He didn’t repudiate the country’s debt or lay out a bold new spending program; instead, as Senior Writer Deepak Gopinath relates in “Turning Point” (page 27), Dervis apologized to the country’s legislature for underestimating the gravity of Turkey’s economic plight. Finance ministers and central bankers around the world may want to order a transcript of his mea culpa.
Given the economic, political and military shifts that have occurred in the past few months, many public policymakers are finding, like Dervis, that they have some explaining to do. Why aren’t their economies performing as promised? Do they need to change policies aimed at a pre-September 11 world?
In “The German Dilemma” (page 33), Germany’s deputy finance minister, Caio Koch-Weser, acknowledges to European Editor Tom Buerkle that key advisers to Chancellor Gerhard Schröder didn’t fully appreciate how greatly the U.S. economic slowdown would affect their country’s performance. But Koch-Weser’s boss, Finance Minister Hans Eichel, insists that Germany will stay the course. Should his economy continue to slip, however, Eichel may have to change his tune as Schröder’s ruling Social Democratic Party approaches important midterm elections in September.
Middle Eastern finance and monetary authorities as well as bankers concede they didn’t foresee the sharp drop in oil prices post-September 11. Because they weren’t well prepared for that possibility, the region’s financial leaders tell Contributing Editor Colin Barraclough (“Petro Dolor,” page 76) that the consequences are going to be tougher economic conditions than might otherwise have occurred.
And in the U.S. officials at the Federal Reserve Board might also want to keep an apology in their back pockets. The central bank continues to pursue bilateral settlement of government debt trades despite the system’s highly publicized failures just after the attacks on the World Trade Center. In “Clearing and Other Present Dangers” (page 21), Contributor Martin Mayer suggests that multilateral clearing, which performed admirably for the stock and commodities markets in the midst of the crisis, might be a wiser alternative. Is the Fed going to change course? It doesn’t appear so.
Of course, Argentina’s recent policy leaders no longer need to explain themselves (People, page 9). They’re gone. Dervis, meanwhile, is still calling the shots; he even got a round of applause for his public act of contrition.
