Spending a few days in Paris this week might make you believe that the world -- or at least the French part of it -- depends on the fate the man locals call "DSK."

The face of Monsieur Strauss-Kahn, who resigned as the head of the IMF Wednesday over allegations he sexually abused a New York hotel maid, is plastered across the front page of virtually every French print publication. TV stations air specials about his past affairs, and news Web sites carry live tickers to inform the public about the latest from the New York courtroom.

Even in the bars and restaurants of the Marais, a hip Parisian district dotted by art galleries, Strauss-Kahn was omnipresent.

"He was favored to be our next president," said Olivier Jollet, a 32-year-old marketing executive from Paris, sipping on a glass of Chardonnay as he followed the court proceedings on his iPhone. "People here are going crazy over it. There are so many theories being floated. Did he do it? Or was he set up? We'll probably never find out what really happened."

We'll find out soon who is to replace Strauss-Kahn.

The Europeans have closed ranks to place one of their candidates at the helm of the IMF. They seem to favor Christine Lagarde, the French finance minister, to succeed Strauss-Kahn. They have acknowledged but resisted pleas by emerging economies China, India and South Africa to have one of their candidates installed.

German Chancellor Angela Merkel, who heads Europe's largest economy, said with the IMF so intimately involved in managing Europe's debt crisis, "there's a lot in favor of a European candidate being put forward."

European Commission President Jose Manuel Barroso backs that thought.

European members "are the biggest shareholders in the IMF," he was quoted as saying this week by the International Herald Tribune. "Why now choose someone because he is not European? That makes no sense."

Yet as the economic importance of the likes of China, India and Brazil is quickly rising, these countries have demanded the Western domination of the IMF be broken.

The person leading the IMF should be "selected for their merits and not for being European," Brazilian Finance Minister Guido Mantega was quoted as saying by the newspaper.

The perfect compromise candidate could have been Kemal Dervis.

The former Turkish finance minister made a name for himself engineering Turkey's economic turnaround after the country in 2001, troubled by a deep recession, requested a bailout. He's technically a European (born in western Istanbul), but since Turkey is an emerging economy situated largely in Asia, the likes of China and India may have backed his candidacy.

Dervis, however, Friday insisted he would not be available for the IMF post. He said in a statement he would instead stay at the Brookings Institution, where he heads the global economy and development program.

That could mean the chances for Lagarde, a former head of Chicago law firm Baker and McKenzie, have just risen again. Together with the United States, the Europeans control more than half the voting power needed to select a new IMF chief.

earlier related report
Outside View: European should head IMF
College Park, Md. (UPI) May 20, 2011 - The debate over whether a European or Asian should lead the International Monetary Fund involves more than symbolism. An Asian leader could be bad for free markets and the progress of the global economy.

After World War II, the World Bank was established to provide long-term financial and technical assistance to developing countries and the IMF was created to manage a system of fixed exchange rates. Essentially, the U.S. dollar was pegged to gold and other currencies to the dollar. The Americans got the head of the World Bank and the Europeans the IMF.

With the demise of the fixed exchange rate system in the 1970s, the IMF mission evolved to providing short-term loans to countries with sovereign debt issues -- that is why it is currently involved in Greece's debt problems -- and advocating transparent, market determined exchange rates.

Too many Asian governments on too many occasions have flaunted the system of market-determined exchange rates and violated World Trade Organization rules against manipulating exchange rates to accomplish competitive advantages and trade surpluses -- the WTO defers policing such abuses to the IMF. Notably abusers have included China, India and Japan, which constitute the lion share of Asian gross domestic product.

Were the Asians permitted to capture the IMF bureaucracy, its role could easily morph into sustaining exchange rate relationships that greatly disadvantage U.S. and European growth. Slow growth caused by the global trade imbalances, created by undervalued Asian currencies, make worse sovereign debt problems in Europe and U.S. federal and state budget challenges.

Asian growth has been remarkable but it has come in some measure from Asian governments breaking the rules -- now we shouldn't put them in charge of enforcing those rules.

(Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former chief economist at the U.S. International Trade Commission.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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