When Russia invaded Georgia in 2008, there was little Washington could do but watch.
A military response was out of the question. But Georgia’s American-educated prime minister, Lado Gurgendize, thought the United States might help him guard against a bank run by topping up the central bank’s reserves.
It was a reasonable assumption. It wouldn’t cost the US treasury much. Georgia’s gross domestic product is about half of that of Vermont, America’s smallest state by GDP. And, President George W. Bush fashioned himself a champion of fledgling democracies around the world. But the United States was on the verge of the worst financial meltdown since the Great Depression. Any money the United States had to spare would be spent on itself.
The man who had to explain this to Georgia’s prime minister was Clay Lowery, an official at the Treasury Department who was charged with supervising international matters. Lowery and Gurgendize talked for a few hours. Lowery explained that the US government would be unable add to the Georgian central bank’s reserves.
But maybe there was another way?
“The U.S. was very supportive of Georgia during that time, but we were in the midst of our own financial crisis and providing emergency liquidity support to another country is difficult for the U.S. to do even during stable times,” Lowery said in congressional testimony this week. “Instead, we worked with the IMF which stepped up very quickly to provide the financing Georgia needed to preserve confidence in the banking system.”
Pity Lowery no longer is at the Treasury.