Summers: US Might Just Have 'Lost Role as Underwriter of Global Economic System'

Summers: US Might Just Have 'Lost Role as Underwriter of Global Economic System'

Monday, 06 Apr 2015 01:14 PM

By Dan Weil

http://www.newsmax.com/Finance/StreetTalk/Summers-US-AIIB-China/2015/04/06/id/636698/

The U.S. government's mismanagement of global economic policy is leading to a major erosion of influence, says former Treasury Secretary Lawrence Summers, now a Harvard professor.

"This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system," he writes in The Washington Post.

"I can think of no event since Bretton Woods comparable to the combination of China's effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out." He was referring to the Asian Infrastructure and Investment Bank.

"Political pressures from all sides in the United States have rendered the global economic architecture increasingly dysfunctional," Summers states.

Conservatives have blocked International Monetary Fund governance reforms, and liberals have hampered infrastructure projects financed through the existing development banks, he explains.

"With U.S. commitments unhonored and U.S.-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions, the way was clear for China to establish the Asian Infrastructure Investment Bank (AIIB)," Summers writes.

Two important solutions in Summers' eyes are bipartisanship and a focus on the middle class.

"As long as one of our major parties is opposed to essentially all trade agreements and the other is resistant to funding international organizations, the United States will not be in a position to shape the global economic system," he notes.

As for the AIIB, Ambrose Evans-Pritchard, international business editor of The Daily Telegraph, says the U.S. government's effort to torpedo it is a major mistake.

"The U.S. Treasury's attempt to cripple the AIIB before it gets off the ground is clearly intended to head off China's ascendancy as a rival financial superpower, whatever the faux-pieties from Washington about standards of governance," he writes.

U.S. officials say the bank must meet the same governance standards as other multilateral lending institutions, such as the World Bank and the Asian Development Bank.

"Such a policy is misguided at every level, evidence of what can go wrong when a lame-duck president defers to posturing amateurs in Congress on delicate matters of global geo-strategy."

The U.S. has forced allies to make a choice between ourselves and China, "and has ended up losing almost everybody. Germany, France and Italy are joining. Australia and South Korea may follow soon. The AIIB is exactly what the world needs," Evans-Pritchard explains.

World Bank

A.W. Clausen was the president of the World Bank, and an honorary trustee at the Brookings Institution (think tank).

Note: David Dollar was a country director for China and Mongolia for the World Bank, and is a senior fellow at the Brookings Institution (think tank).

Robert S. McNamara was the president of the World Bank, and an honorary trustee at the Brookings Institution (think tank).

Ngozi Okonjo-Iweala was a managing director at the World Bank, a visiting fellow at the Brookings Institution (think tank), and is a member of the Bretton Woods Committee.

James D. Wolfensohn was the president of the World Bank, an honorary trustee at the Brookings Institution (think tank), and is a member of the Bretton Woods Committee.

Foundation to Promote Open Society was a funder for the Brookings Institution (think tank), and the Center for American Progress.

George Soros was the chairman for the Foundation to Promote Open Society, married in 2013, a supporter for the Center for American Progress, is a board member for the International Crisis Group, and a member of the Bretton Woods Committee.

Jim Yong Kim was a guest at George Soros’s 2013 wedding, and is the president of the World Bank.

Lawrence H. Summers was a trustee at the Brookings Institution (think tank), a distinguished senior fellow at the Center for American Progress, the National Economic Council chairman for the Barack Obama administration, is a board member for the International Crisis Group, a member of the Bretton Woods Committee, and a 2008 Bilderberg conference participant (think tank).

Mark Malloch-Brown is a co-chair for the International Crisis Group, and was a VP for the World Bank.

Moises Naim was a board member for the International Crisis Group, an executive director for the World Bank, and is a member of the Bretton Woods Committee.

Carole Brookins was a U.S. executive director for the World Bank, and is a member of the Bretton Woods Committee.

E. Patrick Coady was a U.S. executive director for the World Bank, and is a member of the Bretton Woods Committee.

Peter L. Woicke was a managing director for the World Bank, and is a member of the Bretton Woods Committee.

David de Ferranti was a VP for the World Bank, and is a member of the Bretton Woods Committee.

Eli Whitney Debevoise II was a U.S. executive director for the World Bank, and is a member of the Bretton Woods Committee.

Stanley Fischer was a chief economist for the World Bank, and is a member of the Bretton Woods Committee.

Robert B. Zoellick was a president for the World Bank, and is a member of the Bretton Woods Committee.

Jeffrey A. Goldstein was a managing director & CFO for the World Bank, and is a member of the Bretton Woods Committee.

Caio Koch-Weser was a managing director operations for the World Bank, and is a member of the Bretton Woods Committee.

Johannes F. Linn was a VP for the World Bank, and is a member of the Bretton Woods Committee.

Matthew F. McHugh is a member of the Bretton Woods Committee, and was a counselor to the president for the World Bank.

A.W. Clausen was the president of the World Bank, and an honorary trustee at the Brookings Institution (think tank).

Strobe Talbott is the president of the Brookings Institution (think tank), a member of the Bretton Woods Committee, and was an editor for Time magazine. 

Lawrence H. Summers was a trustee at the Brookings Institution (think tank), a distinguished senior fellow at the Center for American Progress, the National Economic Council chairman for the Barack Obama administration, is a board member for the International Crisis Group, a member of the Bretton Woods Committee, and a 2008 Bilderberg conference participant (think tank).

Jon M. Huntsman Jr. is a fellow at the Brookings Institution (think tank), was a distinguished fellow at the Brookings Institution (think tank), and the China U.S. ambassador for the Barack Obama administration.

Foundation to Promote Open Society was a funder for the Brookings Institution (think tank), and the Center for American Progress.

George Soros was the chairman for the Foundation to Promote Open Society, married in 2013, a supporter for the Center for American Progress, is a board member for the International Crisis Group, and a member of the Bretton Woods Committee.

Jim Yong Kim was a guest at George Soros’s 2013 wedding, and is the president of the World Bank.