USA: U.S. Treasury Secretary Henry Paulson reiterates support for Wolfowitz, nudges China on yuan, and discusses financial sanctions

U.S. Treasury Secretary, Henry Paulson reaffirmed U.S. support for World Bank President Paul Wolfowitz who is being scrutinized for his handling of the promotion of a close friend. Paulson also used strong language to call on China to reform its economic policies and underscore the need to link financial sanctions with regards to nuclear proliferation. "I said that I have a very high regard for Paul Wolfowitz, for what he's been doing around the globe, working to reduce poverty, working in other high priorities. That's pretty clear. Second of all, he's apologized, there's a process in place. He thinks its an appropriate process, I think it's an appropriate process and I did say that given the fact that we have a representative that is part of that process, I don't think it's appropriate and I don't intend to comment beyond that here but I made the follow on point which I think is quite important is that I am not by making that wanting to call into question in any way or for that to be read as a lessening of U.S. support for Paul Wolfowitz," Paulson said in response to questions at a briefing. Paulson also spoke about global trade and in particular about China. He said explicitly that China needs to let the yuan appreciate in value, a more direct call than his previous comments in which he has said simply that China needs to introduce more flexibility into its currency policy so that values are responsive to market forces. "I talk with with my Chinese counterparts and various people in China regularly about this and again as I said before, I believe that the renminbi reform and more flexibility is very important for China's further reform and for the rest of the world. China is a very major economy and we have a bit of an anomaly in that it is quite integrated into the global economy terms of trade in goods and services, but their capital markets and their currency are not yet integrated into the global economy. And so our approach has been to push for more flexibility, more -- frankly -- appreciation of the renminbi in the short term, and then in the intermediate term to make the case for China taking the steps that will allow it to have a truly market-determined currency," Paulson said. Also at the press briefing, the treasury secretary also emphasized the need for financial sanctions to tackle the issue of nuclear proliferation. "At the end of the day our strategic objective is the de nuclearization of the Korean peninsula, lets not any of us forget that. The second point I'll make and we talked a little bit about this in the context of Iran today. The international community now understands just how potent our financial actions can be in combating illicit behaviour. And when you look at that, our sanctions are designed not only to combat that behaviour but hopefully to change that behaviour and I do believe that because of treasury's actions we now have a much stronger chance of certain regimes changing their behaviour. So again, treasury has been and we are going to continue to be very aggressive in combating illicit behaviour," said Paulson.

ITN Source | April 14, 2007

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