LONDON — Of all the voices arguing in favor of rescuing European nations submerged in debt, Dominique Strauss-Kahn’s has been one of the strongest and most respected.

The onetime French finance minister is committed to the euro common currency and to closer European integration. Former colleagues from around the region knew he would take their calls when they phoned the International Monetary Fund chief in Washington.

So the absence of Strauss-Kahn, who was being held in New York on sexual assault charges, was glaring Monday when European finance ministers gathered in Brussels for an important two-day meeting that he was due to attend to help deal with the ongoing debt crisis.

The talks are going ahead as scheduled, with an IMF deputy subbing for the boss. Officials approved a $110 billion joint IMF-European Union bailout for Portugal – the third such rescue package in a year – and discussed more aid for Greece.

But the alleged assault inside a Manhattan hotel room has knocked a savvy, forceful leader from the front lines of combat against Europe’s debt problems and added more uncertainty to an already delicate situation.

Consternation was especially sharp in Greece, whose profligacy ignited the debt crisis and forced Athens to request a humiliating  bailout last year.

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Five months ago, Greek protesters angry over spending cuts ordered by the IMF and the EU burned Strauss-Kahn in effigy outside Parliament, despite his assurance that “we’re here to help” and his admonition not to “fight the doctor. You take the bitter medicine he prescribes, even if you don’t like it.”

Now that the doctor is temporarily out of the picture, many Greeks are worried they may be in for an even rougher ride. Over the past few months, doubts have piled up over Athens’ ability to pay back its emergency loans and to return to the markets for funding next year.

Strauss-Kahn is believed to be sympathetic to the idea of lending more assistance to Greece and was expected to play a key role in persuading skeptical governments, including those in Berlin and Amsterdam, to accept the idea.

“Strauss-Kahn has an amazingly strong personality, and he proved that he could trot to (German Chancellor Angela) Merkel’s doorstep, influence decision-making and make it happen,” said Stefanos Manos, a former Greek finance minister. 

Without the IMF chief in their corner, many Greeks fear that demands by harder-line German politicians for harsher conditions on Athens and more extensive privatization of national assets will prevail.

“The chambermaid blocks Greece!” said a headline in the Athenian newspaper Eleftherotypia, referring to the hotel employee who’s accused Strauss-Kahn of attempted rape.

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His absence didn’t affect the European finance ministers’ negotiations over Portugal’s bailout, whose broad outlines had already been agreed on.  

But consensus could prove more elusive regarding further aid to Greece and a push by Ireland for more favorable rates on the loans included in the bailout it applied for late last year.

There is also concern over who would replace Strauss-Kahn should he lose his IMF job. The top post has historically gone to a European, but countries such as Brazil and China might insist on a break with tradition.

 


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