Unlock stock picks and a broker-level newsfeed that powers Wall Street.
India applies to U.N. to try to solve diplomat crisis

* India formally asks for change in diplomat's U.N. status

* State Department: U.S. wants to "move beyond" the dispute

* Diplomat accused of visa fraud, underpaying housekeeper

* Protesters ransack Domino's Pizza in India

By Jonathan Allen and Joseph Ax

NEW YORK, Dec 20 (Reuters) - India asked the United Nations on Friday to accredit a New York-based diplomat who was arrested for visa fraud, in an apparent attempt to defuse a crisis with the United States over her treatment by U.S. authorities who strip searched her.

A U.N. spokesman said the organization had received an official request from New Delhi to accredit Devyani Khobragade as a member of India's permanent U.N. mission in what seemed to be a move to give her a stronger form of diplomatic immunity.

Khobragade's arrest has enraged India, which is demanding that all charges be dropped against her. Indian protesters ransacked a Domino's Pizza in a Mumbai suburb in anger at her detention this month for visa fraud and underpayment of her housekeeper.

She was strip searched at a U.S. District Court building in downtown Manhattan and placed in a holding cell. As India's deputy consul general in New York, she only had limited diplomatic immunity from prosecution.

Indian media said the request to transfer her to the United Nations was aimed at ending the stand-off with the United States in the hopes that Khobragade's new diplomatic status could allow New Delhi to bring her home without facing charges.

Diplomatic sources said that broader immunity could make it harder to follow through on a prosecution against her.

One possible scenario to solve the crisis would be that she receives full diplomatic immunity in her U.N. post if the State Department approves her transfer. The U.S. government would then ask for her immunity to be removed so she can face prosecution. Assuming India refused, the State Department could then take steps to have her removed from the country.

In a similar recent case, U.S. Attorney Preet Bharara, who is prosecuting the envoy, charged dozens of Russian diplomats with healthcare fraud.

Unlike in Khobragade's case, there was no dispute that they were immune from prosecution, but Bharara acknowledged this month the State Department could seek to remove those who remained in the country.

U.S. WANTS TO MOVE ON

The State Department said on Friday it wanted to move beyond the matter of the Indian diplomat.

"We certainly fully agree that it's important to preserve and protect our partnership. It's not just about diplomatic ties," State Department spokeswoman Jen Psaki told reporters, citing more than $90 billion in bilateral trade, close counterterrorism cooperation and engagement on a range of topics including Afghanistan.