Greece spending cuts (audio)

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Riot police and demonstrators clash Tuesday during protests against austerity measures in Athens

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Christine Lagarde in Paris on Wednesday, a day after the IMF appointed her as its next managing director

Chavez acknowledges he has cancer

(Reuters) - Venezuela's socialist leader Hugo Chavez acknowledged he had surgery for cancer, shaking the political system he has dominated for more than a decade and alarming supporters counting on him to win re-election in 2012.

The usually loquacious Chavez, 56, confirmed in a speech on Thursday that he had undergone surgery in Cuba to remove a cancerous tumor and was receiving more treatment. He said he needed to recover before returning to Venezuela to run his self-styled socialist revolution.

"We will live and we will conquer. Until my return!" Chavez ended Thursday night's emotion-charged address from Havana.

In poor Caracas shantytowns, where Chavez is still widely loved for using oil revenues to build new clinics and schools, supporters saluted him with fireworks. "He's alive! He's alive!" one group shouted in the poor Catia area after the speech.

Opposition leaders may take the news as a sign Chavez is weakened and less likely to win next year's vote.

"For the Republic, the best thing that can happen is for the president to recover and to take over full governance, so that the natural political process can evolve, which is to carry out elections next year," said Teodoro Petkoff, who runs the opposition newspaper Tal Cual.

The opposition was trying hard to avoid appearing gleeful at Chavez's ill health, though some detractors posted vitriolic messages on Twitter and other sites.

"It is impossible to deduce if he will or will not be in a physical state and the right mood to go into the 2012 campaign," said local analyst Luis-Vicente Leon.

Known for eight-hour speeches and frequent camera appearances, Chavez left Venezuela in near silence and its government functioning at half-steam for almost three weeks after a June 10 operation to remove a pelvic abscess.

Can he still govern from Cuba? Can he control his coalition? Will he be able to rule for another decade as he has often promised?

Perhaps to answer fears of a power vacuum or succession fight, Chavez said he remained "at the helm" of government" in "permanent communication" with his Vice President Elias Jaua.

Supporters seemed shocked and at times in denial at the news of his cancer.

His popularity has been weakened in recent years as he has struggled to keep up with bread-and-butter government tasks such as keeping electricity flowing, putting criminals in jail and providing housing for the poor.

Remaining in Cuba could further compromise advances in those areas, especially since state leaders are notoriously slow to make decisions without his direct involvement.

adapted from Reuters

Europe's street protests (video)

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Strauss-Kahn case near collapse

NEW YORK/PARIS | Fri Jul 1, 2011 6:24am EDT

(Reuters) - The sexual assault case against former IMF chief Dominique Strauss-Kahn was close to collapse on Friday, sources close to the case said, in a dramatic turnabout that could upend French politics again.

A source familiar with the probe told Reuters that prosecutors now had doubts about the maid's credibility as a witness.

Strauss-Kahn's supporters in the French Socialist party voiced delight at the apparent reversal and some said they hoped he might re-enter the 2012 presidential race.

But political analysts said his reputation had been too tarnished for him to be a presidential contender, although he could play an influential political role if cleared.

"Even if what he did was not criminal, all this is going to take time," said Christophe Barbier, a political commentator and editor of L'Express weekly.

"There is everything we have learned about him, the damage to his reputation. All this makes the idea he could be a candidate very hypothetical, it's science fiction."

From the start, the case hinged on the purported victim, a 32-year-old Guinean immigrant who cleaned the $3,000-a-night suite at the Sofitel hotel in Manhattan where Strauss-Kahn was staying.

The New York Times quoted a source close to the investigation as saying the housekeeper had lied repeatedly and prosecutors no longer believed her account of the circumstances of the sexual encounter or of her own background.

The New York Times reported that prosecutors met with Strauss-Kahn's lawyers on Thursday and the parties were discussing whether to dismiss the felony charges.

It said Strauss-Kahn could be released on his own recognizance and freed from house arrest.

Strauss-Kahn was due back to court in New York on Friday to seek changes to his bail conditions, defense attorney Benjamin Brafman said.


"This is amazing news for Dominique, for (his wife and former television journalist) Anne Sinclair, for his family. I think they must have the impression this morning that they are waking up from a terrible nightmare," Socialist lawmaker Jean-Marie Le Guen, who is close to Strauss-Kahn, told French television on Friday morning.

"All those who believed in Dominque's innocence, and in the fact that the elements as they were reported were incompatible with his personality, will feel vindicated," he said.

Some analysts said that if fully cleared, Strauss-Kahn could lend economic credibility as an adviser to a Socialist candidate and might eventually emerge as a contender to be prime minister or finance minister.

The New York Times quoted two well-placed law enforcement officials as saying prosecutors had found issues with the asylum application of the accuser and possible links to criminal activities, including drug dealing and money laundering.

They had also discovered that the woman had made a phone call to an incarcerated man within a day of her encounter with Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him, the paper said.

The conversation was recorded. The man was among a number of individuals who had made multiple cash deposits, totaling around $100,000, into the woman's bank account over the last two years, the New York Times said

After a few nights in New York's notorious Rikers Island jail, Strauss-Kahn was allowed to post $1 million cash bail and a $5 million bond. He is now under house arrest in Manhattan, equipped with an electronic monitoring device and under the 24-hour watch of armed guards.

Adapted from Reuters