STRAUSS-KAHN: “Revelations will rock world” claim as DSK returns to France

DSK….supporters still believe he was sting victim

How the Left can still damage Lagarde and Sarkozy…and the US

As Dominic Strauss-Kahn returns to a France deeply divided on how it feels about the former IMF boss, US and French sources have told The Slog that belief in a plot to keep DSK away from world debt decision-making is stronger than ever.

“I don’t know about this now,” a long-standing Parisian friend told me last Friday, “Dominic is something of an embarrassment to the Left at the moment. The [Socialist] Party wants him to be low profile for the time being. But his supporters are building a case they hope will refocus attention on why he was snared in New York”.

The Slog’s longstanding source in New York has a different perspective on what might have been behind any anti-DSK sting, but agrees that a powerful case can be made for a US-based conspiracy.

“Now he’s left and out of jurisdiction, there’s unease here that [DSK’s entourage] will speak more freely,” says my Mole, “and it doesn’t seem to be about French politics.” Sources in Washington agree.

“If it wasn’t a sting, then it sure as hell worked like one,” said one, adding “The policy of the IMF has changed one hundred eighty degrees since [Lagarde] took over. She was Geithner’s  girl all along – no doubt about it.”

That much is hard to deny: Lagarde was getting active Fed encouragement long before DSK’s arrest, and since her appointment she has turned the International Monetary Fund from an austerity hawk to (as of yesterday) one calling for QE everywhere in a last-ditch attempt to “save us from a terrible new phase” of recession. What she really means, of course, is ‘save the global banking system’….and nobody has more to lose on that one than the Americans. But in Paris, there is a different emphasis.

“Here the interest in Lagarde’s role in the Sarkozy-Tapie pay-off scandal is much bigger” says a well-placed source, “And some of the specifics are, shall we say, a little ugly”.

The procurator’s investigation is focused on a  half-billion euro arbitration deal in 2008 in favour of controversial French tycoon Bernard Tapie – a high-profile backer of President Sarkozy from the Left. Critics allege that Lagarde exerted improper influence in the case. That part is a vague charge to make stick – but it’s becoming increasingly clear that the procurator’s office is primarily interested in what it calls ‘complicity in embezzlement of public funds’ and ‘complicity in forgery.’  The last of these especially has some on the Right worried – and some on the Left excited. The source above continues:

“There is talk among DSK supporters of creating an air of criminality around Madame Lagarde – of suggesting a ruthless, perhaps boundless ambition. So, you know, she has forged documents to get on, and taken part in a conspiracy to remove Strauss-Kahn, so she is a bad girl and so forth. But Lagarde dismisses all of it as political revenge. She gives off an air of being not at all worried about it.”

Based on the published evidence and some interviews, my own view remains that the Tapie case in general is something and nothing. On the other hand, linked to a conspiracy to get DSK out of the 2012 Presidential campaign, a string of allegations against her would play badly for Sarkozy – whose performance in opinion polls is less than sparkling as it is. Certainly, six weeks ago the Elysee staff had to admit that they had known about DSK’s arrest even before the arraignment – in fact, as he was being pulled off the plane at Kennedy.

But a Slog Washington source dismissed the ‘French connection’:

“The French don’t have the resources for that kind of sh*t,” he insisted, “And they wouldn’t dare – not on US soil. The story is simple: DSK wanted a pro-EU, anti-American acolyte to ease into the IMF job. He planned to humiliate Lagarde’s lamentable economic controls in France, and then take on Sarkozy for the top job. The US couldn’t handle that as an outcome. This was about more than the IMF, it was about having control of the key players in a Europe turning to sh*t. The game is to keep Merkel and Sarkozy in position, to ensure that the US doesn’t get burned alive by this crap [ie, EU debt meltdown].”

Confronted with this as a scenario, my French friend is equivocal to slightly supportive.

“Strauss-Kahn did have a very clear game-plan,” he agrees, “and it was one hell of a plan. He runs France, controls the IMF, saves the EU and goes into the history books. But did the US really care that much? I don’t know. To be frank, very few of them strike me as that bright. What I can tell you is that some of those near to DSK are talking big about this – saying the very foundations of Franco-American relations will be rocked to their foundations when the truth comes out. But there’s an election coming up – they would say that”.

I’ll give the final word to my New York informant…who has yet to be wrong in all this:

“Nobody really knows what [District Attorney Cyrus T.] Vance came up with during all those delays to DSK’s release. There were rumours of intelligence people poking around. And throughout, Geithner took an interest in it way beyond what you’d expect. Vance is a Democrat, and there is talk of him being told to lay off further investigation in return for future favours. He’s ambitious too, you know. But for me, it’s the convenience of the whole thing that smells. Very few thinking people here – you know, the chatterati – buy the idea of a guy walking from his shower, discovering an unexpected, not that attractive female guest, and then demanding a suck right off the bat. I suspect Diallo tried to hit him with a demand for money, he got aroused, and then some important people took some very quick decisions to make the most of it…during that seventy minutes when the Hotel staff rang Paris, where else did they ring? If anything was ever proved, it would kill the US for years in Europe. That’s probably why we’ll never find out.”