Former head of the International Monetary Fund is infamous for his arrest on charges he sexually assaulted a New York City hotel maid — a criminal case that comes in the wake of unwanted incidents reported by other women.
But to many in his native France, the 62-year-old French politician and economist is the pragmatic former finance minister who broke with Socialist Party orthodoxy by persuading skeptics to accept the transition to the euro.
And to those who thought he'd be marginalized in an outdated institution when he joined the Washington, D.C.-based IMF, Strauss-Kahn is the adroit administrator who emerged as a key to stabilizing some of Europe's tottering economies.
"The whole thing, his downfall, the circumstances are just incomprehensible. I don't know another word for it," said Kenneth Rogoff, a former IMF chief economist who's now a Harvard University economics professor and member of the Group of 30, an organization of top economics and financial officials. "This is a man who was going to be president of France … obviously a person of many talents.
After DSK took up the reins in 2007, the IMF had reverted to its heydays in the 1990s, an era when it played a critical role in managing the ‘de-sovietization’ of Eastern Europe and Central Asia, the reform wave in Latin America (despite the fiasco in Argentina) and the opening of capital markets — one of the pillars of what is nowadays called ‘globalization’.
By contrast the two predecessors of DSK are remembered most for their stolid management, their lack of vision and a dreary decade during which the IMF had been marginalized, demoralized and ignominiously downsized. But under DSK stewardship, the IMF confidently regained center stage in top policy circles and on finance markets. It engineered a rapid and effective response to the financial crisis, taking up monumental responsibilities when national governments were mostly scared or hapless to act. Billions of dollars were deployed over the main fronts opened by the freeze in credit markets worldwide to help central banks avoid a financial meltdown and economic collapse.
Nowhere was the IMF intervention more crucial than in the Eurozone. Despite stubborn denials by the European Union authorities and the European Central Bank (ECB) regarding member states’ need for IMF support — which in the view of haughty politicians in the ‘Old Continent’ was only intended for developing countries — Greece capitulated and negotiated a loan in exchange for austerity measures. DSK ensured that European public opinion, foremost in France, perceived that his institution and his personal involvement had saved Greece from a humiliating default. So with an eye to the primaries of the Socialist Party, which could have paved his way to the French Presidency, DSK used his role to strengthen his credentials as a competent economist and an effective decision maker. The successive IMF interventions in Ireland, and recently in Portugal, reinforced his standing; in fact before his arrest he was the frontrunner for the Elysée.
For the Greeks it was a stroke of luck to have at the helm of the IMF a figure with a keen interest in his future political career, and therefore a particular tendency to appease the left-leaning public opinion. The terms of the loans granted to Greece were relatively lax, hard questions were shoveled under the rug and the review of the progress to meet the targets of the stabilization plan lacked the steely determination displayed elsewhere. The plan was too lenient and in fact now Greece is asking for further support, which in any case is unlikely to prevent an eventual default, or a debt restructuring, as many politely call it.
Against this background the downfall of DSK came at a critical juncture. With Greece in need of further support, a benevolent attitude from the IMF was paramount in the strategy by the EU and the ECB to delay the hard choices on new governance in the currency union and reforms of the fiscal framework to share the burden of unsustainable sovereign debts in peripheral countries.
His journalist wife Anne Sinclair and daughter Camille went to the popular New York store SoHo Crate and Barrel, stocking up on towels, washcloths and linens. They also set up four umbrellas on the outdoor patio to shield it from prying eyes, while a woman from a renovation company turned up for an early-afternoon appointment.
Strauss-Kahn, 62, is due back in court June 6 and faces up to 25 years in prison if convicted of sexually assaulting a 32-year-old Sofitel hotel maid.
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