European leaders raced on Friday to nominate a successor for fallen IMF chief Dominique Strauss-Kahn before a G8 summit next week, with French Economy Minister Christine Lagarde in pole position. As Europe rallied around Lagarde as their most likely choice for the International Monetary Fund's top job, which has always gone to a European, the most widely tipped potential candidate from among emerging economies ruled himself out.
Strauss-Kahn was due to leave jail on bail on Friday and be placed under house arrest and round-the-clock monitoring after he was indicted for the alleged attempted rape of a New York hotel maid last Saturday. The man once seen as a possible next president of France denies the charges and has vowed to prove his innocence.
Lawyers representing Strauss-Kahn posted $1 million in bail and a $5 million insurance bond, but said other release conditions set out by a judge - which included being placed under 24-hour home detention with electronic monitoring - needed to be resolved before he could be released.
German Chancellor Angela Merkel all but endorsed Lagarde, telling a Berlin news conference: "Among the names mentioned for the IMF succession is French Minister Christine Lagarde, whom I rate highly." But diplomats said some European Union countries questioned whether the well-regarded corporate lawyer, who would be the first woman to head the IMF, could be anointed before a special court decides next month if she should be investigated in a French legal case.
Since Strauss-Kahn resigned on Wednesday, EU governments have rushed to find a European replacement before emerging nations, which have long demanded a bigger say in running the Washington-based global lender, can mount a bid for the job. Asian, Middle Eastern and African diplomats at the IMF headquarters in Washington said emerging nations were seeking a consensus candidate.
That task was made harder when former Turkish economy minister Kemal Dervis, seen as the front-runner among potential non-European contenders, ruled himself out. "Speculation about succession at the IMF has included me in the group of persons with relevant experience. But I have not been, and will not be, a candidate," he said in a statement.
The New York Times reported that Dervis had an affair with a subordinate when he was a senior World Bank executive. Asked to comment, his office at the Brookings Institution in Washington said he would have no further statement. European and US officials want to move quickly to replace Strauss-Kahn but they also risk angering developing economies if they are seen to do a backroom deal for Europe again.
"We are consulting broadly with the fund's shareholders from emerging markets, as well as advanced economies," said US Treasury Secretary Timothy Geithner, stressing that the process should be open and move quickly. "We are prepared to support a candidate with the requisite, deep experience and leadership qualities, and who can command broad support among the fund's membership."
The United States and European nations jointly hold more than half of the IMF's votes, giving them enough power to decide who leads it. Diplomats said European Council President Herman van Rompuy, who chairs summits of the 27-nation EU, and European Commission President Jose Manuel Barroso were trying to secure a deal on Lagarde after the three biggest European powers - Germany, France and Britain - threw their weight behind her.
Jean-Claude Juncker, who chairs euro zone finance ministers, and Italian Prime Minister Silvio Berlusconi endorsed her on Thursday. Leaders of the Group of Eight industrialised nations - the United States, Russia, Japan, Canada, Germany, France, Britain and Italy, plus the European Union - meet in the French seaside resort of Deauville on May 26-27.