POLITICS Like Ben Bernanke in United States, Like Sambadeen in Sierra Leone Posted by on Aug 28, 2009, 02:40

When President Ernest Bai Koroma appointed the Former Financial Secretary, Mr. Sambadeen Sesay as Governor of the Bank of Sierra Leone (BSL), some APC party members were very critical of the appointment, saying that he is not one of them and were heard saying that he was not going to work in the interest of the party in governance. The pessimists’s assumption was buttressed when the exchange rate of the dollar to the Leone skyrocketed just few weeks after the appointment. The talk around freetown, especially from party fanatics was simple and the same.

The claim was that the situation would go sour, because according to them the appointment of the Governor of the Central Bank was not from within; but from another political party, which is the opposition and the grand plan was to work towards making the economy bad to give what they referred to as leverage to the opposition to regain political power come 2012. It was a sad prediction; this is because the appointment was not based on political consideration, but as a result of a number of factors ranging from competence, experience, professionalism and knowledge of the assignment.

What was evidently demonstrated either ignorantly or delibrately by them was the fact that the general global crisis is affecting the world economy including Sierra Leone was neglected by the critics, taking only a superficial look at the situation. It should be made clear to those who see the appointment as politically incorrect that when it comes to the issue of national development even if your enemy is competent he/she should be given the opportunity to do so and should not be based on political considerations.

Just recently in the United States of America, President Obama  announced his intention to appoint Ben Bernanke as Chairman of the Federal Reserve. Perhaps a bit of historical explanation about similar appointments in the United States would help to eradicate the funny impression on the minds of some of these party fanatics who were pointing fingers and till date not happy with the decision of President Koroma. William McChesney Martin, a Democrat, was twice reappointed to the job of Chairman of the United States Federal Reserve by Republican President Dwight D. Eisenhower.

Paul Volcker, a Democrat, was reappointed once by the Reagan administration (but not twice: there are persistent rumors that Reagan’s treasury secretary, James Baker, thought Volcker was too invested in monetary stability and not invested enough in producing strong economies in presidential years to elect Republicans). Alan Greenspan, a Republican, was reappointed twice by Bill Clinton. As this history suggests, it is more remarkable for a US president not to reappoint a Fed chairman named by the opposite party than to reappoint one who wishes it. Reagan’s failure to reappoint Volcker and Jimmy Carter’s failure to reappoint Arthur Burns are the main exceptions.

The Fed chairmanship is the only position in the US government for which this is so: it is a mark of its unique status as a non- or not-very-partisan technocratic position of immense power and freedom of action, nearly a fourth branch of government. The reason, one would  think that American presidents are so willing to appoint and reappoint Fed chairmen from the opposite party is closely linked to one of the two things that a president seeks: the confidence of financial markets that the Fed will pursue non-inflationary policies. If financial markets lose that confidence and if they conclude that the Fed is too much under the president’s thumb to wage the good fight against inflation, or if they conclude that the chairman does not wish to control inflation, then the economic news is almost certain to be bad.

Capital flight, interest-rate spikes, declining private investment, and a collapse in the value of the dollar – all of these are likely should financial markets lose confidence in a Fed chairman. And if they occur, the chances of success for a president seeking re-election  or for a vice president seeking to succeed him  are very low.

By reappointing a Fed chair chosen by someone else, a president can appear to guarantee financial markets that the Fed is not too much under his thumb. And that can be a very valuable asset for an incumbent Fed chair – one that no other candidate could much. But US presidents seek more than just a credible commitment to financial markets that the Fed chair will fear and fight inflation. They seek intelligence, honour, and a keen sense of the public interest and the public welfare. Presidents’ futures – their ability to win re-election, to accomplish other policy goals, and to leave a respectable legacy – hinge on the economy’s strength. It may or may not be true, especially these days, but certainly what is good economically for the country is good politically for the president.

The argument is that Bernanke’s deep knowledge of the Great Depression and of financial crises is exactly what America  and the world needs in a Fed chair now. And his commitment not to err on the side of underestimating either the difficulty of the situation or the value of keeping employment high would make him.

In a similar vein, President Koroma would like to see a strong economy, low inflation and a robust market situation. If in his wisdom, he imagines these developments will take place, members of his party should welcome it, rather than look at it with a political microscope. The success of the country’s economy is a success story for both the ruling party and people of this country and not for the opposition.

What we should be concerned about is how a nation and its people can contribute in rebuilding the economy and not brush it aside as the wrong appointment done by the President. In  announcing his intention to appoint Bernanke’s as Fed Chair, President Obama did not think about himself but America, the same way President Koroma thought about Sierra Leone.