Iraq’s Debt

IRAQ’S DEBT….I’m a little puzzled by Josh Marshall’s endorsement of this view of the James Baker appointment by Newsweek’s Richard Wolffe:

In previous administrations, Treasury was considered important enough (and competent enough) to deal with international issues such as foreign debt. Along with the diplomats at State, and with a little help from the White House, Treasury dealt effectively with a series of major financial crises.

….Either the president feels that Powell, Snow and the rest of his cabinet are incapable of dealing with Iraq?s debts. Or the president is giving Baker a far broader role in resolving Iraq?s future. Both explanations are deeply unsettling for his much-vaunted foreign policy team and for the rest of the world. When Baker travels to European and regional capitals, the world?s leaders will think that Baker?not Powell, Donald Rumsfeld or Condoleezza Rice?has the influence with the president to get things done in Iraq.

It’s true that the Treasury Department has to be involved in debt renegotiation on a technical level, but even so is Baker’s appointment really that mysterious? We haven’t had much success renegotiating Iraq’s foreign debt so far, and Bush may have simply decided that it needed full-time high level attention, something that no cabinet official can afford to give it.

What’s more, this isn’t financial crisis management, it’s negotiation. A huge part of Iraq’s debt is held by Saudi Arabia and Kuwait, and Baker obviously has personal ties to those governments that are unbeatable. He might very well be able to pressure them into making a deal that no one else could.

Bill Clinton used Jimmy Carter to help broker a deal with North Korea and Richard Holbrooke to broker one in Bosnia. Nobody suggested this meant that his foreign policy team was incompetent. Now George Bush is calling on an elder statesman of his own to broker a deal of a different kind. So why the conspiracy theories?

All in all, Baker’s appointment seems pretty easy to understand. He’s a very high level guy, he can spend full time on this issue, he knows all the players and has considerable influence with them, and he has Bush’s ear. I guess I might be missing something big here, but sometimes a cigar is just a cigar.

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