In Paris, Strauss-Kahn looks presidential

NEW YORK - Smiling faintly as he walked out of court, former IMF chief Dominique Strauss-Kahn was released from house arrest yesterday after prosecutors acknowledged serious questions about the credibility of the hotel maid who accused him of sexual assault.

The charges against him stand - for now, at least. But weeks after saying it had a strong case that was only getting stronger, the district attorney's office was on the defensive. So was the housekeeper's lawyer, who continued to insist that Strauss-Kahn had violently abused the 32-year-old woman, who reportedly has links to drug dealing and money laundering .

Strauss-Kahn, 62, had been confined under guard for weeks to a luxury New York City townhouse on $6 million bail after his arrest on attempted rape charges that forced his resignation as head of the International Monetary Fund and appeared to destroy any hope he had of running for president of France next year.

But then, yesterday, defense lawyers went into court to ask that his bail conditions be eased, with prosecutors' assent.

A letter from the New York District Attorney's Office to Strauss-Kahn's lawyers had revealed a series of lies by the alleged victim. Those listed centered on lies about her background of political persecution and gang rape in her native Guinea, in west Africa, to obtain U.S. asylum, and, in the current case, how she spent her time just after the alleged incident at the Manhattan Sofitel where she worked.

Now his political allies are hoping he can still return to French politics as a major prospect in next year's race for the presidency.

With the woman's credibility suddenly in doubt, Strauss-Kahn quickly regained his aura as a leader even though charges were neither dropped nor reduced nor his passport returned.

His sudden change of fortunes jolted his struggling Socialist Party, regalvanizing allies who had hoped to put Strauss-Kahn forward as the party's presidential candidate against unpopular conservative President Nicolas Sarkozy in elections next April and May.

Strauss-Kahn and wife Anne Sinclair looked every bit the power couple in court yesterday - the wife, to whom Strauss-Kahn owes his wealth - sporting a jaunty white jacket and the husband a light blue tie.

There has been no comment from Sarkozy, who has remained silent throughout the ordeal, widely regarded as an astute political strategy.

In fact, the fate of Strauss-Kahn is as murky as ever. His next court appearance is set for July 18.