France, Global Banks Mull Future Sans Strauss-Kahn

France's Socialists and the international financial community grappled for a future without Dominique Strauss-Kahn on Tuesday after the IMF chief was remanded in a New York prison on attempted rape charges.

Many Socialist leaders voiced outrage at the way the head of the International Monetary Fund, a frontrunner for the French presidency, had been paraded handcuffed and unshaven by U.S. police before he has a chance to defend himself in court.

Strauss-Kahn was arrested aboard an Air France plane on Saturday and charged with a sexual assault on a chambermaid at a luxury Manhattan hotel. He denies the accusations.

A judge denied him bail on Monday, remanding him to the city's grim Rikers Island jail, where he spent the night.

An emergency Socialist leadership meeting in Paris staged a rare show of unity amid consternation over the probable loss of the centre-left's most popular contender to unseat conservative President Nicolas Sarkozy in next April's election.

"Unity, responsibility, combativity, these are the three words which came up the most this morning," Socialist party leader Martine Aubry told reporters after the session.

"There was emotion, of course, and the shock we all feel, but it is our responsibility to be up to the task," she said.

"I say to the French people: we will be ready in 2012."

Strauss-Kahn has neither resigned from the Washington-based IMF nor dropped out of the French race so far, but he seems bound to be sidelined by a prolonged legal case.

Sarkozy, whose approval ratings had slumped to a record low of 20 percent, received another campaign boost with news that his wife, singer and former model Carla Bruni, is expecting a child later this year.

The president's father confirmed the widespread rumours to German newspaper Bild and a visibly pregnant Bruni appeared in public on Tuesday, although Sarkozy's office declined comment on a matter it said concerned his private life.

Sarkozy urged centre-right lawmakers at a closed-door breakfast to show "restraint and dignity" and refrain from comment on the Strauss-Kahn case, participants said.


The Socialists agreed they would not change the selection timetable, which calls for candidates to register by July 13 for a primary election to be held in October.

French politicians and some commentators voiced shock and anger at the judge's decision to refuse Strauss-Kahn bail.

Former Culture Minister Jack Lang described the treatment as a "lynching" that had "provoked horror and aroused disgust."

The U.S. justice system, he said, was "politicised" and the judge appeared to have been determined to "make a Frenchman pay." Other senior Socialists said that displaying the IMF chief in handcuffs escorted by burly policemen violated his right to be presumed innocent until found guilty by a court.

Strauss-Kahn denies the charges and his legal team has denied police accounts that he fled the hotel. He is next due to appear in court on Friday.

In an apparent hint at the defence's strategy, his lawyer Benjamin Brafman told his arraignment hearing: "The evidence we believe will not be consistent with a forcible encounter."

Apart from blasting the French presidential race wide open, Strauss-Kahn's arrest has thrown the Fund into turmoil just as it is playing a key role in helping euro zone states like Greece and Portugal tackle debt woes.

The Washington-based IMF board, which was briefed informally on the case on Monday, has so far held off on deciding whether or not to remove him from his job. If he is forced out, there could be a fierce battle over who would succeed him.

Swedish Finance Minister Anders Borg joined a string of European officials on Tuesday in saying that a successor to Strauss-Kahn should come from Europe because of the IMF's deep involvement in the euro zone debt crisis.

Western Europe has had an effective lock on the job since its creation after World War Two but faces a growing challenge from the rising economic powers of Asia.

China's foreign ministry weighed in on Tuesday, declining to comment on Strauss-Kahn but saying the selection process for IMF leaders should be based on "fairness, transparency and merit."


Strauss-Kahn had been expected to resign soon in order to run for office in France. Diplomats say French Finance Minister Christine Lagarde had been quietly gathering support as a successor before his arrest, but may now face increased resistance to another Paris nominee in the job.

Another possible choice, former British Prime Minister Gordon Brown, appears sidelined by the opposition of his own successor in government, David Cameron. Polish central bank governor Marek Belka, a respected former prime minister with recent IMF experience, might be a European compromise figure.

A Berlin newspaper floated the names of Josef Ackermann, chief executive of Germany's private Deutsche Bank, and Thomas Mirow, a German politician who heads the European Bank for Reconstruction and Development, a public body. But Ackermann has Swiss citizenship and lacks government experience while Mirow may lack political heft.

The most prominent emerging economy figure mentioned as a possible candidate is former Turkish Economy Minister Kemal Dervis, now at a Washington think-tank.

In France, Aubry is under increasing pressure to contest the Socialist presidential primary herself but said "today is not the moment" to declare a candidacy.

Her reluctance to throw her hat into the ring has led some commentators to question her appetite for a race that many see offering the Left its best chance of winning in a quarter of a century.

Strauss-Kahn's spectacular fall from grace could benefit Sarkozy, even though the conservative president nominated the former Socialist finance minister for the IMF job in the first place four years ago.

Far-right leader Marine Le Pen could also pick up support if voters grow disillusioned with mainstream politics.

"K.O." headlined the left-leaning Liberation newspaper, reflecting the almost universal view in France that his political career had suffered a knock-out blow.

A French writer is also considering seeking attempted rape charges against Strauss-Kahn that date back almost a decade. Her lawyer said no complaint would be lodged on Tuesday.

Newspapers were awash with pictures of an unshaven and haggard Strauss-Kahn looked drained and tense during his first court appearance on Monday.