Looking to the U.S. in Hope -- and Worry
Will George W. Bush manage the U.S. economy as successfully as his predecessor? This is among the biggest issues being discussed by corporate and political leaders gathered for the annual World Economic Forum in Davos, Switzerland. There's clearly a lot of nervousness about the U.S. economic slowdown and what foreigners perceive to be the new President's disinterest in international affairs. "Naturally, the new Administration's stance on these issues is of great interest," says Shintaro Ishihara, Tokyo city's governor. "Japan is very vulnerable to what happens in the U.S. because we have such large holdings of U.S. Treasury bonds."
Foreign businesspeople are particularly concerned because the U.S. has been the main engine of the world economy for the last five years. Now that American consumers' appetite for imports is slowing, foreign exporters are concerned that their revenues from sales to the U.S. will fall. They also fear that the U.S. downturn will spread around the world, leading to slower growth everywhere.
GOOD FOR ALL.
Corporate execs also wonder whether the Bush Administration will embrace trade expansion as Clinton's did. "We want the U.S. economy to keep on working the way it has been for the past five years," says Arminio Fraga, Brazil central bank governor. "A buoyant America is good for all of us." Not surprisingly, most executives in Davos were buoyant about the Federal Reserve Board's Jan. 3 rate cut and Bush's proposal for a large tax reduction. They think both will help rekindle growth and boost consumer demand. Strong U.S. demand is good for the global economy, they say.
Europeans fervently hope that Bush will take a softer line on recent skirmishes between the U.S. and the European Union on trade issues. "We hope we'll finally see the end of the dispute over bananas," says the chief executive of a major European food company. "We also hope that Bush will put more pressure on the EU to reform its common agricultural policy to reduce tariffs on food imports."
Despite the appointment of Colin Powell -- a popular figure not just in the U.S. but around the world -- as Secretary of State, there's concern that Bush knows little about the world outside the U.S. and cares even less. "That's why I'd like every member of the U.S. Senate and House of Representatives to take a course in history and international affairs," says Ronnie C. Chan, chairman of Hong Kong-based Hang Lung Development Co. "That would lead to a more balanced relationship between the U.S. and other countries, especially Japan and China."
Dominique Moïsi, deputy director of the Institut Français des Relations Internationales, says he's "moderately apprehensive" about the new Administration's foreign policy. "'Moderately' because U.S. Presidential power appears to be more limited now, with Republicans holding a razor-thin lead in Congress. 'Apprehesive' because a process of decoupling between the U.S. and Europe appears to be in progress." Moïsi says this separation of interests will have a big impact on relations between Washington and European countries.
Not surprisingly, many non-Americans see this as a time to establish a more equal relationship with the U.S. after years of Yankee dominance. Now that Europe's economy is finally growing faster than America's and the euro is strengthening on the foreign exchanges, there's a feeling that the recent era of U.S. triumphalism is over. "That's good," says Ishihara. "We don't want a world that's dominated by the U.S. We want a more balanced relationship with Washington." Let the Davos seminars begin.
By David Fairlamb in Davos, Switzerland
Edited by Douglas Harbrecht