Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.wpost From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Mulford Left His Imprint On World Economic Policy=BY HOBART ROWEN= Date: Mon, 16 Nov 92 05:02:45 EST Message-ID: <31.1992Nov16.050246@AmeriCast.com> Mulford Left His Imprint On World Economic Policy=BY HOBART ROWEN= David C. Mulford, the Treasury's top man on international af- fairs for most of the past nine years, is the first post-election escapee from the Bush administration. He resigned last Monday, and started work in the private sector Tuesday. Mulford's was not a household name in the United States, although he was the most influential spokesman for the country on international financial matters during the Bush years. His job since the mid-1980s included coordinating U.S. policies for the economic summits, and for the Group of Seven finance min- isters' meetings, as well as negotiating, recently, the terms of aid packages for Russia. Mulford has been respected, if not always admired, in Europe and Asia as a tough and successful negotiator for Presidents Reagan and Bush. He has had his brushes with the press. The Wall Street Journal has been especially hard on him - unfairly, he argues. He refers to an unfriendly Journal profile as "a hatchet job." The Financial Times of London, in its story on his departure, went so far as to call him a "sometimes brutal" negotiator, which means that he won more than he lost in dealings abroad. When negotiations were under way for the new European Bank for Recon- struction and Development, Mulford forced the Europeans to agree that the EBRD would do a big chunk of its lending through the private sector, even though there were few viable private sectors in the former Soviet bloc. In a separate deal later, Mulford "took the German banks to the cleaners on final negotiation of terms of commercial loans to the former Soviet states," said an international financial expert. Many in Washington and abroad found him arrogant, but he could also be charming. After a Group of Seven meeting in Paris three years ago, Mulford held a small group of journalists spellbound, over dinner, with a discourse on the importance of global econom- ic cooperation under the Group of Seven industrialized nations. Mulford's influence is not likely to be replicated by a sub- Cabinet economic officer in the Clinton administration. While one part of his power was attributable to talent, another element was that his boss, Treasury Secretary Nicholas F. Brady, knew less about international economics, and didn't appear anxious to get involved. The chances that President-elect Clinton would settle for a weak treasury secretary are minimal, especially at a time when foreign economic policy could turn out to be as important as traditional foreign policy. In the last four years, Mulford was often the only credible or available voice for the United States on foreign economic issues. Sometimes it sounded harsh, when, for example, he criticized the German government last summer for failing to follow a policy keyed to economic growth. Last year, when Brady virtually abandoned U.S. relationships with the World Bank to Mulford, Mulford terrorized the bank with a ridiculous demand that the bank "privatize" all its lending. In the end, that was beaten back by former World Bank president Barber Conable, who went over Brady's head directly to Bush on the issue. But even Mulford's critics agree that he should get major credit for devising the "Brady Plan" to reduce Third World debt. And at a farewell party for Mulford in the Treasury's his- toric Cash Room this week, Brady himself called attention to Mulford's role. In a real sense, the Brady Plan was Mulford's revenge for ear- lier snubs by former treasury secretary James A. Baker III and former deputy secretary Richard Darman. Mulford joined the Treasury as assistant secretary for international affairs in March 1984 under then-Treasury Secretary Donald T. Regan. After Regan and Baker - then White House chief of staff - swapped jobs early in 1985, U.S. policy on the dollar was switched 180 degrees from benign neglect (hands off the foreign exchange markets) toward managed intervention, culminating in a famous meeting at New York's Plaza Hotel in September 1985. Mulford played a key role in the negotiations in what became known as the Plaza Accord, committing the five major industrial nations (the Group of Five) to push the dollar down and other currencies up. But Mulford had desperately wanted the title of treasury under- secretary for international affairs, to put him on a level play- ing field with his opposite numbers in foreign countries. Although the slot was open, Baker never would give it to him. The reason: Darman, who had come along with Baker from the White House, wanted to supervise the international financial arena him- self, without competition from Mulford for Baker's ear. Mulford didn't make undersecretary until May 1989, after Baker and Darman had left the Treasury, and Brady had been installed as the new secretary. That was just the time when it was becoming clear that a highly publicized debt refinancing plan for poor countries created by Baker in 1985, called the "Baker Plan," wasn't working - in fact, it was only generating more debt. Undersecretary Mulford eagerly went to work to supplant it with a proposal that included outright debt relief. This strategy was named for Brady. The plan repudiated the basic philosophy of the Baker Plan, and has helped get many countries, notably Mexico, back on their feet. In an interview a few days before he left town, Mulford insisted that the G-7 coordination process has been and remains "a big success," although others argue that it has deteriorated. He said "the media lost interest" once finance ministers had achieved relative stability of exchange rates "and there were no more exchange rate spectaculars, such as the Plaza, and the Louvre Palace," a 1987 meeting of six major powers. But it is easy to blame the media, when in fact the problem with the coordination process is that the major nations, the United States included, have been following sharply different ma- croeconomic policies. Mulford doesn't really argue the point. He hopes that things will change. His reading is that both the Euro- peans and Japanese belatedly have come to see the need for stimulus to promote global economic growth, "and the Clinton ad- ministration will find (the G-7) as a group more responsive to that need. Give Brady some credit for that," he said. His farewell advice to Clinton: "The global economy requires the G-7 process, and the U.S. must be the leader."<02:34 11-16C9999- ---- Copyright 1992, The Washington Post. 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