Experienced Diplomat, Able Negotiator : Baker Is Likely to Wield Wide Power in New Role

James A. Baker III, the man whom President-elect George Bush has named to be his secretary of state, has the potential to become one of the most powerful holders of that office in the last 30 years.

The former Treasury secretary is a consummate politician, who served as White House chief of staff during President Reagan’s first term and managed the campaign that brought Bush’s comfortable victory on Tuesday.

He is an experienced diplomat and an able negotiator, winning praise around the globe for launching the 1985 push to drive down the value of the dollar, the effort to force the United States and its allies to coordinate their economic policies and the global debt strategy.

Guided Trade Policy

He is widely respected in Congress, having directed the Reagan Administration’s negotiations with Capitol Hill on both the tax overhaul bill in 1986 and the omnibus trade legislation earlier this year. As top economic policy-maker, Baker also effectively set U.S. trade policy from 1986 through 1988.

Perhaps just as important, he is one of Bush’s oldest and closest friends--and is thus unlikely to suffer any challenges on foreign policy issues from competitors in other agencies, such as the National Security Council or the Department of Defense.

“With all that considered, Jim Baker could wind up being the most powerful secretary of state since John Foster Dulles was during the Eisenhower years,” says Robert D. Hormats, a former State Department economic policy-maker who has followed Baker’s career closely.

Speculate on Function

Indeed, there have been suggestions from some quarters during the campaign that Baker might function as a sort of “prime minister” in the new Administration--a man whose reach goes far beyond the foreign affairs portfolio to touch economic and domestic policies as well.

Aides say the President-elect may name Richard G. Darman, a longtime Baker partner, as director of the Office of Management and Budget. And current Treasury chief Nicholas F. Brady, another Bush-and-Baker friend, already is following Baker’s economic plan.

Although he usually plays his cards close to his vest, Baker made no secret about his desire to be come secretary of state. The assignment has been widely predicted even before he left the Treasury last summer to become Bush’s campaign manager.

Significantly, the appointment was the first that Bush announced after winning the election Tuesday.

Baker’s views on foreign policy issues are not well-known, but officials who are familiar with him said he is expected to intensify pressure on U.S. allies to shoulder more of the West’s total defense burden. They said he also is likely to call for somewhat more caution by U.S. allies in expanding economic ties with the Soviet Union.

He also may seek to strengthen ties with Japan and East Asian countries, such as South Korea and Taiwan, possibly by setting up new machinery for coordinating U.S.-Asian economic and trade policies, much as the industrial nations now do. He began a similar initiative during his term at Treasury but was unable to complete it before leaving for the Bush campaign.

Dealt in Foreign Affairs

Baker has no direct experience in foreign policy as such, but his tenure at Treasury was heavily laden with dealings with foreign governments, and his earlier days at the White House involved international affairs as well. He also is known as a quick study.

“That’s just not a really big issue here,” a former State Department official says.

George P. Shultz, the current secretary of state and another longtime Baker friend, also praised the nomination. “Jim Baker is intimately familiar with foreign policy issues,” Shultz said Wednesday. “He has the confidence of leaders all around the world.”

A decided pragmatist, Baker initially was suspect in the Reagan White House, with conservatives complaining that he was not ideological enough to serve the new Administration. He actually is a traditionalist Republican, but with a penchant for political horse-trading.

Baker eventually won the day, both because of his performance as White House chief of staff and as a favorite of First Lady Nancy Reagan. When previous Treasury Secretary Donald T. Regan offered to swap jobs, Baker, who badly wanted a Cabinet position, agreed.

Inveterate Prankster

A natty dresser with a weakness for $800 suits and expensive-but-garish ties, Baker can be formal and close-mouthed in his dealings in official Washington. But to friends back home in Texas, he is an inveterate joker and prankster who can shoot quail with the best.

“He drinks a little whiskey, chews a little tobacco, tells a few stories,” says fellow Texan Robert S. Strauss, a prominent Democratic politician who is one of Baker’s close friends in Washington. Strauss says that the secretary-designate is a crack shot with a hunting rifle.

A frequent Baker tactic at the Treasury Department was to negotiate secretly with leaders in Congress or other countries on a new initiative and then spring it as a surprise, providing maximum impact for even modest changes.

In the September, 1985, accord to drive down the value of the dollar, for example, the change Baker announced was technically a small one--that the United States would resume its pre-1980 policy of intervening in the currency markets to help influence the value of the dollar.

But the surprise factor and the flair with which Baker unveiled the plan sent the U.S. currency on a downward course for months--just as intended. A similar surprise repackaging of the Administration’s global debt strategy in late 1985 was enough to reinvigorate relations with Latin American countries.

Viewed as a Loner

The most frequently heard criticisms of Baker are that he failed to press vigorously enough to reduce the U.S. budget deficit and that he operates too much as a loner, ignoring career government staffers.

Baker’s defenders say that he simply recognized reality when he concluded early on that Reagan would not go along with a serious budget fight. As for his relationship with career federal officials, however, some analysts say that he will find it more difficult to keep his counsel in the State Department, which is far larger than Treasury.