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For the US Development Policy Initiative’s inaugural Voices of Experienceevent, three former Treasury Under Secretaries for International Affairs took the stage: Tim Adams of the Institute of International Finance, Lael Brainard of the Federal Reserve, and Nathan Sheets of Peterson Institute for International Economics. The conversation, moderated by CGD Board Member Tony Fratto, revealed the “esprit de corps” of the International Affairs team, and covered everything from the central yet oft under-the-radar role the Office of International Affairs plays in the formulation and execution of international economic policy, to each Under Secretaries’ proudest moments. Interestingly, the event highlighted significant policy continuity across administrations and a nonpartisan approach to key decisions. See for yourself here, and take a peek at a few takeaways:
Global economic success equals success at home
Brainard kicked off the discussion noting that the primary but less understood role of Treasury is to negotiate the interface of US domestic and global economic policy. Panelists emphasized that continued engagement with the global economy serves domestic interests, but in the current political climate, the message must be communicated consistently and clearly. Brainard, who served during the recent US financial crisis, reflected on both sides of the isle coming forward in the wake of the crisis to support the recapitalization of every multilateral development bank. This remarkable feat represented a bipartisan recognition that economic recovery in the US happens only in concert with the rest of the world. Adams added that this engagement can be a difficult sell to the public particularly in times of domestic hardship, but that the case can rests strongly on three pieces: values, economics, and national security.
Strong, continued support of IFIs, but not without US leadership
The Office of International Affairs manages the United States’ engagement with international financial institutions and other financial international fora, such as the G-20 finance ministers and central bank governors process. All three urged that the US must continue to play a leadership role. Reflecting on his own experience, Sheets’ team time and time again turned to the IFIs to tackle some of the most challenging issues facing the international economic system. This meant taking advantage of the all-important leverage attached to every US dollar funneled through multilateral channels, and he asked: If the new administration is not willing to engage multilaterally with global challenges that affect the US, is the American taxpayer willing to foot the bill in its entirety?
Adams explained that not only should the US continue to have strong support for IFIs, but the US must lead in these institutions if they are to effectively confront global challenges and challenges at home. Reflecting on his (somewhat controversial) speech on shaking up the IMF, he noted that it is in US interests to push for more transparency and more accountability in these institutions. IFI’s are already international standard setting bodies, yet must constantly evolve in order to stay relevant for both domestic and global interests.
Policy continuity and collaboration across administrations is at the core of the office
The conversation revealed a remarkable level of mutual respect and policy agreement. This was no more striking than when each Under Secretary highlighted proudest moments on the job. Adams spoke of commencing the glide path from the G-7 to the G-20, and pushing the IMF to pursue its surveillance mandate more vigorously, including exchange rate policies, for which Brainard and Sheets kept the ball rolling. Sheets also spoke to the IMF’s now sound outlook for the next five years, and his office’s work to continue integrating China into the global financial system, which the panelists all agreed was important for global financial markets and growth. Brainard is proud of the US role in getting the world economy on track to recovery after the financial crisis, and seeing a convergence on exchange rate management in the G-20 with a commitment to avoid use as a trade competitiveness tool. After all, she said, Treasury has always been a mission driven organization, focused on putting the American economy first.
This panel was the first in CGD’s Development Policy Initiative (DPI) Voices of Experience series, which will feature discussion with senior officials from past administrations of both parties who shaped international development, economic, and financial policy.
Thanks to Nancy Lee for helpful comments on this post.