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Dominique Strauss-Kahn resigns as IMF chief

Dominique Strauss-Kahn listens during his arraignment in Manhattan Criminal Court in New York, in this May 16, 2011 file photograph.

Emmanuel Dunand/Pool/Reuters

Dominique Strauss-Kahn has resigned as managing director of the International Monetary Fund, saying he wants to protect his former colleagues from further torment as he mounts a vigorous defense against charges that he sexually assaulted a maid at the Sofitel hotel in Manhattan last weekend.

"I want to protect this institution which I have served with honor and devotion, and especially - especially - I want to devote all my strength, all my time, and all my energy to proving my innocence," Mr. Strauss-Kahn said in a statement released by the IMF shortly after midnight Thursday in Washington.

That statement would have been composed at New York's Rikers Island prison, where Mr. Strauss-Kahn, 62, was placed after a judge denied his request to be released on bail of $1-million on Monday. Mr. Strauss-Kahn's lawyer told the judge that his client denies the charges made against him by the 32-year-old, an assertion that Mr. Strauss-Kahn repeated in his statement.

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"To all, I want to say that I deny with the greatest possible firmness all of the allegations that have been made against me."

The sensational case is reverberating around the world, and not only because of it titillating details.

In France, where Mr. Strauss-Kahn was expected to mount a strong challenge for the presidency next year as the Socialist party's candidate against current president Nicolas Sarkozy, the arrest has caused an uproar, as politicians recalibrate their plans for the elections and the press openly questions whether it dug deep enough into Mr. Strauss-Kahn's sexual history.

A former French finance minister, Mr. Strauss-Kahn loomed large in the effort to contain Europe's sovereign debt crisis, manoeuvring the IMF to play a key role in the rescues of countries such as Greece, Ireland and Portugal, and his abrupt exit has cast a cloud over negotiations that are far from complete.

The presumed inevitability of his departure because of the seriousness of the charges also set off what will now be an imminent clash between the world's old economic powers and its new.

Since the IMF's creation at the end of the Second World War, a gentleman's agreement between the United States and Europe has seen that a European has always run the fund, while an American assumes the presidency of the IMF's sister institution, the World Bank. European leaders, including German Chancellor Angela Merkel, have said this week that the tradition should continue for a least a little while longer because of the IMF's integral role right now in staving off a series of defaults. Emerging markets such as China and South Africa say the next managing director should be chosen on merit, not nationality.

For now, American economist John Lipsky, the No. 2 at the fund, is in charge. The IMF said Mr. Strauss-Kahn's resignation took effect immediately and that Mr. Lipsky would continue as the acting managing director. The fund said it would reveal the executive board's process for choosing a new managing director in the "near future."

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About the Author
Senior fellow at the Centre for International Governance Innovation

Kevin Carmichael is a senior fellow at the Centre for International Governance Innovation, based in Mumbai.Previously, he was Report on Business's correspondent in Washington. He has covered finance and economics for a decade, mostly as a reporter with Bloomberg News in Ottawa and Washington. A native of New Brunswick's Upper St. More

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