May 2, 2003 - Associated Press: RPCV Peter McPherson says Iraq's economic recovery will take time

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By Admin1 (admin) on Tuesday, May 06, 2003 - 3:11 pm: Edit Post

RPCV Peter McPherson says Iraq's economic recovery will take time





Read and comment on this story from the Associated Press that RPCV Peter McPherson, recently chosen by Treasury Secretary John Snow as financial coordinator for the rebuilding of Iraq, says Iraq's economic recovery will take time. In his new job, he said he expects to spend most of his time in Iraq, based in the capital, Baghdad, and hopes to be there in a week or less. Read the story at:

Official to head Iraq's economic recovery says job will take time*

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Official to head Iraq's economic recovery says job will take time

JEANNINE AVERSA

Associated Press

WASHINGTON -The United States will help transform Iraq's ravaged economy from establishing a sound currency to putting in place laws to attract investment, but it will take time, a top U.S. official involved in the effort said Friday.

"You can't turn something around in six months, but you can lay foundations for it," said Peter McPherson, recently chosen by Treasury Secretary John Snow as financial coordinator for the rebuilding of Iraq.

McPherson will handle the rebuilding job only until September, when he said he will return to his position as president of Michigan State University. He has extensive government, financial and international experience, having served as the Treasury Department's second in command in the last 1 1/2 years of the Reagan administration, administrator of the U.S. Agency for International Development from 1981 to 1987 and an executive at Bank of America.

McPherson would not discuss plans for his Iraq position once he returns to the university in the fall.

In his new job, he said he expects to spend most of his time in Iraq, based in the capital, Baghdad, and hopes to be there in a week or less.

Iraqis will make decisions about how their country and economy will operate, McPherson said, but he offered some "doable" principles that need to be pursued with them:

_Setting up a sound national currency, a functioning system of banks and other financial institutions and a regulatory structure to promote confidence and soundness in the economic system.

_Establishing property rights and rules of law for commercial and financial transactions.

_Putting together a federal budget, in which the flows of revenues and spending are made clear.

_Removing price controls quickly.

_Generating support from governments and major international financial institutions, such as the International Monetary Fund, the World Bank and the Paris Club, to help Iraq.

McPherson declined to provide a timetable for implementation of the principles.

Private economists said the process of reviving Iraq's economy and moving it toward a free-market system after years of operating under a system tightly controlled by deposed President Saddam Hussein's government will be difficult and time consuming.

"It is a daunting task," said Mark Zandi, chief economist at Economy.com. "None of the institutions for a market economy are in place - from the legal to the political to the economic. It is building literally from ground zero," he added. "It is not going to happen in a matter of months. If we are lucky it will happen in a number of years."

McPherson said he expects around 20 Treasury employees to work with him in Iraq.

To help pay for Iraq's revival, the Bush administration is starting to use roughly $1.7 billion in Iraqi funds that were frozen in 1990 as part of economic sanctions against the country and have been transferred to an account at the Federal Reserve Bank of New York.

Around $20 million has been drawn from the account so far to pay Iraqi civil servants, McPherson said.

On the commerce front, McPherson said indications of increasing local retail and other commercial activity already are appearing in Iraq and said he expects "there will be a fair amount of entrepreneurial activity" to develop faster than is widely anticipated.

McPherson refused comment on a report this week in The Wall Street Journal about a confidential, 100-page U.S. contracting document that envisions privatizing state-owned industries, such as parts of the oil business, and creating a stock market in Iraq.

Lynn Reaser, chief economist for Banc of America Capital Management, said the transformation of Russia's and some Eastern European countries' economies into more open systems has been bumpy and remains a work in progress. Education, she said, is crucial.

"People have to understand how a market economy works and that there will be some losers as well as winners," she said.
More about Peter McPherson





Read and comment on this story from the at:

MSU president to oversee Iraq's economic recovery*

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MSU president to oversee Iraq's economic recovery

By Thomas A. Fogarty, USA TODAY

Peter McPherson, the new U.S.-appointed economic chief in Iraq, is a cigar-chomping Michigan farm boy who has parlayed hard work and a keen political sense into a string of successes in government, business and academia.

McPherson, 62, is taking a 130-day leave as president of Michigan State University to lead a team charged with revitalizing a long neglected Iraqi economy. The immediate tasks: revitalizing the finance ministry, the central bank and nationwide banking network. He'll report to Jay Garner, the U.S. civil affairs chief in Iraq.

In announcing the appointment Friday, Treasury Secretary John Snow cited McPherson's "wealth of experience" in government and business. Another likely factor: a longtime friendship with Vice President Cheney.

Friends say McPherson, who wasn't giving interviews last week, is uniquely qualified for the task in Iraq by virtue of his deep experience in finance and international affairs. More surprising than his selection for the Iraq job, they say, is that he hadn't been tapped earlier for a top-level assignment in the Bush administration.

"He's a good administrator and a people person, and he'll do a very nice job," says Des Moines attorney Stephen Roberts, who befriended McPherson during Gerald Ford's 1976 presidential campaign.

Republican McPherson was a White House aide in the mid-1970s answerable to Ford's two chiefs of staff Cheney and Donald Rumsfeld, Defense secretary. Cheney has remained close and last year delivered just two commencement addresses at the U.S. Naval Academy and MSU.

After earning a bachelor's degree from MSU, McPherson worked in the mid-1960s as a Peace Corps volunteer in Peru.

American University professor Tony Morella recalls McPherson as a politically active Republican when he taught him as a law student in the late 1960s. After graduation from the Washington, D.C., school, McPherson went to work at the IRS, where his specialty was international taxation. He joined the administration of fellow Michiganian Ford in 1975 as a White House aide.

Exiled from government by the election of Democrat Jimmy Carter, McPherson in 1977 went into private law practice. He returned to government for a series of high-level positions in the Reagan administration: chairman of the government's Overseas Private Investment Corp., administrator of the U.S. Agency for International Development and deputy Treasury secretary.

The Treasury post, where he was No. 2 to former secretaries James Baker and Nicholas Brady, marked the high-water mark of McPherson's government service.

His focus was trade, taxation and international issues, and he was the acting secretary between Baker and Brady.

He left government in 1989 to take charge of Bank of America's portfolio of debt owed by Third World countries.

McPherson seemed an unlikely choice when tapped 10 years ago to lead Michigan State University. He was an international banker in San Francisco laden with all manner of partisan political baggage. He was hardly the scholarly prototype for the presidency of one of the nation's largest public universities.

But three of four finalists for the president's job had withdrawn, and the MSU trustees were hopelessly split over hiring the fourth candidate. McPherson was the compromise candidate to whom the deadlocked board eventually turned.

Although not an academic, McPherson holds an MBA in addition to his law degree. And family ties helped to secure the job: All 10 members of his immediate family parents included held MSU degrees. "He brought a lot to the table as far as money management," says Lansing developer Joel Ferguson, vice chairman of the MSU board of trustees and the person most responsible for hiring McPherson.

Ferguson, a member of the Democratic National Committee and who opposes the war in Iraq, is unsure that the U.S. will achieve much success in arbitrating lingering deep divisions among the Iraqis. But, he says, any shortcomings in the U.S. effort won't be for a lack of effort by McPherson, whom he calls tireless.

Says Ferguson: "He doesn't golf. He doesn't play tennis. He reads and he works. That's all he does."

Married and the father of four adult children, McPherson is often seen around campus chomping on a trademark unlit cigar. Some years ago, McPherson reportedly struck a deal with one of his children to stop smoking cigars but couldn't completely wean himself.

As McPherson nears his 10th anniversary at MSU, he has become the longest-serving president among Big 10 universities. His supporters cite several elements to what they say is a record of success:

* Seven consecutive years in which tuition increases have not exceeded inflation.
* An agreement that now has the private Detroit College of Law operating from the MSU campus.
* A foreign studies program that MSU bills as the largest of any U.S. university. It sends 2,000 students a year to study in 50 countries.

Ferguson says McPherson has muted criticism from faculty members who would prefer a scholar at the helm by deferring to the provost on academics. Personal diplomacy seems to have allayed concerns of elected Michigan Democrats who may otherwise be troubled by his Republican Party ties, say Ferguson and others. "He's a political animal, but he's not a partisan animal," says MSU spokesman Terry Denbow.

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