The Real Crisis Manager by Fareed Zakaria

February 9, 1998, U.S. Edition

The Real Crisis Manager
He's not a spinner or a pol. In a global age, the man to see on substance is the one who can keep peace in the world markets.
By Fareed Zakaria

When Henry Kissinger described the corrosive impact of Watergate, he was frank about one of its side effects. "As an individual I led a charmed life," the secretary of State wrote in his memoirs. "I became the focus of a degree of support unprecedented for a non-elected official." Once all the caveats have been made -- this crisis is not Watergate, we are not in a cold war, Clinton appears more popular than ever -- it may still be true that the country will need a respected national statesman aside from the president to convince the world of American engagement and credibility. The spinners and the political aides who are doing the talk-show circuit loom large at the moment, but if the crisis were to get worse, the real trouble-shooter may turn out to be the secretary of the Treasury -- and that tells us much about the new world we are living in.

Whatever the actual facts of the case, and even if the president sails through this storm, it is quite possible that l'affaire Lewinsky will occupy the White House's attention for the foreseeable future. With the independent counsel's office continuing its investigation for new witnesses, with the press scouring for new leaks, with hours of tape recording still unheard, the president and his staff will be consumed with the facts and spin of this story.

And in May -- just when the crisis might well have subsided -- the Paula Jones trial will begin, requiring a new sex strategy from the White House. Fortunately, this scandal will have little effect on traditional foreign policy. We are not living in the cold war, a time of intense global military competition. Then, crises in one country could be taken advantage of by the Soviet Union. Today the United States dominates the world with no serious adversaries. Its few opponents -- like Saddam, Kaddafi and Castro -- are a ragtag assortment of despots who preside precariously over their impoverished lands. In this strategic landscape, it is difficult to imagine instability spreading like wildfire or the need for permanent military deterrence.

Take the case of Saddam Hussein. He presents an important but localized problem. There is little danger that Baghdad can fund insurgencies in Latin America, or that the Chinese will take advantage of Iraq's probing or that events in Iraq will frighten friends in Central Europe. And contrary to the "Wag the Dog" theory that is being spoken of in amused tones by movie reviewers turned pundits, U.S. policy toward Iraq has been largely unaffected by the president's problems. The administration has been considering two options for months -- strengthening the sanctions or launching a bombing spree. They were likely to do one of these two -- and probably both -- in the next few weeks regardless.

Yet there is still a danger that crises could spiral, and in the post-cold-war world the risks lie in the economic realm. As the financial crisis has already spread from Thailand to South Korea and even to Brazil and Chile, the domino theory is working better in economics than it ever did in politics. Countries with relatively stable and sound policies like Singapore and Taiwan have been rocked -- as have distant economies in Latin America -- because of the interconnected nature of global capitalism.

The open world economy is extraordinarily productive, highly complex and extremely delicate. The constant free flow of goods, information, services and people around the world is crucial to maintain and expand the era of peace and prosperity we have grown so used to. When countries go through downturns and shocks, it is crucial that they not retreat into protectionism or opt out of the free-market system.

In East Asia we face the first real test of this stability of the global economic system. The United States -- and the other major industrialized countries -- should not do too much: large-scale bailouts only encourage economic mismanagement. (Bankers are smart enough to note that a system in which they get the gains from risky investments but governments bear the costs is a pretty good deal.) On the other hand, they can't do too little; that might send a signal of no-confidence and result in a global panic. It is, in other words, a task of high diplomacy, requiring threats and promises, bullying and bluffing, and above all, constant attention.

If scandal consumes the White House, someone with real credibility will have to take actions, real and symbolic, to ensure that the world sees an active, engaged and confident United States. Luckily, the administration's most competent cabinet official is the one best suited to play this role. Robert Rubin is probably the most important secretary of the Treasury since Andrew Mellon. The American economy is the envy of the world because of the disciplined efforts of Rubin and Alan Greenspan. The secretary has the president's ear and the respect of Congress, he runs a tight, able ship and he is a man of substance and integrity. He may have to use every bit of that credibility to signal American interest, involvement and resolve in case governments, markets or currencies go wobbly.

Kissinger recalls that Watergate forced him to develop flair (not that he needed prodding): "It imposed a style of diplomacy leaning toward the spectacular." Alas, Rubin is not known for his showmanship. But since economic policy is run worldwide by bankers and bureaucrats, how difficult would it be to stand out? So, if Rubin starts speaking with a German accent, now you'll know why.