Tuesday, May 17, 2011

A conspiracy theorist's dream

Is Dominique Strauss-Kahn the victim of a sinister, diabolical plot? Is Europe being brought to its knees by dark forces pulling strings in the shadows? Who would have the motive and the means? Can it really be a coincidence that the man responsible for bringing Europe together to rescue the EU's economic basket cases was locked up as a monster just days before Europe's heads of government were to meet to work out a deal for Greece?

Conspiracy theorists have ample material to let their imaginations run wild this week.

If the allegations against DSK are true, then the greatest tragedy of this story will be a personal one: the woman who was apparently attacked in the Sofitel on the weekend. We shouldn't forget that.

But it can be said that two groups stand to gain from this absence of IMF support for Europe. The first are the currency speculators, who stand to make a lot of money if the euro zone fails, or becomes smaller. The second are emerging market countries, who are already questioning the notion that a European should succeed DSK as the head of the IMF. Not only will DSK likely leave, but the second in command as well, American John Lipsky.

A number of names have already been floated, from Turkey, South Africa, Singapore and India. The most important of these emerging markets is China, which has strengthened its influence in Europe by lending the money that others--European creditor countries, American investment companies, and the IMF--are not.

Now, the idea that the euro zone could collapse or could become smaller depends on creditor countries like Germany taking an unrealistically tough line with debtor countries like Greece and Portugal. Until DSK's departure from the scene, it was hoped that he would be able to make a deal possible. The EU's finance ministers are finishing up a two-day meeting, and appear to have reached an impasse.

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