IMF chief’s arrest leaves Greece in limbo

Greece insisted on Sunday that it would continue to implement the measures it has agreed with the European Union and the International Monetary Fund despite the uncertainty created by the arrest in New York of the IMF?s managing director, Dominique Strauss-Kahn.

It is believed that Strauss-Kahn had been at the forefront of recent talks about Greece possibly receiving a second bailout from the EU and the IMF because of the difficulties it is having in meeting the demands of the initial loan memorandum, signed a year ago. The Frenchman?s arrest on Saturday appears to put these negotiations in some jeopardy.

Government spokesman Giorgos Petalotis said Athens would continue to follow the terms of the first bailout and to discuss its position with other IMF representatives. ?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.

Strauss-Kahn?s deputy, John Lipsky, was appointed acting head while Strauss-Kahn remains in custody in New York on suspicion of assaulting a hotel chamber maid. Another deputy managing director, Nemat Shafik is expected to attend the meetings that Strauss-Kahn had been due to take part in this week, where the Greek economy was to be a main topic of discussion.

The IMF managing director?s Sunday meeting with German Chancellor Angela Merkel, where Greece would have been high on the agenda, was canceled. However, Shafik is due to participate in discussions with eurozone finance ministers in Brussels today, where concerns about Greece?s situation are due to be aired.

The turmoil at the IMF comes amid growing speculation that Greece will miss out on the fifth tranche of its 110-billion-euro loan, which is due in June, and will have to agree a new deal with the EU and the Washington-based fund that will lead to the government having to sign up to even tougher terms, such as substantial sackings in the public sector.

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