Bessent Seeks to Rally Allies at G20   09/01 06:33

   Treasury Secretary Scott Bessent is meeting with finance ministers of the 
world's largest economies this week at a time when the United States has 
disrupted the international order with aggressive tariffs on major allies and 
an unpopular war on Iran that is keeping gas prices high for consumers.

   ASHEVILLE, N.C. (AP) -- Treasury Secretary Scott Bessent is meeting with 
finance ministers of the world's largest economies this week at a time when the 
United States has disrupted the international order with aggressive tariffs on 
major allies and an unpopular war on Iran that is keeping gas prices high for 
consumers.

   As Bessent opened meetings of the Group of 20 finance ministers in Asheville 
on Monday, he said he wants to focus on ways to grow the global economy and 
rein in mounting debt. But the event comes after hostilities renewed between 
the U.S. and Iran, and as trade friction with Canada spiked following a 
breakdown in negotiations that led to escalating tariffs.

   Bessent told The Associated Press in an interview on Sunday that he plans to 
turn up pressure on Iran by sanctioning another bank, part of what he is 
calling "Operation Economic Outcast." The administration earlier this month 
took steps to limit an Egyptian bank's operations in the United Arab Emirates. 
He said the administration is prepared to exact "financial violence if we have 
to."

   Asked by reporters Monday how long it would take for the Iranian economy to 
collapse, Bessent said: "I think it could be within weeks or months -- and the 
economy doesn't have to collapse, we just have to have the regime come to their 
senses."

   Bessent said the European Union had backed his sanctions efforts with 
"fulsome support." On Sunday, the EU said in a statement it welcomes added 
economic pressure on Iran and will work with the U.S. and other partners to 
keep the squeeze on Iran.

   France's finance minister, Roland Lescure, told reporters he hopes there 
will be a global statement from the G20 on an agreed-upon path for economic 
growth worldwide.

   He said the world economy is "a bit like the weather in Asheville -- it's 
unpredictable, it's foggy."

   Russia's finance minister is at the meeting too

   Russia's finance ministry said Finance Minister Anton Siluanov met with 
Bessent on Monday on the sidelines of the meeting.

   Asked why the Russian official had been invited to the meeting despite 
invading Ukraine more than four years ago, President Donald Trump said, "We 
like getting along with everybody."

   Bessent told Siluanov that the U.S. would not give Russia economic relief 
until it ends the war, a source familiar with the meeting said, speaking on 
condition of anonymity because they were not authorized to speak on the record 
to journalists. Siluanov tried to discuss areas of interest, but Bessent 
"forcefully interrupted" to say that no actions were possible until the war 
ended, the source said.

   Under the circumstances, it might be hard to marshal allies

   Daniel Fried, a former assistant secretary of state for European affairs in 
George W. Bush's Republican administration, said the U.S. may "find it 
difficult to rally its usual friends and allies" under the circumstances.

   If Bessent and other administration officials want international support, he 
said, they will need to "take greater care in consulting with allies and 
partners than the U.S. has shown in recent months."

   Bessent wants other countries to help the U.S. isolate Iran in order to 
force its capitulation during a war that recently crossed its six-month mark. 
Although the U.S. struck Iran again on Sunday, the administration has 
previously signaled its intention to focus on economic pressure rather than 
military action to achieve its goals.

   So far, Trump has not followed through on threats of an "economic D-Day" for 
Iran, instead largely relying on warnings to Iran's trading partners. A 
particular challenge is China, which is the largest buyer of Iranian oil.

   Bessent told the AP that "all options are on the table" in terms of 
sanctioning Beijing for its continued purchases.

   Sanctioning China for Iranian oil purchases would come with consequences

   Nicholas Mulder, a Cornell historian who specializes in sanctions, said "we 
might see a gradual trickle of smaller listings but a large designation of, 
say, a major Chinese bank would cause serious upheaval and prompt retaliation."

   But Bessent rejected the idea that the administration is reluctant to 
confront China, calling it "a completely false narrative." He insisted that 
China and the U.S. agree on the need to reopen the Strait of Hormuz and prevent 
Iran from developing a nuclear weapon.

   Mulder also cautioned that any disruption to global oil flows through 
secondary sanctions would boost inflation and force the Federal Reserve to 
raise interest rates.

   "Given that Bessent's Treasury already finds itself having to quell a 
growing unease in the bond markets, it will be very challenging to do the same 
in the sanctions enforcement space with credibility," Mulder said.

   The G20 meetings are taking place in Asheville, which was devastated by 
Hurricane Helene in September 2024. The natural disaster killed more than 250 
people and caused nearly $80 billion in damage from Florida to the Carolinas.

   Bessent said Asheville -- which rebuilt after the storm -- was a symbolic 
backdrop for discussions about economic growth.

   "We want the rest of the world to come along with our growth agenda, whether 
it's deregulation, the energy independence, and we want to discuss global 
imbalances, banking regulations, some sovereign debt restructuring for 
developing countries," Bessent told the AP.

   He added that "the world has this mountain of debt, and we do have to grow 
our way out of it."