Treasury Secretary Paul O'Neill, highly
regarded for his success in reviving aluminum giant Alcoa, is now
focused on an even bigger goal — overhauling the international
financial system.
O'Neill, who has stirred up a fair amount of anxiety about the
new administration's plans in this area, made his debut on the
international stage this weekend at a meeting of finance ministers
and central bank presidents of the world's seven wealthiest
countries.
The Group of Seven gatherings are considered the equivalent of a
board of directors' meeting for the global economy with the U.S.
treasury secretary serving as the titular head of the group given
that he represents the world's biggest economy.
Before coming to the meetings, O'Neill had made a number of
critical comments about how the G-7 and the International Monetary
Fund had responded to previous financial crises. He also had
expressed skepticism about whether the G-7 sessions, which occur
three times a year, were worth the travel time to distant cites.
But O'Neill told reporters at a closing news conference that he
had been impressed with the quality of the closed-door discussions.
"It was at the right level of detail," he said. "It was not
just what you could learn from reading the newspapers."
O'Neill also said he was pleased that the group had been
receptive to his suggestions that they explore ways to make
agencies such as the IMF more accountable for how they handle
future financial crises.
Conservative critics have charged that the IMF, which assembled
more than $100 billion in bailout packages during the 1997-98
global financial crisis, saw much of that money wasted because it
failed to stop financial panic from toppling a number of countries.
O'Neill, who made $59 million in salary and stock options at
Alcoa last year, has striven during his first month in the Bush
Cabinet to bring a no-nonesense business style to government work.
He said the G-7 officials "talked about the really important
subjects ... questions of accountability and responsibility."
The new administration has not yet laid out its reform proposals
for the 183-nation IMF, and its sister lending agency the World
Bank, but in a series of interviews with reporters O'Neill has
discussed such ideas as requiring the IMF to blow the whistle
sooner on countries not following sound practices, to scale back
the size of its bailout packages and to identify one person who
would be held accountable if the rescue efforts did not succeed.
O'Neill has also been skeptical about the use of government
intervention in currency markets to stabilize currencies such as
the dollar and in general has focused on a view that President Bush
will pursue a less-interventionist policy when it comes to
international economics than the Bush administration.
While U.S. allies may still have concerns about the direction
the new administration is taking, O'Neill's colleagues were
complementary of O'Neill after their get-acquainted session this
weekend.
Wim Duisenberg, the head of the European Central Bank, said that
"O'Neill came here in a very modest spirit of trying to learn more
than teach ... I have the impression we can continue doing business
in the same cooperative state we have experienced in past years."
German Deputy Finance Minister Caio Koch-Weiser said that
O'Neill was a good listener who "directly engages in the
discussions."
One of the top agenda items on the table was the sudden slowdown
in U.S. economic growth, which has raised recession fears.
The group's final statement called on the United States to use
both interest rate reductions and fiscal policy such as tax cuts to
combat the downturn, which the Bush administration is sure to use
as another endorsement of the need to win congressional approval
for his $1.6 trillion 10-year tax cut.
O'Neill said he believed the United States was likely to begin a
strong recovery later this year and he said he was "comforted" by
a pickup in auto sales in January although he cautioned against
reading too much into one month's data.
As he had promised before the meeting, O'Neill sought to change
the tone in America's relationship with Japan. He called his
discussions with Japanese Finance Minister Kiichi Miyazawa "good
and clear" and said he wanted to avoid "haranguing" Japan about
the need to do more to boost growth in a country that has suffered
a decade of sub-par activity.
