Socialists drop DSK amid new sleaze claims

Five months after his arrest in New York on attempted rape charges, Dominique Strauss-Kahn is still making lurid headlines and France's Socialists are breathing a sigh of relief at a narrow escape.

Socialists drop DSK amid new sleaze claims
Guillaume Paumier (File)

Once touted as the French left’s best hope to take on President Nicolas Sarkozy in next year’s presidential election, Strauss-Kahn has been caught up in a series of scandals despite New York police dropping charges that he sexually assaulted a hotel maid.

Now France’s Socialists are turning their backs on the man they once hailed as the party’s saviour.

“We can see in hindsight that his candidacy would have been very vulnerable,” prominent Socialist lawmaker Pierre Moscovici told news magazine Le Point this week.

“I am disgusted,” a high-ranking French Socialist once close to Strauss-Kahn said. “I have the feeling of being cruelly betrayed, the feeling that I was duped by Dominique.”

French newspapers have this month been reporting in torrid detail the latest accusations to hit Strauss-Kahn — that while head of the International Monetary Fund he attended sex soirees with prostitutes paid for by businessmen.

The case began after the manager and the public relations chief of the luxury Carlton hotel in the northern city of Lille were arrested and charged with arranging prostitutes for guests with the help of a pimp based in Belgium.

Lille police chief Jean-Christophe Lagarde, who was detained by police for questioning as part of the pimping probe, allegedly attended evenings at a luxury Paris hotel along with prostitutes and Strauss-Kahn.

David Roquet, head of a subsidiary of construction giant Eiffage, allegedly paid part of the tab from the Paris hotel sex soirees, billing his company with invoices marked with Strauss-Kahn’s initials “DSK”.

Reporting on the scandal this week, news magazine Marianne described the probe as “an investigation into the French Berlusconi,” comparing Strauss-Kahn to the Italian prime minister famed for his raunchy parties.

The reports emerged after French prosecutors said Strauss-Kahn had admitted to acts “that could be qualified as sexual assault” against French writer Tristane Banon in 2003 but that they were halting an investigation because the statute of limitations had expired.

Strauss-Kahn is also still facing a US civil suit by Nafissatou Diallo, the Guinean chambermaid who alleges he assaulted her at the New York hotel.

Strauss-Kahn has told AFP that he wanted the authorities to question him as soon as possible over the latest allegations in order to end the “insinuations”.

But unlike after his arrest in New York, the French left has not rushed to defend Strauss-Kahn this time, instead denouncing his alleged sexual escapades and seeking to distance him from the Socialists.

“I am flabbergasted by his inability to face up to his responsibilities,” a former ally told Le Point.

“The page on DSK has been turned, without regrets,” a Socialist lawmaker said.

The Socialists are now pinning their hopes on Francois Hollande, a party insider who was chosen as the candidate in a primary this month.

The French people also seem to have turned against him, with Strauss-Kahn coming last in a recent poll measuring trust in public figures.

The Ipsos poll released on Monday showed 71 percent of respondents saying they had an unfavourable view of Strauss-Kahn and only 20 percent a favourable one. He was ranked 35th out of 35 in the poll, down seven spots from only a month ago.

“How is it possible that such a vulnerable man was carried up to the steps of the presidency, to the point that he was declared the victor before even being a candidate?” Le Point said.

“The accumulation of revelations is turning into a sad farce, putting without a doubt the final nail in the coffin of a man who had been so glorified.”


World unprepared for next financial crisis: ex-IMF chief Strauss-Kahn

The world is less well equipped to manage a major financial crisis today than it was a decade ago, according to Dominique Strauss-Kahn, a former chief of the International Monetary Fund (IMF).

World unprepared for next financial crisis: ex-IMF chief Strauss-Kahn
Former French Economy Minister and former managing director of the International Monetary Fund (IMF) Dominique Strauss-Kahn , poses during a photo session in Paris on Thursday. Photo: JOEL SAGET / AFP
In an interview with AFP, the now-disgraced Strauss-Kahn — who ran the fund at the height of the 2008 financial meltdown — also said rising populism across the world is a direct result of the crisis. 
Strauss-Kahn resigned as head of the IMF in 2011 after being accused of attempted rape in New York, although the charges were later dropped. He settled a subsequent civil suit, reportedly with more than $1.5 million.
Q: When did you become aware that a big crisis was brewing?
A: When I joined the IMF on Nov 1, 2007, it became clear quite quickly that things were not going well. That is why in January 2008, in Davos, I made a statement that made a bit of noise, asking for a global stimulus package worth two percent of each country's GDP. In April 2008, during the IMF's spring meetings, we released the figure of $1,000 billion that banks needed for their recapitalisation.
Q: Did the Bush administration grasp the danger of Lehman Brothers going bankrupt?
A: No, and that is why Treasury Secretary Henry Paulson decided not to save Lehman, because he wanted to make an example of it in the name of moral hazard. Like everybody else, he considerably underestimated the consequences. Allowing Lehman to go under was a serious mistake. Especially because only a week later they were forced to save the insurer AIG, which was much bigger.
Q: Ten years on, are we better equipped to deal with a crisis of such a magnitude?
A: No. We have made some progress, particularly in the area of banks' capital adequacy ratios. But that is not nearly enough. Imagine Deutsche Bank suddenly finding itself in difficulty. The eight percent of capital it has at its disposal are not going to be enough to solve the problem. The truth is that we are less well prepared now. Regulations are insufficient.
Q: How so?
A: After 2012-2013 we stopped talking about the need to regulate the economy, for example concerning the size of banks, or concerning rating agencies. We backtracked, which is why I am pessimistic about our preparedness. We have a non-thinking attitude towards globalisation and that does not yield positive results.
Q: Do we still have international coordination?
A: Coordination is mostly gone. Nobody plays that role anymore. Not the IMF and not the EU, and the United States president's policies are not helping. As a result, the mechanism that was created at the G20, which was very helpful because it involved emerging countries, has fallen apart. Ten years ago, governments accepted leaving that role to the IMF. I'm not sure it is able to play it today, but the future will tell.
Q: Do you believe that Donald Trump's election is a consequence of the crisis?
A: I believe so. I'm not saying that there was a single reason for Trump's election, but today's political situation is not unconnected to the crisis we lived through, both in the US with Trump and in Europe.
Q: Connected how?
A: One of the consequences of the crisis has been completely underestimated, in my opinion: the populism that is appearing everywhere is the direct outcome of the crisis and of the way that it was handled after 2011/2012, by favouring solutions that were going to increase inequalities.
Quantitative easing (by which central banks inject liquidity into the banking system) was useful and welcome. But it is a policy that is basically designed to bail out the financial system, and therefore serves the richest people on the planet.
When there's a fire, firemen intervene and there is water everywhere. But then you need to mop up, which we didn't do. And because this water flowed into the pockets of some, and not of everyone, there was a surge in inequality.
By AFP's Antonio Rodriguez