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ANALYSIS – Clinton takes bigger role in China ties

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ANALYSIS – Clinton takes bigger role in China ties

Secretary of State Hillary Clinton has hired envoys to tackle most tough foreign policy issues, but one priority she kept is China as Washington seeks Beijing’s help on challenges from North Korea to Iran.

Clinton and Treasury Secretary Timothy Geithner co-host two days of “strategic and economic” talks with top Chinese officials this week — meetings traditionally handled by the Treasury under the former Bush administration.

Sidelined recently by an elbow injury, Clinton also wants to reassert herself as a key player amid reports she is playing a lesser role in crafting foreign policy for President Barack Obama, her rival in last year’s Democratic presidential race.

Officials say Clinton — whose first foreign trip was to China — wants improved relations with Beijing to be a signature issue, with plans to broaden the previous focus from largely economic ties to a more “comprehensive” relationship.

“Over the past few years, the dialogue tended to shift significantly towards the economic and financial side,” said Clinton’s spokesman, P.J. Crowley.

“I think it (Clinton’s new role) reflects a return to a really broad range of issues, rather than a fairly narrow set that might have been the focus of the agenda over the past couple of years.”

The goal of the talks on Monday and Tuesday in Washington is to set a framework for the Obama administration’s agenda with the Chinese government — which is sending nearly all of its key officials for sessions.

“When you look at the U.S.-China relationship, it is kind of overweight on economics and light on security and foreign policy cooperation,” said Drew Thompson, director of China Studies at the Nixon Center.

Aside from stabilizing the shaky global economy, another focus of this week’s talks will be climate change and clean energy, an area Clinton earmarked as a diplomatic priority with Beijing and where some experts expect the most movement.


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Treasury boss courts Mideast, sees gradual rebound

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Treasury boss courts Mideast, sees gradual rebound

DUBAI, United Arab Emirates – U.S. Treasury Secretary Timothy Geithner reached out to Gulf Arab leaders Tuesday, stressing to some of America’s top creditors that his country has a “special responsibility” to steer the world through a global recession that may finally be showing signs of easing.

A key aim of Geithner’s trip is to convince the major oil producers that the U.S. still welcomes their business, and has plans to get itself out of a crisis stemming from what he said was an “unsustainable fiscal path.”

“The force of the global recession is receding,” Geithner told Saudi Arabian business leaders in the commercial hub of Jiddah, the starting point of his first official visit to the Middle East. “Global trade is just starting to expand again.”

But while noting that the International Monetary Fund and other analysts have begun raising their growth forecasts for the second half of 2009 and into 2010, he cautioned that the signs of improvement were fragile and that the “process of repair and recovery is going to take considerably more time.”

“This crisis has been brutal in the extent and severity of damage to economies around the world,” he said. “Given the extent of damage to financial systems … it seems realistic to expect a gradual recovery, with more than the usual ups and downs and temporary reversals.”

Geithner’s Mideast trip was billed as a follow-up to President Barack Obama‘s recent overtures to the region. But the stop in Saudi Arabia — the Arab world‘s largest economy and OPEC’s de facto leader — is also a clear reflection of the growing financial clout of the six-nation Gulf Cooperation Council.

The treasury secretary arrives for talks in the neighboring United Arab Emirates, the No. 2 Arab economy, on Wednesday.

What Geithner has to say in private to officials in the oil-rich region could help determine whether the Obama administration’s efforts to right the U.S. economy succeed. The Arab Gulf states are major backers of U.S. companies and government bonds and, as a group, are the biggest U.S. creditor after China.

The weakening of the American economy has raised questions as to whether the dollar could remain the world’s top reserve currency, a key issue for the heavily leveraged U.S. with a deficit that recently topped $1 trillion for the first time. The slowdown also increased concerns that major foreign creditors could look to more lucrative investments in strong developing economies outside the U.S.

“The (Gulf) countries have a big stake in the financial stability of the United States. They’re a big creditor,” said Nasser Saidi, chief economist of the Dubai International Financial Center. “The earlier you bring the Gulf and the Middle East onto the agenda, the better.”

The Gulf states’ wealth skyrocketed during oil’s earlier boom years, but they have grown increasingly concerned as crude prices and the value of their investments soured.

Five of the GCC nations — Saudi Arabia, the UAE, Oman, Bahrain and Qatar — peg their currency to the dollar. Kuwait uses a basket of currencies that includes the greenback.

“This is a visit to really re-emphasize U.S. leadership and U.S. pre-eminence in the world economy even in the midst of this global downturn,” said Tarik Yousef, dean of the Harvard-affiliated Dubai School of Government. “The last thing the U.S. wants is for people to lose confidence in its policies and its currency.”

Geithner, who was in London on Monday, said the Obama administration is committed to preserving the openness of the U.S. economy. He said the U.S. realizes it has “a special responsibility” in protecting the value of the dollar, which remains the world’s dominant currency.

He held talks with Saudi King Abdullah and his top financial advisers later Tuesday, according to the official Saudi press agency SPA, and will meet with officials from the UAE’s powerful state investment funds on Wednesday. From the Emirates, he heads to Paris.

In Saudi Arabia, Geithner laid out a four-point strategy that he said is essential for economic recovery.

It includes stabilizing and repairing the U.S. financial system, helping offset the dramatic contraction in demand, working with the major economies of the world on a coordinated program of macroeconomic stimulus and financial stabilization and focusing on the future by building a stronger and more productive economy.

“In the United States, we need to make sure that as we rebuild, we build a stronger and more productive economy, less prone to crisis, with the gains of growth more broadly shared,” he said, adding that the government was determined to cut the deficit once officials were sure the global crisis was over.

America “was on an unsustainable fiscal path before this crisis, and we will not succeed in establishing sustainable recovery without a credible commitment to address our long-term deficits,” he said.

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