The Washington Week

After nearly a week based in Jerusalem - at a very pivotal time in the modern history of the region - and a day in Stockholm I'm now heading over the North Atlantic in the direction of Washington.

I'm there primarily for a board meeting of Legg Mason in Baltimore, but as usual these trips combine a number of different elements. There will be ample of political discussions in Washington before I'm back home towards the end of the week.

It's a week with a heavy political agenda.

On Tuesday, President Bush adresses Congress with his annual State of the Union speech, setting out the priorities and policies of his presidency one year into it's four-year term.

Whether that will be the most important event of the day, or whether more attention will be given to Alan Greenspan's last day as Chairman of the Federal Reserve after 18 years of very distinguished service remains to be seen. On Wednesday, Bed Bernankie takes over.

Be sure that President Bush will pay tribute to Greenspan, and that he will use this also to highlight the rather extraordinary dynamism of the American economy at this time.

The figures are truly impressive.

When Greenspan took over from Paul Volcker in 1987, the US GDP was around 5 trillion dollars. Since then rapid growth has taken it to today's level of around 13 billion dollars. In absolute terms, no country throughout history has ever created so much new wealth during a corresponding span of time.

But there will obviously be a restatement of the administrations foreign policy priorities that will be keenly watched.

Will it be dominated by an effort to give a positive picture of developments in Iraq? Or will it be the escalating conflict with Iran that will dominate? And how will he treat the fact that democracy in the Arab world seems to mean that Islamist forces are gaining ground at the expense of more moderate ones, with the Palestine election just days behind us?

All of these issues will be the subject of important activities elsewhere during this week.

Tonight German Chancellor Angela Merkel - who's quickly achieved a superstar status in her country - will arrive in Jerudsalem for talks with Acting Prime Minister Olmert before she tomorrow proceeds to Ramallah and to see President Abu Mazen.

With her new weight both in Europe and in the White House, the impression that she gets will obviously be important in shaping Western policy.

And tomorrow the EU Foreign Ministers will meet in Brussels to look at the new situation. They are however likely to defer major policy conclusion until the dinner in London that brings in also UN Secretary General Kofi Annan, US Secretary of State Condolezza Rice and Russian Foreign Minister Sergei Lavrov.

The London meetings will not only deal with the new situation in the Middle East.

The Iran issue will be on the agenda as well, as will the question of how to proceed with the search for a Kosovo solution. President Ahtisaari, who leads the international effort, is likely not to get support for the approach that he has recommended.

And the big issue - bringing representatives of 60 or so states to London tomorrow - will be to get money for the different peace efforts in Afghanistan. Things are not going too badly there - but neither are they going particularly well. State-building takes time - and costs money.

On Thursday the Iran issue is likely to be at the top of the global political agenda as the Governing Board of the IAEA convenes in Vienna to deal with the EU requst thar the Iranian issue the one way or the other be sent to the UN Security Council.

There is likely to be heavy maneuvering prior to and at the meeting. Evidently Teheran has suddenly accepted to let IAEA inspectors visit the Lavizan facility in Teheran which is suspected of having housed unreported nuclear activities in previous years. But the critical vote might well be delayed by the fact that the IAEA isn't fully ready to report their full conclusions on Iran. Another months or so might be needed.

In the meantime, the Chinese are busy celebrating that they have now entered the Year of the Dogs.

USATODAY.com