E.U. crisis could last seven years, ex-IMF chief warns
Former IMF chief Dominique Strauss-Kahn delivered yesterday in Beijing his first public speech since quitting the post amid allegations of sexual assault.
In a keynote speech to an annual conference of economists organised by NetEase.com, a mainland news portal, Strauss-Kahn shared his insights on the euro-zone debt crisis.
He called for greater integration of European Union countries to solve the present economic crisis, which he said could continue for a further five to seven years if effective measures were not implemented.
He refused to mention his arrest in May after being accused of sexual assault by a New York hotel maid or his subsequent resignation from the International Monetary Fund. Prosecutors dropped the case in August, saying his accuser was not a credible witness because of lies she had told, but the scandal badly damaged his reputation.
Formerly perceived as a likely strong challenger to Nicolas Sarkozy in the French presidential election next year, Strauss-Kahn said in an interview with a French television station in September that he was now unlikely to join that race. However, he did not rule out the possibility of returning to political life.
Focusing on Europe's economic malaise yesterday, he projected a pessimistic outlook, saying the euro zone lacked integrated fiscal budgets, monetary policies and a central financial organ.
'We need to have the European Union be a real union. That is the only way to solve the crisis,' he said.
'A monetary union without a central budget is something that doesn't make sense.'
Talking to prominent Chinese economist Li Daokui after the speech, he said the European economy could face a rather long period - probably five to seven years - of low growth if no strong decisions were made.
He said China should and could help the euro zone get out of trouble, because it was in its 'own interest' in a globalised economy.
'I think the Chinese could help through the IMF, or directly,' he said. 'We're now in a globalised world, and there's no way for any single player to believe it can solve a problem without the help of others.'
Li, an adviser to China's central bank, said many Chinese people still supported Strauss-Kahn despite the scandal, because of the IMF's contribution to the country's economic growth while he was in office.
'Beijing might be the place that welcomes you the most,' he said.
Strauss-Kahn said the yuan is still undervalued and the central government should continue moving towards growth driven more by domestic consumption than exports, which could lead to a revaluation.
He said that when the yuan's value was decided by the market, it would certainly become a currency in the Special Drawing Rights basket - a synthetic currency created by the IMF - which now includes the US dollar, the euro, the Japanese yen and the British pound.