's arrest on sex-crime charges, which he denies, will almost certainly end his tenure at the Washington-based fund. But it will also complicate fraught negotiations among European governments as the sovereign-debt crisis moves into yet another critical phase.
The new chapter of the crisis is threatened by Greece, whose debt troubles provoked the first phase of the crisis before it was bailed out by the European Union and the IMF a year ago.
Greece's rescue package last year assumed it would raise money by issuing bonds starting next year, but financial markets remain so hostile that the prospect has been all but ruled out, leaving a hole of as much as €60 billion ($84.6 billion) in its finances for 2012 and 2013. European officials say the IMF has indicated it isn't comfortable continuing to fund Greece this year without a plan to address that shortfall.
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