Economy: The Falling Dollar, Trade, Iran and the Middle East
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Published on: October 27th 2007 17:02:19
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| “Caution” may be the one word that summarizes the mood of top Administration and private sector leaders about the state of the US economy. We sense that some of this caution is now feeding into the foreign policy arena. While conservative commentators urge that the Administration should spend “whatever it takes” to advance its aims, official contacts suggest to us that economic factors are now more influential in internal Administration debates. The most obvious is the acknowledgement that a growing sense of economic vulnerability in the US workforce has produced a less welcoming climate for international trade deals. This will manifest itself in diminished US backing for trade liberalization, such as under the Doha Round. Behind the scenes, Treasury concern about the dollar’s international value is impacting US thinking about Iran. A National Security Council official told us: “Treasury warnings about the risks for the dollar that would result from military action against Iran are growing.” US officials also acknowledge that concerns about the currency policies of Bahrain, the United Arab Emirates and Saudi Arabia mean that “we have to listen carefully to their views about US policy in the Middle East.” More positively, the declining dollar is opening export opportunities. Treasury Secretary Paulson will visit India on October 29th-30th for a session of the US-India CEO Forum. A high-powered US financial team will join him. They will be looking at opportunities in India’s infrastructure and power-generating needs. A Treasury official told us that Paulson hopes for an easier relationship with India than China. |
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