Storm over top job bodes ill for world trade body

The installation of Renato Ruggiero as head of the new World Trade Organisation was yesterday turning into an occasion of acrimony and diplomatic farce.

Less than 24 hours after the United States bestowed grudging public approval upon Mr Ruggiero, the European Union's candidate, ambassadors at the headquarters of the WTO complained bitterly of a backstage deal between Washington, Brussels and South Korea, struck in disregard of the WTO rule that its head be adopted by consensus.

There was consensus among diplomats that this has been the most ineptly handled senior international appointment in recent history. "It has produced bad feelings on almost all sides and I do not see how Mr Ruggiero can begin work with the necessary authority and goodwill," said one European ambassador, who asked not to be named.

The WTO is to oversee the transformation of the trading system into a global economy for the 21st century. Over 120 countries are expected to become members. It will resolve disputes and implement 28 accords, comprising 27,000 pages of text, from the General Agreement on Tariffs and Trade (Gatt) negotiations.

But the contest over the leadership has set the WTO off to a faltering start. It was hoped that the effective Peter Sutherland of Ireland, brought in to push through the last round of Gatt, would stay on to head the WTO. Mr Sutherland, however, preferred the fresh air of his native land to the claustrophobic chambers of multilateral trade bargaining.

The EU, urged on by Sir Leon Brittan, the Trade Commissioner, proposed Mr Ruggiero, 65 , formerly the Italian minister of foreign trade and a senior emissary of Gianni Agnelli's Fiat, which dominates the protected Italian car market.

The Clinton administration preferred Carlos Salinas de Gortari, former president of Mexico, who conveniently hailed from a developing country and was thought to possess credibility with global businesses. Unfortunately for Mr Salinas, his brother was then accused of a political murder while the Mexican economy, touted as a shining example of market reform, collapsed. He withdrew as a candidate early this month.

A third contestant emerged inSouth Korea's former trade minister, Kim Chul-Su, who won support from Asian countries. Mr Salinas's withdrawal left the US in a quandary. The US ambassador to the WTO, Booth Gardner, looked dumbstruck at meetings for which he appeared to have no instructions from Washington. One senior administration economic official, W Bowman Cutler, undermined Mr Ruggiero, as "more protectionist than we would like".

Then came tales of CIA intelligence reports that did not reflect wellon Mr Ruggiero's stint in the Italian government from 1987 to 1991. EU officials angrily described as a "smear campaign" any effort to link Mr Ruggiero to the corruption scandals of the old Italian regime.

The issue soured relations between Sir Leon and the chief US trade negotiator, Mickey Kantor. These are now said to be glacial. Mr Ruggiero, in fact, professes a qualified commitment to free trade. He maintains there could be no return to the protectionism of the 1930s, saying that "politicians in Europe or elsewhere who pretend otherwise are deluding themselves." But he has also said that "while free trade is the engine of growth, it cannot solve all the world's economic problems."

By last weekend, the US had failed to come up with an alternative candidate and both Mr Ruggiero and Mr Kim had declined US suggestions to withdraw. A deal was then cut. The US swallowed its objections to Mr Ruggiero on condition he served only one four-year term and that his successor would be a non-European. The South Koreans agreed to withdraw Mr Kim on condition he got a job as one of the deputies to Mr Ruggiero.

In Washington, Mr Kantor and Mr Ruggiero went on television to present the fait accompli. Then the South Korean news agency, Yonhap, quoted a foreign ministry spokesman in Seoul saying Mr Kim had the deputy's job in the bag. This came before the envoys at WTO had heard a word through formal channels.

It induced collective diplomatic indigestion in Geneva. Last night, Mr Ruggiero was flying back to Switzerland while EU and American diplomats calmed tempers in hastily convened ambassadorial meetings. Mr Ruggiero is likely to gain his consensus at the price of much self-effacement and some quid pro quo for the critics. There is an Italian word for such affairs: un pasticcio - a mess.

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