Before the U.S. dollar has been strong in the foreign exchange markets, President-elect Ronald Reagan and his key aides have been able to focus on the domestic economic crisis and to say nothing about the scope of their international economic policy, which is equally important in an interdependent world.
This reporter can offer some clues on how it's shaping up -- and the news won't cheer traditionalists who had hoped there would be a restatement of U.S. multilateral aid commitments to institutions like the World Bank and the International Monetary Fund. Instead, there will be greater reliance on bilateral deals, which will frankly be used as tools in support of short-range foreign policy. Coordination of international economic policy will be in the hands of the National Security Council.
Going the bilateral route "is the only way to assess the performance and usefulness of those loans," a key adviser told me. "I worry about the deification of the multilateral institutions. It's only a short step from there to the New International Economic Order" (demanded by some Third World spokesmen).
Such an assessment will be bitterly disputed by the outgoing administration, which together with some of the Atlantic Alliance powers saw increased clout for the World Bank and International Monetary Fund as the only responsible alternative to more radical Third World demands.
The underlying rationale for moving away from multilateral aid is the Reagan team's conviction that Congress and the public are fed up with appropriating money for disbursal by international agencies with no strings attached. "On an idealized basis, this might be preferred," says a Reagan official, "but it's getting harder and harder to find a constituency for it."
What this means is that Reagan's people propose to take a look at how important an aid recipient is to U.S. national interest and how it behaves toward the United States -- before shelling out the dollars.A Reagan administration with a sympathetic view toward Taiwan will not be especially warm toward the World Bank's notion of extending $10 billion worth of loans to the People's Republic of China over a five-year period.
A hint of Reagan's disaffection for the multilateral approach came when Congress allowed a key authorization bill to die in the last session, after Republican leaders consulted the Reagan transition team for guidance. This bill provided for continued U.S. contributions to the International Development Agency (the soft-loan affiliate of the World Bank), the principal source of subsidized loans for poor countries.
Thus, six weeks after Reagan takes office, he could have a minor crisis on his hands. Unless he seeks a supplemental appropriation, IDA will be out of business on March 1, because if the United States doesn't put up its share, other national contributors have no further obligation.
If the Reagan administration attempts to end or cut back on the U.S. commitment to IDA, it is likely to cause strains with Western European allies (and Japan), who, at the very same time, presumably will be under pressure from Secretary of State Al Haig to put up more of their own money for mutual defense. They will argue that mutualityor interdependence cuts more than one way.
As to the IMF, the Reaganites will be more sympathetic than was the Carter crowd to the banking community's charge that the fund has eased up too much on "conditionality" -- the strict terms that used to attach to its loans, especially in Africa, where some countries have been advanced 500 percent of their deposits in the IMF.
A key decision on trade, as yet unannounced, is to keep the Office of Trade Representative where it is and as it is -- an independent agency with a shared loyalty to the White House and Congress. The role model for the trade ambassador would be a skilled politician, a la Robert Strauss. A leading prospect: Republican National Chairman Bill Brock.
But the nature of Reagan's trade policy isn't yet clear. Along the campaign route, he diluted an earlier free-trade position. Reagan will have to deal quickly with the Japanese auto import question. In recent weeks, the depression in the domestic auto industry has worsened -- with Chrysler facing bankruptcy and Ford also losing buckets of money. But the toughest trade question of 1981 -- involving a bitter battle with Europe -- may be renegotiation of an international agreement on textile imports (the Multi-Fiber Agreement), required by midyear.
There are other international economic conundrums: Can the United States keep major European nations from using excessive export credit subsidies? Can the United States discourage its allies from making package deals with OPEC countries to tie down oil supplies?
Some of these issues will be on the agenda for the seventh Economic Summit, scheduled for midyear in Ottawa. Reagan plans to keep this summit date -- but also intends to review the validity of the whole process and structure of economic summitry.