The arrest of IMF head Dominique Strauss-Kahn complicates a key European meeting on whether to give Greece billions more in aid — but analysts said one man's troubles won't keep the 17 eurozone nations from trying to contain a debt crisis that threatens them all.
Eurozone financial leaders are to discuss Greece's deteriorating economy Monday at a Brussels meeting where they be briefed by an expert team assessing the situation in Athens. Key questions include what conditions to put on more help, with European leaders unhappy at what they say see as limited Greek efforts to raise money by selling government property.
Strauss-Kahn was arrested Sunday on suspicion of sexual assault on a hotel maid in New York. The IMF said in a statement it remains "fully functioning and operational."
The arrest scratched Strauss-Kahn's meeting Sunday with German Chancellor Angela Merkel in Berlin, where the German public is deeply skeptical about putting up any more money for Greece, which received a euro110 billion ($157 billion) bailout from the European Union and the International Monetary Fund last year.
Merkel has stressed her government will need clear conditions on any new Greek loans before backing more help. But German Finance Minister Wolfgang Schaeuble has conceded that if the expert's full report in June shows Greece can't pay its debts, something more will have to be done.
The International Monetary Fund put up euro30 billion ($43 billion) of that Greek loan. The Washington, D.C.-based organization also supplies expertise in assessing whether Greece and other countries that get emergency loans are living up to the conditions attached to them, such as getting deficits under control.
Many investors believe that Greece's financial troubles are so overwhelming that a Greek default or a restructuring that would give creditors less than the full value of their bonds is inevitable. But that would be a serious blow to the euro, and eurozone governments and the European Central Bank appear determined to prevent it.
A euro78 billion ($111 billion) bailout for Portugal is also on the agenda for Monday's meeting in Brussels, as is Ireland's progress in dealing with the financial morass that led to its own EU-IMF bailout. With the terms of the Portuguese bailout largely decided, EU finance ministers are expected to signal approval of that deal.
Although Greece is also the agenda, a new bailout announcement was not expected at this meeting. Instead, a general statement of support may come followed by days or weeks of more haggling.
Marco Valli, chief eurozone economist at UniCredit, said he expected a decision on more help for Greece in the near future but not on Monday.
"There is no way that just because the IMF's chief gets into personal trouble that Greece would be left alone," Valli said. "Maybe it can have some impact on timing, but our view is that this is not going to have a meaningful impact on the bottom line, which is that Greece would get a second bailout package."
Greek government spokesman Giorgos Petalotis also downplayed the impact of Strauss-Kahn's arrest.
"The Greek government deals with institutions, not individuals, and continues unimpeded to implement the program that will get it out of the crisis," he said.
The IMF's 24-member executive board, appointed by member countries or groups of countries, is responsible for running day-to-day IMF business, with Strauss-Kahn as its spokesman, said David Buik at BGC Partners in London. The board typically meets several times a week, working on reports prepared by the fund's staff.
"The IMF is not a one-trick pony," Buik said. "European markets may be damaged by this news for a few hours but there is plenty of depth to the IMF."
The canceled meeting with Merkel raises concerns, he admitted, but "markets will be much more concerned about seeing some unanimity of purpose from the EU political leaders over contingency plans for providing extra help for Greece and maybe Ireland and Portugal."
AP
