Chang­ing the guard

Mu­si­cal chairs in global lead­er­ship game

Finweek English Edition - - Economic trends & analysis - BY HOWARD PREECE howardp@fin­

THE TOP TA­BLE in big-league global po­lit­i­cal-eco­nomic fo­rum will see sev­eral long­fa­mil­iar faces gone in a cou­ple of years.

They will nec­es­sar­ily be re­placed by a new band of lead­ers.

But how im­por­tant will this be, po­ten­tially, to the world econ­omy?

Or will this tran­si­tion ul­ti­mately have only a mar­ginal ef­fect at most?

Also, are those who are set pro­gres­sively to leave the cen­tre stage, for­tu­itously quit­ting at just the right time per­son­ally? Or will the de­par­tures, of some at least, al­ready be too late to es­cape a thumbs-down ver­dict from his­tory?

Let’s start with those still in of­fice now, but for whom the clock is count­ing down. • The spot­light is trained most acutely on Repub­li­can Pres­i­dent Ge­orge W Bush of the United States. He will be out of the White House by the end of 2008, com­plet­ing a max­i­mum eightyear spell.

It’s odds on that he’ll be suc­ceeded by a Demo­crat. What’s much less cer­tain now than only two months ago is who that Demo­crat will be.

Hil­lary Rod­ham Clin­ton, New York’s ju­nior sen­a­tor and wife of for­mer Pres­i­dent Bill Clin­ton, seemed to have her party’s nom­i­na­tion ef­fec­tively se­cured.

To­day that can’t be taken any­where so eas­ily for granted.

Ms Clin­ton has al­ways aroused a great deal of an­i­mos­ity as well as much ad­mi­ra­tion, and that seems to ap­ply now among a great many Democrats.

So a ma­jor chal­lenge is be­ing mounted, the polls say, by sen­a­tor Barack Obama, son of a Kenyan fa­ther and white Amer­i­can mother.

There’s also the some­times forgotten “third man” – John Ed­wards, for­mer sen­a­tor and the vice-pres­i­den­tial can­di­date for the Democrats in the los­ing 2004 elec­tion.

This nom­i­na­tion con­test will un­fold over com­ing months, and it will surely have pro­found in­flu­ence on the eco­nomic pol­icy pro­pos­als that the suc­cess­ful Demo­crat even­tu­ally lays out against her/his Repub­li­can ri­val.

Hil­lary Clin­ton has, un­til re­cently, broadly fol­lowed the pro-free-trade stance that her hus­band mostly pur­sued.

True, Bill Clin­ton sold out at the no­to­ri­ous 1999 Seat­tle meet­ing of the World Trade Or­gan­i­sa­tion, but that was be­cause he des­per­ately needed full back­ing from anti-free­trade Democrats to fight off de­mands for his im­peach­ment.

But hos­til­ity to free trade has been mount­ing fast in the US.

Vi­tally, the cur­rent ac­count trade deficit steadily soars while im­ports from China – widely be­lieved in the US to be de­lib­er­ately main­tain­ing an ar­ti­fi­cially cheap cur­rency, the yuan – keep surg­ing up­wards.

This is Ed­wards’s best bet. He has long been one of the most un­com­pro­mis­ing pro­tec­tion­ists in Amer­ica.

Obama, sens­ing the wind, has moved strongly that way.

Clin­ton, de­ter­mined not to leave her­self pos­si­bly greatly vul­ner­a­ble in this key area, has also shifted sig­nif­i­cantly, in the pro­tec­tion­ist di­rec­tion.

The Repub­li­can choice ap­pears to be be­tween for­mer New York mayor Rudy Gi­u­liani and sen­a­tor John McCain. Both are in­stinc­tively re­cep­tive to free trade – but they might also change stance in a pres­i­den­tial elec­tion where the go­ing will be up­hill any­way. • And what of other coun­tries?

In France the great sleaze-mas­ter, Jac­ques Chirac, is fi­nally hav­ing to step down from the pres­i­dency there.

The fight for suc­ces­sion is, at present, be­tween Ni­co­las Sarkozy on the cen­tre-right and so­cial­ist Se­go­lene Royal.

Sarkozy was very much a free mar­ke­teer, but he’s trim­ming his sails to suit tra­di­tional French statist at­ti­tudes.

Royal started cam­paign­ing on a mod­er­ate pro­gramme but has now em­braced old-style left­ist pop­ulism.

Sarkozy is favourite and, if he wins, might try to nudge the Euro­pean Union to­wards freer trade, even in agri­cul­ture. But don’t bet on that.

Chirac was also sup­pos­edly right-wing, but he hopped left when­ever it seemed ex­pe­di­ent.

Also, al­most all French politi­cians are fiercely pro­tec­tive of agri­cul­ture – which leaves lit­tle prac­ti­cal hope for get­ting the WTO Doha free-trade round back on any re­al­is­tic pro­gramme of im­ple­men­ta­tion. • Tony Blair has at last agreed to step down as Bri­tish pre­mier, his rep­u­ta­tion hav­ing crashed over the last 12 months or so. Chan­cel­lor Gor­don Brown is ex­pected to suc­ceed him, though ex­tra­or­di­nary up­turns can no longer be ruled out.

But Brown’s claim to be the great mas­ter of the UK econ­omy has tum­bled (the In­ter­na­tional Mone­tary Fund has steadily moved his rat­ing from great suc­cess to in­creas­ing in­ci­dence of fail­ure).

So Brown could lose the elec­tion to the great un­known, UK Tory leader David Cameron, or form a coali­tion with the left-of-cen­tre Lib­eral Democrats headed by Men­zies Camp­bell.

In any out­come, the UK would be push­ing for Doha and other free-trade ini­tia­tives.

But even with the prob­a­ble back­ing of An­gela Merkel’s coali­tion gov­ern­ment in Ger­many, this wouldn’t get far in the face of French op­po­si­tion.

The favourite is un­der pres­sure as race pace picks up. Hil­lary Clin­ton

Cap­tain Sleaze is bow­ing out so far un­de­feated. Jac­ques Chirac

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