A Favorite Emerges as IMF Chief

PARIS - French Finance Minister Christine Lagarde would be a "very good candidate" to run the International Monetary Fund but it may not be easy for France to retain the post, a minister said on Thursday.

Dominique Strauss-Kahn, himself a former French finance minister, resigned as IMF managing director on Thursday after being arrested at the weekend on charges of attempted rape of a chambermaid in a luxury New York hotel.

Lagarde has been tipped as the leading candidate to replace him from Europe, which is fighting hard to keep the leadership of the Fund in the face of pressure from fast-growing emerging economies for a decision based more strictly on merit.

"I am convinced that she is a very good candidate," Thierry Mariani, minister for transport, told France Info radio. "I have done some trips with her in Asia and I can testify to her popularity with the ministers of major emerging economies.

"I think she would be a very good candidate but, having said that, it will be very difficult in the current context. It is not just France, unfortunately, that dreams of having the leadership of the IMF," he said.

The French government had no immediate official reaction to Strauss-Kahn's resignation. The issue of his replacement could emerge as a major theme at a summit of Group of Eight leaders in the French seaside town of Deauville next week.

Lagarde has declined to comment on reports that she is in the running but she is understood to be well regarded by German Chancellor Angela Merkel and has received backing from European colleagues such as Swedish Finance Minister Anders Borg.

Borg on Thursday told Swedish radio that it had been logical for Strauss-Kahn to step down, given the legal process ahead, and it was now important to appoint a successor quickly.

He said he had "very positive experiences" of Lagarde: "She has been a strong force in the Ecofin council and very, very important in the G20 work."

Aside from her nationality, another obstacle for Lagarde might be that she has been accused of abuse of authority in a case brought by opposition Socialist deputies.

France's public prosecutor has recommended a full inquiry into her role in awarding 285 million euros in compensation to a prominent French businessman in 2008 to settle his judicial battle with a state-owned bank.

A three-judge panel has until mid-June to decide whether to launch a full inquiry. Lagarde has denied any wrongdoing and there is no suggestion that she profited from the award herself.