John Taylor, Treasury undersecretary for international affairs, says critics should reconsider. “People will have to make their own judgments, and they’ll look at all the facts and the decisions that we are making and recognize the strategy we are taking to get more flows into these markets,” he told Institutional Investor after a recent trip to Brazil. And what is that strategy? Taylor notes that the support for Brazil came from the IMF -- not from the U.S. or other G-7 countries. Relying on the IMF and other international financial institutions, Taylor argues, “gives greater accountability and also an element of limits [to the amount of financing available].” And he stresses that Treasury’s $1.5 billion bailout for Uruguay in July was limited to a short-term bridge loan, which has since been paid back. The U.S. strategy remains “emphasizing good policies on the part of countries, emphasizing that we would not lend into unsustainable situations, a limitation on the amount by focusing more on the international financial institutions, trying to address contagion and to emphasize that there is really nothing automatic about contagion,” Taylor explains. Contrary to public opinion, he says, all emerging markets aren’t basket cases. “There are many successes in the region and other parts of the world right now -- Russia, Southeast Asia, Mexico, Chile, Central America -- so you have to look at the whole picture.”
