The Economy: The Dollar: A Power Play Unfolds

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Political Squabbling. If the surcharge is to be removed, hard bargaining will be necessary for all the U.S.'s major trading partners. For one thing, the U.S. is asking that the countries benefiting from American military protection assume more defense costs. The Administration also wants its allies to give American exports the same access to foreign markets that the U.S. traditionally gives to foreign imports. This demand is aimed directly at the Japanese. Extremely tight restrictions on imports and foreign investment make it almost impossible for American businessmen to sell their goods or set up their factories in Japan.

What the world now faces is a suspenseful period in which some major currencies will bob up and down and trade may be temporarily impeded because of confusion over what different monies are really worth. At week's end Europe's official currency exchanges remained closed, though most are scheduled to reopen this week. In West Germany, The Netherlands and some other countries, the dollar was floating against local currencies. It was worth whatever buyers were willing to pay for it from minute to minute. France decided to adopt a two-tier system. The French Central Bank will continue to give the official rate of 5.6 francs to the dollar to exporters, importers and other businessmen for legitimate commercial deals. But it will give a lower, floating rate, based on supply and demand, to tourists, investors and speculators.

To find a way out of this mess, bankers and finance ministers will hold a series of meetings at which the drink of the day will not be champagne but Alka-Seltzer. The Common Market's finance ministers will huddle in Brussels on

Sept. 13, or perhaps sooner, in an attempt to devise a coordinated strategy for revaluation. An initial meeting last week broke up in bitter squabbling between the representatives of France and Germany. Europe's ministers are gloomy, expecting that no one will want to agree to basic changes until the IMF holds its annual conference in late September in Washington. That meeting will be the most important in the IMF's stormy history. Last week IMF officials openly criticized President Nixon's refusal to devalue the dollar directly by raising the price of gold rather than indirectly by relying on other countries to move the value of their own currencies upward. The IMF and its member nations must come up with a way to "set up an urgently needed new monetary system."

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