May 16, 2011
With Dominique Strauss-Kahn locked in a New York police station, the IMF is likely to be sidelined in talks about the European debt crisis, City analysts warned.
Despite providing billions of euros in funds to Greece, Ireland, and more recently Portugal, experts said that the IMF could now be distracted by the allegation facing Strauss-Kahn, and the power vacuum left behind him, thereby damaging its chances of bringing the eurozone's warring factions to a workable conclusion.
Strauss-Kahn was French finance minister when the euro was created in 1999, and had brought his organisation centre stage as governments wrestled with the financial crisis. As an authority on Europe's economic issues and being comfortable with its web of power politics, he has paid particular attention to the lurching sovereign debt crisis being played out in Brussels.
His experience is widely perceived to have been crucial while the German chancellor, Angela Merkel, and French president, Nicolas Sarkozy, wrestled with the eurozone's biggest crisis since its inception. His absence will increase worries about the IMF's longer-term capacity to promote deals to an increasingly divided Europe. "It's like losing an experienced ship's captain, while navigating particularly difficult, uncharted waters," said Jan Randolph, head of sovereign risk analysis at IHS Global Insight.
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