Eurogroup's Juncker endorses Strauss-Kahn for IMF

BRUSSELS, July 9 (Reuters) France's contender to head the International Monetary Fund, former Socialist Finance Minister Dominique Strauss-Kahn, won influential backing from the chairman of euro zone finance ministers today.

While some EU partners sought to put the brakes on President Nicolas Sarkozy's drive to capture another big international economic job for Paris, Eurogroup chairman Jean-Claude Juncker said Strauss-Kahn, 58, was ideally qualified to succeed Spain's Rodrigo Rato, who steps down in October.

''Dominique Strauss-Kahn has all the qualities you need in order to become managing director of the IMF,'' the Luxembourg Prime Minister told reporters on arrival to chair a meeting of the Eurogroup with the new French leader.

In an interview published yesterday, Sarkozy said he had already put Strauss-Kahn's name to US President George W Bush and the leaders of Spain, Italy and Britain in what diplomats saw as a bid to seize the initiative before rival European contenders emerged.

The position traditionally goes to a European, although this time around developing nations are challenging the carve-up where Europeans head the IMF with US support and an American leads the World Bank with Europe's blessing.

A European Commission spokeswoman said she expected the EU to agree on a European candidate very soon.

A source in the Portuguese European Union presidency said EU finance ministers would discuss the IMF succession informally on Tuesday but added: ''I do not expect to have a name coming out from the meeting tomorrow but we will see.'' German Finance Minister Peer Steinbrueck's spokesman Torsten Albig said on Saturday that he held Strauss-Kahn in high regard as a ''good European candidate''. But he added the cabinet would discuss the proposal before Berlin gave a formal endorsement.

OTHER CANDIDATES France already holds three key international economic posts, with Pascal Lamy at the World Trade Organisation, Jean-Claude Trichet at the European Central Bank and Jean Lemierre at the European Bank for Reconstruction and Development.

Steinbrueck's deputy, Thomas Mirow, said Strauss-Kahn's competence was not in doubt, but there were other candidates.

''The credentials of Strauss-Kahn cannot be disputed. As regards the political process, we have just started,'' Mirow told reporters at an insurance industry seminar in Berlin.

He said he was aware of a Dutch candidate, whom he did not identify. Diplomats said former Dutch Finance Minister Gerrit Zalm was a potential runner.

But a spokesman for the Dutch Finance Ministry said: ''Obviously Mr Zalm would make an excellent candidate for the post but unfortunately he has said that he is not available.'' Poland has said it would support its former central bank chief, Leszek Balcerowicz, architect of the liberalisation of central Europe's biggest post-communist economy in the 1990s.

Diplomats say Italy is also interested in the IMF position.

Italian names mentioned include Bank of Italy Governor Mario Draghi, former European Competition Commissioner Mario Monti and Finance Minister Tommaso Padoa-Schioppa.

Draghi reiterated today he did not want the job, telling reporters in Milan: ''I am not interested.'' Padoa-Schioppa has said the only IMF role he seeks is chairman of the policy-setting interim committee of finance ministers.

A European finance official said Britain, a European member of the Group of Seven major industrialised nations, believed it was too soon for Europe to put forward a candidate this month.

Critics have suggested that Sarkozy, who won power in May, wants to place Strauss-Kahn in the prestigious post partly for domestic reasons, to deprive the opposition Socialists of one of their most popular and effective figures.

The IMF board is to meet next week in Washington, officials there said, at the prompting of developing nations.

They want a rethink on the US-European duopoly which has existed since the IMF and World Bank were created after World War Two, but which no longer reflects the true balance of economic power since the rise of China and other giants that were economic minnows half a century ago.

Sarkozy was to attend a meeting of euro zone finance ministers this evening to defend his plans to introduce tax cuts, which will weigh on the French deficit, and was expected to use his presence to promote Strauss-Kahn's candidacy.

Strauss-Kahn is fluent in English and German and is a strong advocate of the concept of a mixed economy, coupling free-market reform with the defence of a state role in industry.

Reuters SBC VV2245