After a first term in which terrorism and war dominated President
Bush's foreign policy agenda, his allies in Europe and Asia suspect
that his next confrontation with the world could take on a very
different cast: a potential currency crisis, in which a steep plunge in
the value of the dollar touches off economic waves around the world.
Already, the tensions over the dollar are becoming a recurring source
of friction, a conflict that does not reverberate as loudly as the
differences over Iraq but may be as deeply felt. At a meeting in Paris
on Monday, the finance ministers of Germany and France complained that
Europe had unjustly borne the brunt of the dollar's decline, and called
for coordinated action to stop it. "Europe has until now paid too big a
share in this readjustment," Herv Gaymard, the French finance
minister, said. His German counterpart, Hans Eichel, said the United
States needed to reduce its deficits, adding "each one has to play its
role." Two months ago, similar sentiments came from China's prime
minister, Wen Jiabao, whose nation is at the center of a struggle with
Washington over currency policy. He complained about the fall of the
dollar, asking, "Shouldn't the relevant authorities be doing something
about this?" [more]