New treasury secretary sticks with the herd
The US's "independent" new treasury secretary looks to be pursuing the usual neocon agenda of the White House elephants
William Keegan
Wednesday September 20, 2006
Guardian Unlimited
business.guardian.co.uk
Henry Paulson: showed as much loyalty to the Bush agenda as his predecessor at the US treasury. Photograph: Martin H Simon/EPA
It's terrible, is it not, how one year's nice metaphor is the next year's cliche?
Your correspondent has lost count of the number of times in the past seven days that he has heard references to "the elephant in the room".
Well, I have to say there were no elephants in any of the rooms I entered in Singapore over the weekend during the annual meetings of the World Bank and International Monetary Fund.
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But if I were to be tempted to use that metaphor in the way it is often employed - to denote a discussion topic that is being studiously avoided - I would say that the elephant in the IMF meeting rooms was George Bush, president of the United States.
Ostensibly, the great and the good of the international financial world - given all those "gIobal imbalances" we hear about, I hesitate to call it the international financial system - were gathered together to discuss the outlook for the world economy; evolving changes in the role and power-structure of the IMF; and what the World Bank is up to.
These annual meetings of the Bank and Fund are preceded by other meetings, followed by further meetings, and accompanied by lots of smaller meetings, not to say parties. You could hardly move in Singapore without bumping into delegates who, as they rushed from one party to another, claimed that all the financial "bulls" were ignoring the elephant which, after all, is a far bigger animal.
Mostly, they did not see the elephant as Mr Bush. No, the elephant was, depending on whom you talked to, the threat of protectionism; the impact of even higher oil prices; the terrible things that lay in store for the world economy if the US slowed down dramatically as a result of a collapse in property prices; the growing threat of inflation; and the even worse outlook for inflation if the US Federal Reserve Board were to panic at the first sight of a serious slowdown in the US and cut interest rates while inflation was still not under control.
A veritable, sorry, metaphorical, herd of elephants.
So why did my elephant answer to the call of the name George W Bush? Simple. Let us take the press conference the new US treasury secretary, Henry Paulson, gave on Saturday night, after the meeting of the Group of Seven finance ministers and central bank governors (the group comprising the US, Japan, Germany, the UK, France, Italy and Canada).
This was the first sighting of Mr Paulson at a G7 press conference. His appointment to the top treasury job had been announced in June, and we had been told that this man, who had risen to the top of Goldman Sachs and made over 70 trips to China on the way, was no pushover. His predecessor, the engaging John Snow, had been seen as a cipher, a mere satellite orbiting the White House. Paulson, by contrast was his own man, and would stand up to Mr Bush on issues such as global warming.
So what happens? After a routine summary of the G7 hopes - that rapid world economic growth will continue; that the oil price will stabilise; that central banks will be "vigilant" in the fight against inflation (ie, that interest rates may have to rise further); and that the Doha trade talks will be resumed - Mr Paulson made it clear that what was really on his mind was encouraging his G7 colleagues to impose financial sanctions on Iran.
Well, I spoke to some of Mr Paulson's European counterparts. They are not at all keen on this. They see Mr Paulson as pursuing a White House agenda. As one senior official said: "We are not going to ask our banks to stop financing road building in Iran simply for fear that one day a terrorist may drive along that road."
I think this was a neat way of epitomising the European view of the paranoia being exhibited by Mr Bush and the neocons about Iran. Of course, one day there could be elephants on the roads in Iran. |
