Secretary of State Clinton and Secretary of Treasury Geithner
SoS Clinton and SoT Geithner have been grabbing a large portion of the media attention amongst President Obama's cabinet since the inauguration. Regarding SoS Clinton, she grabs attention simply because of her prominent position in U.S. politics, but also because she is always looking to assert herself and put her stamp on whatever she does. Since she failed to ascend to the Democrat Presidential Nomination, she will have to defer executive decisions to President Obama, but will do doubt try to flex her SoS muscles as much as possible in working with other cabinet members, such as SoT Geithner.
Quite quickly, she has jumped out front to question the U.S.-China Strategic Economic Dialogue which I described in my previous post here. Her remarks were quoted as follows:
"Ms. Clinton told reporters at the State Department that the Bush administration's dialogue with China "turned into an economic dialogue," referring to former Treasury Secretary Henry Paulson's Strategic Economic Dialogue, discussions held twice a year since late 2006.
""We need a comprehensive dialogue with China," Ms. Clinton said. Economic engagement, she added, is "a very important aspect of our relationship with China, but it's not the only aspect our relationship.""
I believe what can be inferred here is that SoS Clinton would like to tie a regular dialogue to other issues such as labor standards, human rights, environmental policy, etc. A description of SoS Clinton's various positions is outlined here by the Council on Foreign Relations. I won't go into every detail of her positions, but it is fair to say that she is a China 'skeptic' in the context of a general support for free trade. It is also I think fair to say that she prefers trade agreements conditional upon concessions in the other areas of policy mentioned above. Asian countries are sure to have a long file on SoS Clinton and a team of people that have worked with her and her husband in the past. The key to success will be whether SoS Clinton approaches the Asia-Pacific under a well-crafted grand strategy, in which policy is defined against the deeply rooted interconnectivity in the region, or takes the stance of trying to isolate and score points on individual issues.
I see few problems in direct relations with Japan, as this article suggests. The only possible problem would be if SoS Clinton errors in the China relationship and puts Japan in a tight spot in its own relations with China. On South Korea, the quality of the relationship will, in the short-term, turn on discussions of the U.S.-Korea FTA and the North Korea issues. Seoul will be quite bitter if it is increasingly sidelined on North Korea and simultaneously asked to renegotiate the FTA. In addition, South Korea's economy is also quite intertwined with China, and this balance must also be considered.
For Southeast Asia, Australia will remain a close friend while the U.S. will likely honor existing agreements and relations with stable ASEAN member countries and continue to pursue human rights initiatives with Cambodia and Burma.
As for SoT Geithner, he has made waves in the media for his tax problems and inadvertant comments on China's currency policy, stating that the Obama Administration believed that China was manipulating its currency. The Obama Administration quickly moved to correct SoT Geithner and assuage the immediate anger coming from Chinese leadership. Based on the background by CFR, SoT Geithner has a long-time relationship with the Asia-Pacific:
"From 2001 to 2003, Geithner was director of the Policy Development and Review Department at the International Monetary Fund (IMF). There, he helped craft the IMF's $30.4 billion bailout of the Brazilian economy in September 2002. He also worked on bailouts of the Indonesian, Mexican, and South Korean economies.
"Geithner has a bachelor's degree from Dartmouth College and a master's degree from Johns Hopkins University in international economics and East Asian studies. He has studied Japanese and Chinese and has also lived in East Africa, India, and China."
Given this experience, I expect he will have a great deal of confidence in defining economic policy towards the Asia-Pacific region and it will be interesting to see how this will temper, if it all, SoS Clinton's efforts to assert State's role in the formation of overall policy. Adding an additional layer to the background going forward is the U.S. reliance on foreign nations financing its debt. As the Obama Administration moves towards accepting a significantly large stimulus package, it must be solidly built for future U.S. growth to reduce the reliance on debt financing over the next several years.
While the Obama Administration shapes the strategy within which they expect the SoS and SoT to work together, they must also deal with a Congress whose leadership could be described as relatively more antagonistic towards free trade. Within the proposed stimulus package, 'Buy American' provisions are stirring up negative feedback around the world, such as from Canada, several other countries, as well as the WTO and U.S. Chamber of Commerce. As I mentioned in a previous post, healthy global supply chains equate with a healthy global economy. Constrain global supply chains with new protectionist regulations and the result is constrained trade, and thus, constrained growth for U.S. businesses.
Since it has been already mentioned that President Obama's first offical foreign visit will be to Canada (our largest trading partner), watch to see when other members of the Administration make their first trips to the Asia-Pacific. We should begin to see, from the language that comes out of those meetings, whether a grand strategy is in formation. There may also be visits by foreign leaders of the Asia-Pacific to the Whitehouse, and these meetings will provide additional clues.
Comments