The US Treasury secretary Timothy Geithner visited Abu Dhabi last week as part of a four-nation trip that also took him to the UK, Saudi Arabia and France. The first member of President Barack Obama's new Cabinet to visit the UAE, Mr Geithner spent most of his day in closed-door meetings with the Central Bank, the Abu Dhabi Investment Authority (ADIA), the Abu Dhabi Investment Council (ADIC) and Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. Before leaving for Paris he was interviewed by the television network Al Arabiya, an interview that was scheduled to be broadcast Thursday.
A reporter travelling with the US contingent produced an unofficial transcript of the interview, excerpts of which The National publishes below: q What is the purpose of your visit to Saudi Arabia and Abu Dhabi? a I'm here to underscore the president's commitment as he outlined in his speech in Egypt to strengthen our ties to the region. Not just with Abu Dhabi ? but the world as a whole. Oil is of paramount importance in this part of the world. Did your discussions include oil? What is your view on oil prices?
We discussed oil as we always do in these kinds of conversations. I don't want to talk about, comment specifically on current prices. But let me just underscore two things: I think we all have an interest today in trying to make sure that we're reinforcing these tentative signs of recovery we're seeing across the world economy. It's also very important to us ? that we explore ways to bring better transparency to energy and commodity markets, and ways to reduce volatility in these markets.
How do you view Gulf economies? Here, like in so many parts of the world, we're still going through and still facing a challenging period of adjustment. We came into this crisis at different periods. The US came in earlier than other countries. The process of adjustment started later in other major economies. I think the really important thing is we're making progress. The important thing is we keep at it.
Did Gulf officials voice concern about the growing US budget deficit? I found really quite substantial confidence in the broad strategy of this administration in trying to address the causes of this crisis and put us on a foundation to stable recovery. Of course we are committed to making sure of that as we emerge from this crisis. Once we are confident that we have repaired the damage, we are committed to bringing our budget deficits down to a sustainable level. But to do that we need to bring growth back.
Saudi Arabia's foreign reserves have declined. Are you concerned about that? No we didn't discuss that. I'm not concerned about that. When the world is more concerned about risk, what generally happens is people want to hold treasuries [US government bonds] and you see investments increase in the dollar. Are you committed to a strong dollar? It is the policy of the United States and it will remain the policy of the United States to remain committed to a strong dollar.
Did you hear any concerns about the dollar's future as the global reserve currency? My view, and this is the view I heard expressed here, is that the dollar will remain the principal reserve currency. What was purpose of your meetings with the sovereign wealth funds [ADIA and ADIC]? We do that everywhere, in all our conversations with governments around the world. What we try to do is to get a greater appreciation for the challenges we see and for how our counterparts view the world.
Did you hear any specific concerns from the funds about their investments in the US? We have a strong interest together in trying to lay a foundation for a sustainable, strong recovery globally. To do that effectively, we work very, very closely with countries around the world. Did you pitch for more investment in US? No. One of the great strengths, one of the great sources of innovation ? is our basic openness to investment from around the world. Of course, we're going to be careful to protect our national security interests.
Did you hear of any interest in further investment? We did not discuss any specific investment issues. The most important thing I can do ? is to discuss the broad environment we're seeing across the global economy. Did you discuss specific plans of action with Saudi businessmen? No, it was really just a general exchange of views. My general view is America has a lot to learn from the world, and we're going to spend a lot of time trying to make sure we watch what the rest of the world does.
Why are you optimistic the US will see growth in coming quarters? It is going to take the world economy a while to work through those basic challenges. We borrowed too much. But we're seeing very encouraging signs in the economy. We've seen a lot of adjustment in the financial sector. Will there be a second US stimulus package? I don't think we can make that judgement, nor do I think we should. Toxic assets remain on US banks' balance sheets. How can that restore confidence?
We've been very effective in making sure there's capital coming into the banking system on a very substantial scale, relative to the crisis we have. We're starting at a smaller scale than we originally envisioned, in part because we've seen much greater-than-expected capacity for banks to go out and raise capital from private investors. We think these programs are valuable. We have the capacity to increase them. I think you should be encouraged, not discouraged, by the fact that we're starting at a more modest level.
How would you describe credit markets? Better. Significantly better. Gradually unfreezing. Not back to normal. It's going to be hard to know what the new normal will be. But things are significantly better. What is happening on the regulatory reform front? We're moving very, very quickly. I think the world wants to move too. You want to move when the memory of the crisis is acute. We have to do it together. My own personal sense is ? there is a remarkably strong consensus across the major financial centres. I think the world as a whole has much more in common.
What about the Europeans? I think the Europeans believe regulation will remain the responsibility of sovereign nations. But to make sure that our domestic safeguards work, we need to make sure we move together. Geithner's warning, b7