World leaders confer on debt crises this weekend

Jean-Claude Trichet, President of the European Central Bank (ECB) ponders a question during his monthly news conference at the ECB headquarters in Frankfurt, August 4, 2011. REUTERS/Ralph Orlowski

PARIS/WASHINGTON (Reuters) - Global leaders on Saturday arranged a round of emergency calls to discuss the twin debt crises in Europe and the United States that are causing turmoil in financial markets.

After a week that saw $2.5 trillion wiped off global stock markets, they are under pressure to show political leadership and reassure markets that Western governments have both the will and ability to reduce their huge and growing public debt loads.

French President Nicolas Sarkozy, who chairs the G7/G20 group of leading economies, conferred with Britain's Prime Minister David Cameron ahead of a call planned for this weekend by G7 finance ministers and central bankers.

"They discussed the euro area and the U.S. debt downgrade. Both agreed the importance of working together, monitoring the situation closely and keeping in contact over the coming days," a spokesman for Cameron said.

Standard and Poor's deepened the urgency for action late on Friday by stripping the United States of its top-tier AAA credit rating, a move that over time could ripple through markets worldwide by pushing up borrowing costs and making it more difficult to secure a lasting recovery.

It cited the acrimonious debate in Washington on raising the debt ceiling and near political paralysis over the best way to reduce the its $14.3 trillion debt, which on the current trajectory could climb above 100 percent of U.S. national output this decade.

President Barack Obama called on lawmakers once again on Saturday to set aside partisan politics and work together and to put the nation's fiscal house in order and stimulate the stagnant economy.

But the most immediate concern for financial markets was the debt crisis in the euro zone, where yields on Italian and Spanish debt have soared to 14-year highs on political wrangling and doubts over the vigor of budget cuts.

The European Central Bank was scheduled to hold a rare Sunday conference call. Markets are anxiously looking for the central bank to start buying Italian and Spanish debt on Monday to stabilize prices, a move that has split the ECB governing council.

Investors saw the ECB's failure to include Italy and Spain in a relaunch of its bond purchases late last week as a sign of the depth of political divisions over the role of the euro zone currency. German officials want to see stiffer austerity programs in place before the ECB would shoulder more Italian and Spanish debt. The danger is that further pressure on Italian and Spanish bonds could undermine an already damaged European banking system and lock Italy, the world's eighth largest economy, out of the market.

Italy's Prime Minister Silvio Berlusconi, his government weakened by infighting, ruled out early elections to stem market panic. "This has never been an option," Berlusconi said. Instead he has pledged to bring forward austerity measures and balance the budget by 2013, a year ahead of schedule -- steps the ECB will consider to gauge whether to buy its bonds.

S&P's one-notch downgrade of the U.S. sovereign credit rating to AA-plus, while not totally unexpected, adds another level of uncertainty. Loss of gold-plated status for the world's benchmark interest rate risks pushing up borrowing costs on everything from car loans, mortgages and corporate debt to government bonds worldwide.

"However justified, S&P couldn't have picked a worse time to downgrade the U.S.," said Rabobank in a note to clients.

A senior European diplomatic source said the U.S. downgrade, coupled with Europe's problems, raised the need for international policy coordination. G7 finance ministers and central bankers of the major industrialized nations were to hold talks by telephone on either Saturday or Sunday, the source said. Their deputies from the broader G20 were due to hold a call on Saturday evening, a Brazilian finance ministry source said.

A U.K. official said "senior officials" also would talk late on Saturday. There was no indication of whether a statement would be issued by G7 or G20 policymakers, the usual method by which they lay out policy steps designed to soothe markets or provide them with direction.

DEBT ADDICTION

China, the largest foreign holder of U.S. debt, took the world's economic superpower to task for allowing its fiscal house to get into such disarray. It also revived its calls for a new stable global reserve currency to replace the U.S. dollar, gaining a sympathetic ear in the United Kingdom.

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.

Xinhua scorned the United States for a "debt addiction" and "short sighted" political wrangling. China, it said, "has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets."

China and Japan have called for coordinated action to avert a new worldwide financial crisis. India's Finance Minister Pranab Mukherjee told reporters: "There is no need to unnecessarily press the panic button."

Dutch Finance Minister Jan Kees de Jager said: "I am in constant contact with colleagues in other countries and am following the development of the financial markets closely."

Recrimination flew thick and fast among U.S. politicians over its debt downgrade, with each side seeking to blame the other for the impasse over how to solve the fiscal crisis.

Senator Jim Demint, a Republican, said Obama should demand the resignation of Treasury Secretary Timothy Geithner.

In contrast, French Finance Minister Francois Baroin said France had faith in the United States to get out of this "difficult period." Friday's U.S. unemployment numbers were better than expected and so things were heading in the right direction, he said.

"One should not dramatize, one needs to remain cool-headed, one should look at the fundamentals," he told France's iTele.

"There is no need for panic," Polish Prime Minister Donald Tusk said. "We will see in August, and maybe more intensively in September what the effects for the world economy will be."

Hotel maid in Strauss-Kahn case speaks out

• In this undated photo provided by ABC News, Robin Roberts, right, talks to Nafissatou Diallo, the alleged victim …more in the Dominique Strauss-Kahn assault case. Diallo told the network she never wanted to be in the public eye but had no choice, amid questions about her credibility. Lawyers for Strauss-Kahn told ABC that the interview was "an unseemly circus" designed to inflame public opinion. (AP Photo/ABC News, Heidi Gutman) less

  
  

The New York hotel maid who accused former IMF chief Dominique Strauss-Kahn of attempting to rape her said in an interview published on Newsweek's website on Sunday that he appeared as a "crazy man" and attacked her when she entered his room.

Nafissatou Diallo also gave the newsmagazine and ABC News permission to identify her by name.

The magazine interview marks the first time the 32-year-old Guinean immigrant to the United States has publicly spoken to the media since she shocked the world with allegations that Strauss-Kahn emerged naked from the bathroom of his luxury suite on May 14 and forced her to perform oral sex.

Until now, Reuters had kept to the practice in the United States of protecting the identity of alleged rape victims.

ABC News on Sunday also announced it would broadcast an interview with Diallo on Monday morning.

"I want justice. I want him to go to jail," she said in excerpts from the television interview released on Sunday.

"I want him to know that there is some places you cannot use your money, you cannot use your power when you do something like this," Diallo said.

One of Diallo's attorneys, Douglas Wigdor, told Reuters she has come forward to let the world know she is not a "shakedown artist or a prostitute."

"She's being attacked ... and she thought it was important to put a name and face to her account," Wigdor said.

She also plans to file a civil lawsuit soon, which means her name would become public, he added.

ABC reported Diallo also acknowledged "mistakes" but said that should not stop prosecutors from going forward.

"I never want to be in public but I have no choice," she told ABC News, adding "Now, I have to be in public. I have to, for myself. I have to tell the truth."

Diallo, who Newsweek said had agreed to be photographed for next week's edition, said she saw Strauss-Kahn appear naked in front of her when she opened the door to his suite. He was like "a crazy man to me," she said.

"You're beautiful," she reported Strauss-Kahn as saying, and said he attacked her despite her protestations.

DENIES ALL CHARGES

Strauss-Kahn, 62, has repeatedly denied all the charges against him. In a statement on Sunday, his lawyers called the interview a last-ditch effort by the maid and her lawyers to extract money from the former managing director of the International Monetary Fund.

She is "the first accuser in history to conduct a media campaign to persuade a prosecutor to pursue charges against a person from whom she wants money," lawyers Benjamin Brafman and William Taylor said.

"Her lawyers and public relations consultants have orchestrated an unprecedented number of media events and rallies to bring pressure on the prosecutors in this case after she had to admit her extraordinary efforts to mislead them."

Her credibility was thrown into question when Manhattan prosecutors revealed Diallo told authorities numerous lies, including fabricating a story about being gang-raped in Guinea in order to gain U.S. asylum. She also changed details of her story about what happened following the purported assault.

Wigdor said Diallo has worried that prosecutors would drop the charges. "That has been a concern, but we're all hopeful that the district attorney's going to do the right thing," he said.

A spokesman for Manhattan District Attorney Cyrus Vance had no comment on the interviews, saying: "We will not discuss the facts or evidence in what remains an ongoing investigation."

FLED AFTER RAPE

After arriving from Guinea in 2003, Diallo, who is illiterate, told Newsweek she spent years braiding hair before working at a bodega in New York City's Bronx borough. As a maid at the Sofitel hotel, she received $25 an hour plus tips.

Diallo said her husband in Guinea died of an illness but did not provide further details. Roughly two years after being raped by two soldiers in Conakry, the Guinean capital, she fled with her daughter, now 15, to the United States, where she said she has few close friends.

Following the alleged attack, Diallo spent weeks in protective custody, holed up in a hotel with her daughter.

"She's been in seclusion for over two months. She hasn't been able to take a walk in the park," her lawyer said.

French newspaper France Soir reported in a front page headline that David Koubbi, the lawyer for French writer Tristane Banon, who has accused Strauss-Kahn of a 2003 sexual assault, had met with Diallo. It added only that he "was impressed by her courage."

(Reporting by Basil Katz; Additional reporting by Noeleen Walder in New York and JoAnne Allen in Washington; Editing by Ellen Wulfhorst and Eric Walsh)

Oops! French Open officials gave runner-up the winner’s trophy

There are two winner's trophies at the French Open, the large Coupe Suzanne Lenglen that you see female winners like Li Na hoist in the air and kiss after the match and the smaller replica version they take home. In an embarrassing mistake Saturday at Roland Garros, one of those trophies was accidentally awarded to runner-up Francesca Schiavone.

Schiavone was handed the small trophy by the gentleman on the left and posed for pictures with it alongside Li Na, the winner, and 1971 champion Evonne Goolagong Cawley. Notice how Schiavone's trophy is a mini version of the larger one Li Na is holding.

Evidently the large Coupe Suzanne Lenglen stays at Roland Garros and winners take home the smaller trophy. In the original picture, you can see the true runner-up trophy sitting on a table behind the players.

The mistake was eventually corrected and Schiavone was awarded the proper trophy.

Schiavone couldn't have minded giving the replica trophy back too much. After all, she won one last year.

Pressure rises against IMF chief held at NYC jail

AP – Dominique Strauss-Kahn, head of the International Monetary Fund, is arraigned Monday, May 16, 2011, at …

By JENNIFER PELTZ, Associated Press Jennifer Peltz, Associated Press – 8 mins ago

NEW YORK – Pressure built Tuesday for Dominique Strass-Kahn to consider resigning as chief of the International Monetary Fund after he was charged with trying to rape a maid at a New York hotel.

Strauss-Kahn spent the night at the infamous Rikers Island, a 400-acre penal complex in Manhattan, after being denied bail Monday. Prosecutors had warned the wealthy banker might flee to France and put himself beyond the reach of U.S. law like the filmmaker Roman Polanski.

Strauss-Kahn's weekend arrest rocked the financial world as the IMF grapples with the European debt crisis, and it upended French presidential politics. Strauss-Kahn, a member of France's Socialist party, was widely considered the strongest potential challenger next year to President Nicolas Sarkozy.

Austria's finance minister suggested Tuesday that Strauss-Kahn consider stepping down to avoid damaging the IMF, which provides emergency loans to countries in severe distress and tries to maintain global financial stability.

"Considering the situation, that bail was denied, he has to figure out for himself that he is hurting the institution," Maria Fekter said as she arrived at a meeting of European finance ministers in Brussels.

Elena Salgado, Fekter's Spanish counterpart, said Strauss-Kahn had to decide for himself whether he wanted to step down, considering the "extraordinarily serious" nature of the charges.

"If I had to show my solidarity and support for someone it would be toward the woman who has been assaulted, if that is really the case that she has been," she said.

In France, defenders of Strauss-Kahn, a former finance minister who had topped the polls as a possible candidate in presidential elections next year, said they suspected he was the victim of a smear campaign. Others expressed sympathy.

"I didn't like the pictures I've seen on television," Luxembourg Prime Minister Jean-Claude Juncker said Monday night, referring to footage that showed Strauss-Kahn in handcuffs being escorted by police outside a New York precinct house.

Showing a suspect in handcuffs is illegal in France since a 2000 law aimed at the preserving the presumption of innocence.

The 62-year-old Strauss-Kahn was arrested Saturday at Kennedy Airport after the allegations at the Sofitel hotel near Times Square.

Making his first court appearance Monday, a grim-looking Strauss-Kahn stood slumped before a judge in a dark raincoat and open-collared shirt. The silver-haired banker said nothing as a lawyer professed his innocence and strove in vain to get him released on bail.

"This battle has just begun," defense attorney Benjamin Brafman told scores of reporters outside the courthouse, adding that Strauss-Kahn might appeal the bail denial.

Because of his high profile, Strauss-Kahn will be held in protective custody on Rikers Island, away from most detainees, said city Correction Department spokesman Stephen Morello. Unlike most prisoners who share 50-bed barracks, he will have a single-bed cell and will eat all of his meals alone there. He'll have a prison guard escort when he is outside his cell.

Rikers is one of the nation's largest jail complexes, with a daily inmate population of about 14,000.

The complex's notable history includes accounts of run-ins between inmates and guards. In one such case last year, a guard was sentenced to six years in prison for ordering inmate beatings as part of a rogue disciplinary system. Prosecutors said he imposed order in a unit at the complex by having teenage inmates beat other teenagers who had stepped out of line. The union that represents jail guards said the prisoners fabricated the allegations.

Also last year, more than a dozen correction officers were injured while quelling fights between inmates awaiting pretrial hearings at a jail there. And in February, the city settled a wrongful death lawsuit brought by the family of an inmate who died after a scuffle with guards.

Strauss-Kahn was ordered jailed at least until a court proceeding Friday. He cannot claim diplomatic immunity because he was in New York on personal business and was paying his own way, the IMF said. He could seek that protection only if he were conducting official business, spokesman William Murray said. The agency's executive board met informally Monday for a report on the charges against Strauss-Kahn, the managing director at the international lending agency since 2007.

The French newspaper Le Monde, citing people close to Strauss-Kahn, said he had reserved the suite at the Sofitel hotel for one night for a quick trip to have lunch with his daughter, who is studying in New York.

Strauss-Kahn is accused of attacking a maid who had gone in to clean his penthouse suite Saturday afternoon at a luxury hotel near Times Square. He is charged with attempted rape, sex abuse, a criminal sex act, unlawful imprisonment and forcible touching. The most serious charge carries five to 25 years in prison.

The 32-year-old maid told authorities that she thought the suite was empty but that Strauss-Kahn emerged from the bathroom naked, chased her down a hallway, pulled her into a bedroom and dragged her into a bathroom, police said.

He grabbed her breasts, tried to pull down her pantyhose, grabbed at her crotch and forced her to perform oral sex on him during the encounter at about noon, according to a court complaint. She ultimately broke free, escaped the room and told hotel staffers what had happened, authorities said. She was treated at a hospital for minor injuries.

"The victim provided a very powerful and detailed account of the violent sexual assault," Assistant District Attorney John "Ardie" McConnell said. He added that forensic evidence may support her account. Strauss-Kahn voluntarily submitted to a forensic examination Sunday night.

Brafman said defense lawyers believe the forensic evidence "will not be consistent with a forcible encounter." Defense lawyers wouldn't elaborate, but Brafman said "there are significant issues that were already found" that make it "quite likely that he will be ultimately be exonerated."

Prosecutors asked the judge to hold Strauss-Kahn without bail, noting that he lives in France, is wealthy, has an international job and was arrested on a Paris-bound plane at Kennedy Airport. He had left the hotel before police arrived, leaving his cellphone behind, and appeared hurried on surveillance recordings, authorities said.

At one point, Strauss-Kahn called the hotel "in a panic" about the phone, a law enforcement official said Monday.

Hotel security officers hadn't found a phone. But they were instructed by NYPD investigators to set a trap by informing him they had it and asking where they could get it to him, said the official, who spoke on condition of anonymity because the investigation had not been completed.

Strauss-Kahn told them he was about to board a flight — unknowingly tipping off authorities to his whereabouts, the official said.

Prosecutors said they couldn't force Strauss-Kahn's return from France if he went there.

"He would be living openly and notoriously in France, just like Roman Polanski," said Chief Assistant District Attorney Daniel Alonso, referring to the film director long sought by California authorities for sentencing in a 1977 child sex case.

Defense lawyers suggested bail be set at $1 million and promised that the IMF managing director would remain in New York City. His lawyers said Strauss-Kahn wasn't trying to elude police Saturday: The IMF head rushed out of the hotel at about 12:30 p.m. to get to a lunch date with a family member, then caught a flight for which he had long had a ticket, they said.

Allegations of other, similar attacks by Strauss-Kahn began to emerge Monday. In France, a lawyer for a 31-year-old French novelist said she is likely to file a criminal complaint accusing him of sexually assaulting her nine years ago. A French lawmaker accused him of attacking other maids in previous stays at the same luxury hotel. And in New York, prosecutors said they are working to verify reports of at least one other case, which they suggested was overseas.

A French lawmaker from a rival political party also alleged, without offering evidence, that Strauss-Kahn had victimized several maids during past stays at the Sofitel near Times Square.

The hotel issued a statement calling conservative lawmaker Michel Debre's claims "baseless and defamatory." Sofitel management "has had no knowledge of any previous attempted aggressions," the hotel said, adding that it had set up a hotline for workers to report incidents more than a year ago.

McConnell, the assistant district attorney, said in court Monday that New York authorities are working to verify at least one other case of "conduct similar to the conduct alleged." When Criminal Court Judge Melissa C. Jackson asked whether the potential other incident occurred in the United States, McConnell said he "believed that was abroad."

Strauss-Kahn's lawyers said they had no immediate response to the allegations emerging from overseas.

France sends Roma Gypsies back to Romania

Christian Fraser visits a French Roma (Gypsy) camp

Dozens of Roma (Gypsies) have arrived back in Romania after being repatriated by France under a controversial policy backed by President Nicolas Sarkozy.

At least 70 Roma left France and hundreds more will follow in the coming weeks after their camps were shut down.

The French government says it is a "decent and humane" policy of removing people from deplorable conditions.

But rights groups say the Roma are being demonised, and Romania has warned France against "xenophobic reactions".

"We understand the position of the French government. At the same time, we support unconditionally the right of every Romanian citizen to travel without restrictions within the EU," Romanian President Traian Basescu said.

However, Mr Basescu added that he was prepared to send police to France to help implement the repatriation scheme.

Two flights from Lyon and Paris were due to be carrying 93 Roma passengers, but according to some reports only 70 actually boarded the flights and arrived in Bucharest.

A deportee named Gabriel told the AFP news agency in Bucharest that life had been "very tough" in France, but he would not rule out returning because there was no work in Romania.

Another man said that in Romania "we don't have any chance, no jobs, nothing".

Hundreds more are expected to leave France on flights scheduled for Friday and next week.

Exploitation claims

The Roma are EU citizens, mostly from Romania or Bulgaria, but French law requires them to have a work permit and prove they have the means to support themselves if they intend to stay for more than three months.

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The Roma have a history of being persecuted - many were killed by the Nazis”

They complain that the permits are difficult to get, and so they are often forced to live illegally.

Roma who agree to leave have each receive 300 euros (£246; $384) and an additional 100 euros for each child.

The French government says it plans to shut down 300 illegal Roma camps in the next three months.

The controversial plan was put in place after clashes last month between police and travellers in the southern city of Grenoble and the central town of Saint-Aignan.

The Roma were not involved in all of the trouble, but the government said travellers' camps were sources of "illegal trafficking" and "exploitation of children for begging, of prostitution and crime".

Some 51 camps have already been demolished by police and the residents have been moved into temporary shelters or accommodation.

Popularity booster?

The operation has been condemned by human rights groups, who say it is deliberately stigmatising a generally law-abiding section of society to win support among right-wing voters.

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France's Roma

• Roughly 12,000 Roma migrated to France after Bulgaria and Romania's accession to the EU
• Many have no work permits, so live in camps and resort to begging
• Separately, at least 400,000 people are designated "travellers", mostly French nationals with Roma origins

• Q&A: Roma expulsions

Last week, members of the UN's Committee on the Elimination of Racial Discrimination criticised the tone of political discourse in France on race issues, saying racism and xenophobia were undergoing a "significant resurgence" there.

But France has insisted that the actions "fully conform with European rules and do not in any way affect the freedom of movement for EU citizens, as defined by treaties".

Foreign ministry spokesman Bernard Valero told AFP that an EU directive "expressly allows for restrictions on the right to move freely for reasons of public order, public security and public health".

The European Commission said it would ensure none of the bloc's rules were being broken.

France repatriated some 10,000 Roma last year and other European countries, including Germany, Italy, Denmark and Sweden pursued similar policies.

Mr Sarkozy's political opponents have accused him of using the Roma issue to shift public attention away from corruption and on to crime.

The BBC's Christian Fraser in Paris says that the president's poll rating is sagging and there are some who accuse him of using the recent unrest to boost his own popularity.

Some of the Roma living in France are part of long-established communities of travelling people who are French nationals.

In addition, there are an estimated 12,000 Roma who are recent immigrants from Central Europe.

"Some of these families have been in France for five, seven or 10 years and 300 euros is not enough to help them settle in Romania. They will return in the coming weeks," Malik Salemkour, the vice-president of the French Human Rights League, told the Reuters news agency.