Every nation is balanced on fiscal cliff

Stagnation over the US budget in Congress will have far-reaching consequences, writes Anne-Marie Slaughter

THE world should be worried. The possibility that US President Barack Obama and the Republicans in Congress will fail to reach a compromise before mandatory deep spending cuts and tax increases take effect on Jan 1 is very real.

Global markets are well aware of the danger of the US falling over the “fiscal cliff”, and are watching nervously. They know this outcome could throw the US — and the world — back into recession. Unless the US can get its fiscal house in order, it will be forced to abdicate leadership on a wide range of critical global issues.

In the short term, Syria and its neighbours are already paying the price of the US inability to focus on anything other than domestic politics since Obama’s re-election. In my view, the Syrian crisis is at a tipping point: While it is now apparent that the opposition will eventually win and President Bashar al Assad will fall, the endgame’s duration will be a key element determining who actually comes into power and on what terms.

Syria’s implosion, and the chaos and extremism that are likely to breed there, will threaten the entire Middle East. But we do not even know who will succeed Hillary Clinton as US secretary of state or who will be on the White House security team.

In the medium term, the world abounds with tensions and potential crises that US leadership is likely to be indispensable to resolving. As recent events in Egypt have demonstrated all too vividly, the Arab awakening is still only in its first act in many countries.

Indeed, democracy is fragile, at best, across North Africa; and, in the Middle East, Jordan, the Palestinian territories, Kuwait, and Saudi Arabia have only begun to feel the ripples of the tidal wave sweeping the region. Bahrain remains a flashpoint, Iraq is deeply unstable, and the simmering conflict between Iran and Israel could flare up at any time.

In Asia, the US has been pushing for multilateral resolution of dangerous bilateral disputes between China and its many neighbours over territories in the East and South China Seas, while at the same time restraining US allies who might otherwise provoke crises.

The US needs to “rebuild itself at home”, as the Obama administration’s 2010 national security strategy promises. But if US politicians spend the next two years the way they have spent the past two — patching together temporary policy fixes while avoiding the hard issues — America’s voice will grow fainter, and weaker, in international institutions and affairs.

Equally worrisome is the prospect of deep, across-the-board cuts in the US defence budget at a time when many rising powers are increasing their defence spending. As much as many countries may dislike the US military, the availability and extraordinary capabilities of US soldiers, ships, aircraft, and intelligence assets often function as a global insurance policy.

In the long term, the challenge is more vague, but deeper. The longer the US obsesses over its own political dysfunction and economic stagnation, the less likely it is to bear the mantle of global responsibility and leadership.

Openly isolationist political forces, such as the Tea Party, will grow stronger. A retreating US will, in turn, guarantee the emergence of what foreign-policy analyst Ian Bremmer describes as a “G-Zero world”, in which no country will take the lead and marshal the necessary economic and political coalitions to solve collective problems.

Individual presidents and secretaries of state will certainly try. However, without Congressional support, they will bring fewer and fewer resources to the table and will suffer from an increasing credibility gap when they seek to negotiate with other countries.

Global leaders can do more than stand by and watch. The G7 or G8 leaders could issue a statement, urging the US to get its fiscal house in order. Even G20 members, were they so moved, could make a statement.

Of course, when we think about the G20, we immediately wonder who, other than the US, could organise the issuance of such a statement. That is precisely the problem, and it could get much worse.

* Anne-Marie Slaughter is a former director of policy planning in the US state department and is professor of politics and international affairs at Princeton University. Copyright: Project Syndicate


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