Letter From Washington: The Indispensable Man at the Treasury

If, two years ago, reports of Timothy F. Geithner possibly leaving had reached the White House, some advisers would have seized on them as an opportunity; President Barack Obama’s Treasury secretary got off to a very rocky start and was considered a short-termer.

Today, if rumblings that he is thinking about stepping down made their way to 1600 Pennsylvania Ave., there would be near-panic. Mr. Geithner is as close to an indispensable figure as there is in the Obama administration.

The 49-year-old Treasury chief is unrivaled in economic policy making in the administration, commands respect in Asia and Europe, and is a presidential favorite.

Some associates say that in recent months, he has ruminated privately about leaving before the end of this term, perhaps when the battle over the debt ceiling is resolved this summer. A few knowledgeable people take this seriously; most doubt it.

It is understandable that Mr. Geithner at times feels spent. He was the head of the New York Federal Reserve beginning in 2003. In his final year in that post, 2008, he was at the epicenter of the worst financial crisis since the Great Depression. He then took on the Treasury job, starting with a contentious confirmation and embarrassing initial public performances.

And he had to devise a plan to prop up a teetering financial system, as well as a faltering economy. In so doing, he collaborated with his friend Lawrence H. Summers, then the director of Mr. Obama’s National Economic Council and a sworn enemy of self-doubt.

The post of Treasury secretary demands punishing global travel, and painful obsequiousness to Congress. By one count, Mr. Geithner has testified before congressional committees 52 times, with many more private meetings, and House Republicans would love to double that number this year.

Over the past three years, no public official, save the president, has endured a more grueling pace.

The father of a college-aged daughter and a son in high school, Mr. Geithner has spent almost his entire life in public service. His means are relatively modest; his net worth is estimated in official disclosures between $770,000 and $1.8 million.

In addition to the economic challenges he confronts, Mr. Geithner has some internal problems at the Treasury. There are at least a half-dozen important jobs that are unfilled, partly because of the cumbersome confirmation process, and also the remarkable slowness the administration has exhibited on such matters.

It also isn’t clear what Mr. Obama would do if Mr. Geithner expressed a wish to leave. Presidents Lyndon Johnson, through coercion, and Bill Clinton, through charm, would have talked a valued cabinet member out of such thoughts. That’s not the Obama style. During the 2008 campaign, one associate said he “travels light” when it comes to people.

There would be no natural replacement. Knowledgeable observers say the first two names that come to mind would be the former White House chief of staff, Erskine Bowles, and the current occupant of that post, William M. Daley; both lack Mr. Geithner’s financial and international expertise.

The secretary’s experience with China goes back to his youth, when his father was posted there for a time, and he is a favorite of the financial elite in Beijing.

Although U.S.-China relations are fraught with strategic and political tensions, economic ties have been comparatively smooth and improving over the past two years; Mr. Geithner and Vice Premier Wang Qishan have a real rapport.

In Europe, Mr. Geithner’s nudging on the debt crisis has ruffled some feathers; still, many top European officials express respect for his views and expertise.

At home, his relations with the Federal Reserve chairman, Ben S. Bernanke, recall the celebrated alliance of Robert E. Rubin, Mr. Summers and Alan Greenspan, the former Federal Reserve chairman, in the 1990s.

The difference is, this time, given the political heat from the Republican right, neither man talks about the relationship much.

The Treasury secretary’s political acumen has improved, as have his once acrimonious relations with congressional Republicans.

“You can have a conversation with Tim Geithner,” said Paul D. Ryan of Wisconsin, the House Budget Committee chairman.

His political instincts, however, fall well short of his financial ones. He’s no James Baker, who was President Ronald Reagan’s astute Treasury chief. Mr. Geithner was genuinely surprised by the outrage on Main Street over the bonuses paid to executives of American International Group after the insurer was bailed out by taxpayers.

While he no longer has the deer in the headlights look he had in early public appearances, he sometimes still comes across as a passionless technocrat; in private sessions with politicians, the news media and business leaders, he’s much more effective and personable, displaying a wickedly sharp sense of humor.

His role model for the current job probably is his friend and predecessor, Mr. Rubin. There hasn’t been a secretary since Mr. Rubin left 12 years ago who possessed Mr. Geithner’s influence with both the financial community and the president.

Still, if Mr. Geithner were to leave after the debt crisis, the legacy would be incomplete. That’s one reason that people who know him believe he will stay.

Another is his genuine loyalty to Mr. Obama and a sense of pride in the administration’s accomplishments.

More so than all but a handful of people in the higher echelons of government, Mr. Geithner is genuinely devoted to public service. It’s in the genes. His father was a top Ford Foundation official, mainly in Asia — where he supervised Mr. Obama’s mother — and his uncle, Jonathan Moore, was a leading Republican official and Harvard College dean.

When the debt ceiling ruckus is resolved — probably close to the Aug. 2 deadline — Mr. Geithner will be exhausted. He’ll rest a few days and then in all likelihood come back for the final battles of this Obama term.

 

Letter From Europe: Agreeing With Nick Clegg, When It Suits

PARIS — There was a time when, almost like a mantra, British politicians of all stripes would offer enthusiastic assent to just about everything Nick Clegg, the Liberal Democrat leader, might suggest.

“I agree with Nick,” they would say in the days of political courtship before the national election a year ago when voters, disenchanted with big party politics, returned a hung Parliament in which neither of the traditional titans — Conservative and Labour — had a majority. The perennially third-place Liberal Democrats became the kingmakers. Agreement with Nick was the passport to power.

Then, after some brief wrangling, the person who agreed most with Nick turned out — counterintuitively, perhaps — to be the Conservative leader, David Cameron, who agreed with Nick so much that he made him deputy prime minister in Britain’s first coalition government since World War II.

Laughing, joking with each other, icons of youthful promise, both svelte and well-spoken, the two men appeared side by side in the rose garden at 10 Downing Street — some pundits even called them clones — insisting publicly that their alliance would work for the good of their battered land despite their wide ideological differences.

But a year, it hardly needs to be said, is a very long time in politics, and ever fewer people seem to agree with Nick.

When he agreed to Conservative plans for a huge increase in college tuition fees, students rampaged in London, blaming him for breaking promises.

In a referendum last week on his flagship policy to overhaul the electoral system, Britons voted by a ratio of two to one against. Across the land, in local elections on the same day as the referendum, the blame for Britain’s harsh austerity measures seemed super-glued to Mr. Clegg, whose party lost hundreds of local council seats, unlike Mr. Cameron’s Conservatives, who had steamrollered the cost savings through Parliament yet survived the vote intact.

In other words, the experiment in what Mr. Cameron once called a “new politics” had stalled.

So the Liberal Democrats are finished, right? Their day in the sunshine of power is over, yes? Britain will inevitably return to two-party politics, eschewing the coalition negotiations and compromises that routinely haunt European alliances from Berlin to Rome?

Well, maybe not. This week, it became the fashion again to agree with Nick, or, at least, to encourage him to stay on as his party’s leader and fight what could be Britain’s biggest political struggle to safeguard its vaunted National Health Service from Conservative changes.

Indeed, the National Health Service has become the potential battleground not just for the survival of the coalition but also for something quintessentially British that many Britons fear will be lost to ruthless Conservative measures that pander to privilege and punish the poor.

As the Conservatives have cast around for ways to cut costs in the face of Britain’s debt, with the Liberal Democrats tagging along — sometimes like children on an outing — Mr. Cameron’s followers already have shown themselves prepared to assault whole pillars of a Britain portrayed by the former poet laureate John Betjeman as a nation of suburban predictability and bucolic charm.

The austerity measures have threatened public libraries and forests — both beloved of middle-class and literate supporters who have resisted the ax of austerity.

But the National Health Service remains Britain’s great institutional conundrum — the only source of free medical care for most people, a central assumption of British life, at once beloved and reviled for its blend of administrative bungling and miracle moments, yet now jeopardized by reformist zeal.

The proposed changes would hand control of most of the ￡100 billion, or nearly $163 billion, annual health budget to the service’s 42,000 general practitioners and, critics argue, they would propel the public health system into the arms of private service providers who would cherry-pick the most lucrative parts, leaving other parts to crumble.

There are clear signs that Mr. Cameron himself believes the changes are too radical.

And now, said Polly Toynbee, a columnist for The Guardian, it is time for Mr. Clegg to reverse his previous acquiescence in the health care overhaul. After his drubbing by the voters, she wrote, “a burning-rubber U-turn is never a pretty political sight, but it is the only option that might, just possibly, avoid sudden death.”

The Liberal Democrats themselves seem to have drawn similar conclusions. Mr. Clegg has promised a “muscular liberalism” to differentiate his party from its coalition partner.

It is not a hard calculation. While some Conservatives want to call an early election, they have no guarantee of surviving a fresh ballot if they are depicted as the dragon-slayers of the National Health Service. Mr. Cameron, indeed, has said he does not want the coalition to collapse, agreeing with Nick who wants it to continue albeit with different ground rules.

“We need to show people where we have a moderating influence on the Conservatives and we need to stand up for our values and say that loud and clear,” Mr. Clegg said.

It is clear enough from the coalition’s mood music that the unease between the parties goes far beyond policy matters.

Lord Tony Greaves, a Liberal Democrat peer, even called Mr. Cameron a “toffee-nosed slimebag.”

Such epithets evoke Britain’s enduring class distinctions, which reserve much opprobrium for those like Mr. Cameron, educated at Eton College, Britain’s most exclusive private school, and Oxford University, where he joined an elite dining and drinking club called the Bullingdon.

In Parliament, the opposition Labour leader, Ed Miliband, has used that record to lampoon Mr. Cameron as Flashman — a fictional 19th-century bully, scoundrel and military officer with upper-crust credentials. (Mr. Cameron hardly helped his own case the other day when he turned to a female lawmaker, Angela Eagle, in Parliament and told her to “calm down, dear.”)

The prime minister has sought to deflect Mr. Miliband’s jibes, letting it be known, for instance, that, in a one-of-the-guys way, he likes to be called Dave.

So maybe, Dave has concluded it helps to have a political partner called Nick, sometimes to agree with, and sometimes to take the fall. Or, as Mr. Cameron put it in public on Thursday, “a strong coalition government” is “what I’m absolutely committed to delivering.”

 

Letter from Europe: Libya Crisis Reveals Splits on E.U. Goals

 

BERLIN — The Libyan war is not good news for NATO. In spite of the upbeat speeches by NATO foreign ministers last week in Berlin, only 14 of the 28 member countries militarily support the no-flight zone and actions to protect Libyan civilians from attack by Col. Muammar el-Qaddafi’s forces. Only six of them are carrying out airstrikes.

With support from Qatar, the United Arab Emirates and Jordan, the NATO mission in Libya is now a coalition of the willing, which analysts say undermines the cohesion of the alliance. But compared with other missions undertaken by NATO, the alliance this time moved with unprecedented speed in beginning the operation.

The Libya crisis is even worse news for Europe and its military ambitions. It shows more clearly than ever how most E.U. countries are unwilling to match their defense ambitions with any broad strategic goals.

“The decision by many European countries not to contribute to the NATO mission bodes ill for Europe’s foreign and security policy,” said Jan Techau, director of Carnegie Europe, the European center of the Carnegie Endowment for International Peace.

Particularly damaging for Europe was Germany’s decision to abstain in the U.N. vote that authorized the no-flight zone over Libya. That was a huge disappointment to the United States and particularly to Britain and France. “Germany positioned itself outside the Western consensus,” Mr. Techau added. In doing so, he said, Berlin was undermining attempts by Europe to become a convincing defense player.

Britain and France had lobbied the U.N. Security Council to authorize the no-flight zone. Once authorized, with the United States, Canada and Denmark, they began the airstrikes.

Then came the crunch. The Obama administration did not want to continue leading the mission. It has enough on its plate with Afghanistan. Besides, Libya is considered Europe’s backyard. So for the first time ever, the United States asked NATO’s European allies to take over the command and control of the mission.

At first, the French president, Nicolas Sarkozy, balked at giving NATO that role, hoping that France could take the lead. But eventually he had to realize that Europe was not going to become a defense player in its own right with France at the helm.

“Libya confirmed France’s worst beliefs,” said Clara Marina O’Donnell, a defense expert at the Center for European Reform, a research organization in London. “It could not rely on its E.U. partners.”

It was a blow to France’s ambitions. “France’s goal of leading Europe in defense matters is receding,” said Bastien Irondelle, security expert at Sciences Po, the Center for International Studies and Research in Paris. “For his military aims, Sarkozy will now have to go outside the E.U. That means coalitions of the willing.”

It is not for want of trying by France, and Britain, to shift Europe from its preference for being a “soft power” — providing humanitarian aid and building civilian structures — to becoming a “hard power” with military force as an option.

They knew as much during the 1990s when the European Union, with its diplomacy ridiculed, had no idea about how to stop the war in the former Yugoslavia. It had to rely on the United States and NATO to end the fighting. Europe’s paralysis prompted Britain and France in 1998 to launch the Union’s European Security and Defense Policy.

Britain, then under Prime Minister Tony Blair, believed a stronger Europe was vital for the trans-Atlantic relationship, because most E.U. missions would depend on NATO’s military assets. The Union, therefore, would not become a competitor to or grow independent of NATO.

France, then led by President Jacques Chirac, thought differently. “It always wanted Europe to become a strong defense player, a European power,” said Mr. Irondelle.

Despite the ideological differences, London and Paris worked together. In 1999, they pushed the Union to agree that by 2003, the bloc should have the ability to deploy a force of 60,000 troops within 60 days and sustain it for a year. It never happened.

London and Paris in 2003 then came up with the idea of E.U. battle groups, or expeditionary forces. These units would consist of 1,500 soldiers each and be deployed within five to 10 days. These units have still to be tested.

With prodding from London and Paris, the Union managed in 2003 to agree on a European security strategy designed to foster a global strategic culture among European countries. The reactions by the Union to the changes sweeping across the Middle East showed how the Union was out of its depth.

The Union’s shortfalls in defense, including expenditure and military capabilities, persuaded Britain and France to forge last year a far-reaching agreement in defense cooperation. It included sharing aircraft carriers and collaborative research for both countries’ nuclear deterrent systems.

“The Anglo-French accord confirmed the frustration in London and Paris over E.U. defense efforts,” Ms. O’Donnell said. She added that European defense could become even weaker as long as these two countries continue to cooperate so closely.

Yet opinion polls across Europe show that citizens want the Union to have a stronger defense and security policy to underpin the bloc’s support for human rights. But paradoxically, polls also show that the public is unwilling to support military action or fund any increase in defense spending to defend the bloc’s values.

The main reason for this discrepancy is that Europe, as a bloc, does not have a strategic culture. “Only Britain and France have a strategic culture and natural outward approach,” said Mr. Techau, from Carnegie Europe.

That could change — if Germany changed.

“Germany could lead others if it adopted a more open approach to foreign policy. But Germany has neither the muscle nor the strategic scope to think in global terms, unlike Britain and France,” Mr. Techau said.

Indeed, Chancellor Angela Merkel shows no inclination to take any lead in shaping Europe’s defense, or, for that matter, foreign policy. Therefore, say analysts, the United States, Britain and France will continue as they did during the Libya crisis, forging coalitions of the willing that will leave Europe and NATO weaker.