The Euro Hero: Dominique Strauss-Kahn

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Gueorgui Pinkhassov / Magnum for TIME

Discussions on Chinese economic relations are hardly a magnet for paparazzi — unless, of course, they include a star speaker. So when France's Finance Ministry hosted a conference in Paris on June 16 about China and Europe's common challenges, dozens of photographers crowded into the auditorium, elbowing each other for a spot in front of the stage, where they trained their cameras on the short, gray-haired man at the podium: International Monetary Fund chief Dominique Strauss-Kahn. DSK, as he's widely known, ignored the flashbulbs with the sangfroid of a rock star.

How the French politician went from also-ran to celebrity is one of the more surprising tales to emerge from the global recession — no more so, perhaps, than for Strauss-Kahn's fiercest rival, President Nicolas Sarkozy. Flush with victory in the 2007 presidential election (in which Strauss-Kahn failed to secure his Socialist Party's nomination) Sarkozy put forward the former Finance Minister for the job of managing director of the International Monetary Fund (IMF) in Washington. French pundits widely assumed the President was sending his nemesis into political exile, at an organization whose credibility had long since waned. But within a year of Strauss-Kahn's arrival at the IMF, the world's stock markets imploded and its major economies went into free fall. Darting between crisis meetings with heads of state, Strauss-Kahn became a key player in tackling the most severe downturn since the 1930s by casting the IMF as a lender of last resort in a world stripped of credit. "Before the crisis there was this idea, Do we need an institution like the IMF?" says Strauss-Kahn, 61, relaxing on a couch in his Paris office. "It was like wondering about the need for firefighters when you don't have a fire," he says.

Strauss-Kahn has spent the past year extinguishing flames that threaten the global economy. In April 2009, with the world reeling from the crisis, leaders of the G-20 pieced together a $1.1 trillion rescue package and tripled the IMF's funds in the process. That hugely increased the IMF's power, and Strauss-Kahn's, by allowing the organization to lend big money to troubled countries — its core mission — at a time when banks were collapsing across the world.

Then in April of this year, he shuttled between Athens, Berlin and Brussels, persuading E.U. officials and German Chancellor Angela Merkel, who heads Europe's biggest economy, to bail out cash-strapped Greece and prevent its dire economy from destabilizing the euro. Strauss-Kahn's bargaining resulted in a joint E.U.-IMF rescue package worth about $1 trillion for Europe's hardest-hit economies. The deal secured the euro, which Strauss-Kahn had, as French Finance Minister, helped usher in during the late 1990s.

Europe's troubles are not over — and neither, probably, is Strauss-Kahn's role in solving them. Having spent part of his childhood in Morocco and Monaco, and speaking near flawless English and German, he says he firmly believes in multilateral approaches to tackling most problems, including Europe. The E.U., he says, lacks economic coordination across its 27 countries and needs an overall institution to impose fiscal rules — a contentious issue for many European leaders. "The completion of the euro process is still not done," he says. "You cannot have a single currency and almost no coordination in fiscal policy."

While that coordination could take years to build, there are other — some say more urgent — issues facing Strauss-Kahn: namely China and the U.S. There, say economists, Strauss-Kahn has yet to prove his mettle. "The real test is whether he can battle the big cats, and he has not taken the battle to the Chinese and Americans," says Morris Goldstein, a former IMF official who is now senior fellow at the Peterson Institute for International Economics in Washington, D.C. Like many economists, Goldstein believes the undervalued Chinese currency, the yuan, and the record U.S. budget deficit could both derail the global recovery. (On June 21, Beijing announced it would make the yuan somewhat more flexible.)

Whether Strauss-Kahn will take on those two economic giants when he flies to Toronto on June 26 for the G-20 summit is uncertain, in part because he is looking to boost the contributions to the IMF by the G-20's major members. And even if he does confront the big cats, some politicians — especially in France — are already wondering how long he will remain in Washington before attempting another run at the French presidency. With less than two years to go before Sarkozy's re-election campaign in 2012, two separate polls in February and March found that Strauss-Kahn would easily beat the President if France were to hold the vote today. While Sarkozy's popularity has been slumping lately, some respondents said they felt Strauss-Kahn's IMF role gives him authority as a leader.

Poll results like those can be tempting to a politician, especially one as ambitious as Strauss-Kahn. But he remains coy about his intentions. "I think most people understand this job takes my focus every day," he says. "The only thing I ask is, let me work in doing what I have to do."