The departure of James Baker'sclosest aide, Deputy Treasury Secretary Richard Darman, will
not change the course of Washington's domestic and
international economic policies, U.S. officials said.
    Darman, who has worked alongside Baker for six years, was
widely credited with helping him mastermind initiatives on
currency management and international economic cooperation.
    U.S. Officials said Darman also played a key role in
shepherding President Reagan's sweeping tax reform plan through
the U.S. Congress.
    But they flatly dismissed suggestions that his departure,
to the investment banking firm of Shearson Lehman Brothers,
signaled the Baker team was breaking up, or that the Treasury
Secretary himself might leave soon.
    "It really does not mean that, he took the opportunity as it
came up," one official said.
    Another commented, "Baker will miss him, but he's not going
to stand in his way."
    There has been widespread speculation since last autumn
that Darman sought a Wall Street job.
    Officials said Darman felt the passage of tax reform late
last year marked an appropriate moment to bow out.
    Baker acknowledged Darman would be sorely missed.
    "Dick Darman has contributed mightily to the success of this
administration over the past six years and his departure
represents a substantial loss," he said.
    U.S. Officials admitted Darman's absence would be an
undoubted blow to Baker, who has relied on him for policy
advice, both at the White House and, in Reagan's second term,
at the Treasury. One aide once described Darman as
"indispensable" to Baker.
    Baker is widely thought to want a more stable currency
system and Darman is generally credited by officials of other
nations as Baker's leading theorist on this issue, favouring
target zones to limit currency fluctuations.
    Earlier this year, monetary sources said the U.S. Treasury
unsuccessfully sounded out allies on a target zone system.
    But a U.S. Official disputed the assessment that, with
Darman gone, Baker would abandon international initiatives.
    Baker's work as head of Reagan's Economic Policy Council,
spearheading trade policy, and his skills in negotiating with
the Democrat-controlled Congress will go on as before.
    Darman's strength was not as an economist, but as a
political strategist "and that's Baker's strength too," the
official said.
    There were already indications that Baker, who throughout
his time in government has relied on a closely-knit circle of
advisers, has moved swiftly to find a successor.
    One possibility is that Baker might turn to George Gould,
who holds the number three Treasury position of
Under-Secretary.
    Gould, another close confidante, has known Baker for years.
    Before joining the Treasury in November 1985, Gould was a
partner at the Wall Steet firm of Wertheim and Co and formerly
headed Donaldson, Lufkin and Jenrette Securities Corp.
    The Darman announcement came on the eve of the semi-annual
meetings of the International Monetary Fund and the World Bank,
where many policies Darman helped shape will be debated.
    He helped Baker devise the September, 1985 Plaza Agreement,
when the United States, Japan, West Germany, France and Britain
curbed the dollar's strength. The pact was a major turning
point in U.S. Policy, ending a period of disdain for economic
cooperation and intervention in currency markets.
    Darman also worked on some other Baker initiatives, like
the Tokyo Summit agreement to intensify coordination of
economic policies among the leading industrial countries and
the recent Paris Agreement to stabilise currencies and
stimulate global growth.
    These policies are collectively aimed at redressing the
huge gap between Japan and West Germany's trade surpluses and
the United State's massive trade deficit.
    That policy goal still remains a prime objective of the
Reagan Administration and will not change with Darman's
departure.
 REUTER
