IMF chief resigns, Lagarde heads race

French Finance Minister Christine Lagarde emerged as frontrunner on Thursday to succeed Dominique Strauss-Kahn as head of the IMF after he resigned and vowed to fight charges of sexually assaulting a hotel maid. His letter of resignation, tendered from a New York prison cell, triggered a political tug-of-war over the leadership of the global lender.
Strauss-Kahn arrived at a New York court building on Thursday to apply for release on $1 million bail. His arrest on Saturday dashed his prospects of running for the French presidency in 2012 and sparked debate over the 65-year-old tradition that a European heads the IMF.
US Treasury Secretary Timothy Geithner called for an "open process" to select a successor to Strauss-Kahn, although sources in Washington said the United States, the largest financial contributor to the IMF, would back a European for the post. "We want to see an open process that leads to a prompt succession for the Fund''s new managing director," Geithner said in a brief statement.
The US push to find a replacement quickly was also likely to favour a European replacement because it would be difficult for developing nations to unify around a rival candidate to challenge Europe''s long hold on the job. A Reuters poll of economists showed 32 out of 56 think Lagarde is most likely to succeed him, and diplomats in Europe and Washington said she had backing from France, Germany and Britain - the three biggest European economies.
They also said there was an expectation that the United States would back Lagarde, not least because it wants to keep the number two IMF job and the leadership of the World Bank, the IMF''s sister organisation that funds developing countries.
German Chancellor Angela Merkel tried to pre-empt calls from emerging nations for a shot at the post by saying the next managing director should be appointed quickly and should be a European. Canada, a member of the Group of Eight leading economies, who meet for a summit in France next week, expects a European to get the post, a government source said. In veiled warnings against another US-European stitch-up, China and Japan both called for an open, transparent process to choose a successor on merit.
''GREATEST POSSIBLE FIRMNESS'' Strauss-Kahn''s resignation letter, released by the IMF and dated May 18, contained his first public comment on the charges of attempted rape, illegal sexual acts and sequestration of a 32-year-old widow from West Africa at a luxury Manhattan hotel. "I deny with the greatest possible firmness all of the allegations that have been made against me," he wrote. "I want to devote all my strength, all my time, and all my energy to proving my innocence."
A senior source at the IMF said Strauss-Kahn had tendered his resignation of his own accord through lawyers before the Fund''s board had been able to contact him to ask his intentions. The former finance minister was to make his second request to be released on $1 million cash bail and placed under 24-hour house arrest until his trial, his lawyers said. He is being held in New York''s Rikers Island jail, charged with attempted rape, sexual abuse, a criminal sexual act, unlawful imprisonment and forcible touching.
The woman Strauss-Kahn allegedly tried to rape testified on Wednesday before a grand jury. The 23-member panel will decide in secret whether there is enough evidence to formally press charges with an indictment. Any trial could be six months or more away. If convicted, he could face 25 years in prison. Strauss-Kahn''s attorney, Benjamin Brafman, told his arraignment hearing on Monday that the evidence "will not be consistent with a forcible encounter."
A lawyer for the alleged victim, a Guinean mother of a 15-year-old daughter who has gone into hiding to avoid media attention, told Reuters she opposed bail. "The idea that the man who did this to her is now on the street, so to speak, and able to do what he wants to do in the world is something which is frightening to her," Attorney Jeffrey Shapiro said.