Treasury boss courts Mideast, sees rebound

DUBAI, United Arab Emirates -- Treasury Secretary Timothy Geithner reached out to Gulf Arab leaders Tuesday, stressing to some of America's top creditors that his country has a "special responsibility" to steer the world through a global recession that may finally be showing signs of easing.

A key aim of Geithner's trip is to convince the major oil producers that the United States still welcomes their business, and has plans to get itself out of a crisis stemming from what he said was an "unsustainable fiscal path."

"The force of the global recession is receding," Geithner told Saudi Arabian business leaders in the commercial hub of Jiddah, the starting point of his first official visit to the Middle East. "Global trade is just starting to expand again."

But while noting that the International Monetary Fund has revised up growth forecasts in the second half of 2009 and into 2010, he cautioned that the signs of improvement were fragile and that the "process of repair and recovery is going to take considerably more time."

"This crisis has been brutal in the extent and severity of damage to economies around the world," he said. "Given the extent of damage to financial systems ... it seems realistic to expect a gradual recovery, with more than the usual ups and downs and temporary reversals."

Geithner's Mideast trip was billed as a follow-up to President Obama's recent overtures to the region. But the stop in the Saudi Arabia — the Arab world's largest economy and OPEC's de facto leader — also is a clear reflection of the growing financial clout of the six-nation Gulf Cooperation Council.

The treasury secretary arrives for talks in the neighboring United Arab Emirates, the No. 2 Arab economy, on Wednesday.

What Geithner has to say in private to officials in the oil-rich region could help determine whether the Obama administration's efforts to right the U.S. economy succeed. The Arab Gulf states are major backers of U.S. companies and government bonds and, as a group, are the biggest U.S. creditor after China.