Strauss-Kahn faces new hurdle at home as U.S. woes ease (Reuters)

PARIS/NEW YORK (Reuters) – Dominique Strauss-Kahn was hit with a fresh complaint of attempted rape in France on Tuesday, a new hurdle to any political comeback, even though U.S. sex assault charges against him may be lifted this month.

The New York Post cited an unnamed senior investigator as saying prosecutors would drop their charges at a court hearing in two weeks, or even earlier, due to doubts about the credibility of the alleged victim.

In Paris, however, French writer Tristane Banon filed a legal complaint alleging Strauss-Kahn tried to assault her in 2003, when she was 22, her lawyer David Koubbi told Reuters.

Banon, an author and journalist, gave a graphic account in a 2007 TV talk show of her allegation Strauss-Kahn tried to rape her during an interview in a Paris apartment. Tuesday was the first time she has taken legal action.

Her complaint will be examined by a judge who, as a matter of course, would question both Banon and Strauss-Kahn, sending investigators to the United States if necessary, before deciding to either place the Frenchman under investigation or dismiss the case.

In yet another twist to a saga that has captivated much of the world, the hotel maid who accused Strauss-Kahn in May of trying to rape her sued the New York Post and four of its journalists on Tuesday for reporting that she was a prostitute.

Signs that the U.S. charges are unraveling have set off a round of political sparring that threatens to poison the run-up to an April 2012 presidential election that Strauss-Kahn had been tipped to win for the left.

French left-wingers, furious their star candidate has been all but knocked out of the election race, dismissed the Banon complaint as more evidence that Strauss-Kahn's foes are determined to bring him down.

"Strauss-Kahn's destiny has been snatched from him. All his friends are asking how it is possible that a man who is director of the IMF and a presidential candidate finds himself in prison a few days before he submits his candidacy," said Socialist deputy Jean-Christophe Cambadelis, a close ally of Strauss-Kahn.

"This is clearly a conspiracy against the Socialist Party," he told LCI television.

Asked about Banon's allegation, her televised account of which had Strauss-Kahn's name bleeped out, Cambadelis said: "This is manipulation by a young woman who wants to extort funds from Dominique through a rape complaint."

Koubbi told French M6 television that talk of a plot against Strauss-Kahn was "nonsense."

Strauss-Kahn plans to bring a counter-claim against Banon, his lawyer said on Monday, a routine response in France when a legal complaint is filed against a party who denies misconduct.

STRAUSS-KAHN FUTURE UNCLEAR

The Banon case may fizzle out after a preliminary inquiry, unless the judge deems there is tangible evidence of an attempted sexual assault. Given the years that have lapsed since the alleged incident, there could be little aside witnesses' conflicting statements to hold up a court case.

Regardless of the outcome, opinion polls since the weekend suggest that more than half of French voters think Strauss-Kahn's political career is already over.

Francois Hollande, the left's new election frontrunner, was dragged into the imbroglio on Tuesday, when he was asked during a trip to the French Caribbean island of Martinique to respond to Banon's allegation that he had known about the 2003 incident and encouraged her at the time to press charges.

"I really want to put a stop to this controversy, rumours and gossip," Hollande told reporters in Fort-de-France. "This is all becoming quite unbearable."

A judge released Strauss-Kahn from house arrest on Friday, although charges of attempted rape remained in place, after prosecutors said the hotel maid changed details of her story.

"We all know this case is not sustainable," The New York Post quoted its source as saying on Tuesday.

A spokeswoman for the district attorney's office in New York would not confirm that prosecutors plan to drop the charges, saying they were still investigating the case.

Meanwhile, the 32-year-old Guinean immigrant filed a suit in a court in the Bronx, accusing the Post of publishing defamatory articles between July 2-4. The Post was unavailable for comment.

Strauss-Kahn's abrupt reversals of fortune have angered many French, who viewed his parading before cameras, unshaven and handcuffed, in New York as a gross violation of his rights.

The Socialist Party, struggling to find a candidate who can match Strauss-Kahn's know-how and experience, has said it is very unlikely he could make a late bid for the October party primary, but it would not close the door if he did so.

"Strauss-Kahn today is not a man who is hungry for power," Cambadelis said. "He is in a period of healing, rehabilitation, rebuilding, he's a man who's been hurt."

(Additional reporting by Anthony Boadle in Washington and Dominique Bareto in Fort-de-France; Writing by Catherine Bremer; Editing by Louise Ireland)

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Greece clears final hurdle to get bailout funds (AP)

By ELENA BECATOROS and DEMETRIS NELLAS, Associated Press Elena Becatoros And Demetris Nellas, Associated Press – 1?hr?54?mins?ago

ATHENS, Greece – Greece bought itself time to deal with its crippling debt crisis Thursday after lawmakers passed the second and final austerity bill essential for the release of crucial bailout funds that will prevent the country from defaulting next month.

The European Union and International Monetary Fund had demanded Parliament pass two bills — an austerity law and a second bill detailing how it will be implemented — by June 30 before they approve a euro12 billion ($17.3 billion) installment from the country's euro110 billion ($159 billion) package of rescue loans.

Without the next installment of rescue loans, Greece was to run out of money in mid-July.

Despite that overhanging threat, many Greeks were angry at yet more austerity. A 48-hour general strike and outbreaks of violence on the streets of Athens brought much of Greece to a standstill in the run up to Wednesday's vote on euro28 billion ($40.5 billion) worth of spending cuts and tax hikes and a euro50 billion ($72 billion) sell-off of state enterprises.

Fears of a Greek default have weighed heavy on global markets in recent weeks — investors have been fretting that a default could trigger a major banking crisis and turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

Concerns of a near-term default have been eased as the money will see Greece through September. That's clearly evident in the performance of global markets in the past couple of days. Athens' main stock market closed another 1.1 percent higher Thursday.

"Greece has bought more time," said economist Vagelis Agapitos. "This time however will start running out rather quickly unless Greece starts to deliver on its promises."

The worst case scenario is that Greece may only have a couple of months to show it is doing so — in September, it will once again have to prove it has implemented all it has promised in order to receive any further funds from last year's bailout package.

One particular point of interest will be what progress it is making on the privatization drive in light of continued union opposition. Few state enterprises are immune from being sold off, from the race track and ports to the state electricity company.

Even if Greece gets through the next hurdle in September, there are still real worries that the country will end up eventually having to restructure its debts — negotiating longer repayment times or giving creditors less than the full amount owed. Many economists believe Greece will ultimately have to default on its debts at some point as the scale of the debt at euro340 billion is just too big for a country of only 11 million people to service.

For now though, the Greek government has conceded it is going to need more help and is in talks for a second bailout. Last year's package was predicated on Greece being able to tap bond market investors for cash next year, but with the country's interest rates at exorbitant levels, that looks highly unlikely.

As well as rubber-stamping the release of the next batch of bailout funds, finance ministers from the eurozone are expected to discuss the terms of a second bailout at their meeting Sunday in Brussels. The IMF is also expected to clear the immediate funds next week.

The involvement of the private sector in any second bailout is likely to feature heavily at the Brussels discussions after German banks agreed to rollover some of the debts Greece owes them. The news that the German banks are willing to contribute to a second rescue package follows on the heels of a similar announcement earlier this week from their French counterparts. Details of the initiatives remain sketchy.

"Of course we have major difficulties ahead of us," Finance Minister Evangelos Venizelos said in the debate before Thursday's vote. "It is not just that we must negotiate with the EU, the eurozone countries, our institutional partners and the IMF. The point is that in the turbulence of the of the global markets and banking system, we are victims for a large part and a test case for the strength of our institutions."

Parliament passed the second law by 155 votes to 136 Thursday, a day after voting through the main austerity bill in a vote held as rioters clashed with police outside parliament in a second day of violence.

More than 300 people were injured in two days of mayhem in central Athens, which saw rioters pelting police with anything they could find, and police responding with a barrage of stun grenades and tear gas that still lingered in the city's central square on Thursday morning. Windows at cafes and shops were smashed, and a post office housed on the ground floor of the finance ministry building torched. Burning barricades set up across central streets smoldered into the early hours of Thursday.

The austerity measures, which slap taxes even on the lowest paid, have sparked repeated strikes and demonstrations. The riots on Tuesday and Wednesday came during a 48-hour general strike that disrupted services across the country, forcing airlines to cancel or reschedule flights, halting nearly all public transport and leaving ferries tied up in port.

The EU welcomed Thursday's vote, with the heads of the EU commission and council, Jose Manuel Barroso and Herman Van Rompuy saying it was a "decisive step Greece needed to take in order to return to a sustainable path. In very difficult circumstances, it was another act of national responsibility."

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Derek Gatopoulos in Athens contributed.

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