Paulson: Protectionist policies won't solve crisis - East Valley Tribune: Business

Paulson: Protectionist policies won't solve crisis

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Posted: Sunday, October 12, 2008 9:08 am | Updated: 11:07 pm, Fri Oct 7, 2011.

WASHINGTON - Appealing for global unity in a time of crisis, Treasury Secretary Henry Paulson said Sunday that isolationism and protectionism do not offer a way to contain the spreading damage.

"Although we in the United States are taking many extraordinary measures to ease the crisis, we are not pursuing policies that would limit the flow of goods, services or capital, as such measures would only intensify the risks of a prolonged crisis," he said at a meeting of the World Bank's policy-setting committee.

The bank and the International Monetary Fund, holding their annual meetings this weekend, have a vital role to play in working with governments to develop appropriate responses "and discourage inward looking policies," he said.

As a result of the downturn, developed countries are not expected to help 28 countries facing twin shocks of rising food and fuel prices, said the bank's president, Robert Zoellick. "For the poor, the costs of the crisis could be lifelong," he said.

President Bush says his administration is doing everything possible to halt the biggest market disruption since the Great Depression.

Accompanied by Paulson and Federal Reserve Chairman Ben Bernanke, Bush participated for about 25 minutes in a discussion late Saturday with the Group of 20 nations, which includes wealthy countries as well as major developing countries such as China, Brazil and India.

Bush acknowledged that problem began in the United States, but told participants that "we're all in this together," according to a White House spokesman, Tony Fratto.

"We take this seriously and we want to work with you," Bush assured the ministers, according to Fratto.

In a statement, the G-20 finance officials pledged to work together "to overcome the financial turmoil, and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world's financial markets."

Other speakers at a policy meeting of the IMF echoed Bush in emphasizing the need for countries to work together to address the crisis, avoiding the go-it-alone protectionist trade strategies that worsened conditions during the Great Depression of the 1930s.

"There is a resolve in the international community that this crisis will be resolved, that no tools will be spared to address its ramifications," said Youssef Boutros Ghali, Egypt's finance minister and the new chairman of the policy panel.

At a meeting Sunday of European leaders, French President Nicolas Sarkozy said he expected an ambitious and coordinated plan to tackle the financial crisis.

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