Archive for the ‘Political Economy’ Category

18
Oct

None of the deeper problems with American government was solved this week

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Imagine you are in a taxi and the driver suddenly turns violently and speeds towards a wall, tyres screeching, only to stop at the very last moment, inches from the bricks—and cheerfully informs you that he wants to do the same to you in three months time. Would you be grateful that he has not killed you? Or would you wonder why you chose his cab in the first place?

That is the journey Congress has taken the American people on over the past few weeks (see article). The last-minute deal to raise America’s debt ceiling, avoid a default and reopen the government at least until mid-January, which was signed by the president on October 16th, is welcome only compared with the immediate alternative.

For a long time American politicians have poured scorn on their European peers for failing to deal with the euro crisis. This week Washington equalled Brussels on one measure of dysfunctionality and surpassed it by another. The way in which the Democrats and Republicans, having failed to reach any agreement, decided to “kick the can down the road”, was deeply European. The deal allows the government to stay open till January 15th and the debt ceiling to be raised until February 7th. Just as America’s economy seems to be recovering, with the promise of GDP growing by 2.7% in 2014, it could face another shutdown of the kind that has just sent consumer confidence to a nine-month low and knocked back growth in the fourth quarter by an estimated 0.6 percentage points.

The way in which the Americans have surpassed the Europeans is the unreality of their discussion. The Europeans at least talk vaguely about banking unions and other solutions to their mess. In America the immediate budget deficit—at 3.4% of GDP—is smaller than that of many European countries. Indeed the danger is of too much tightening in the short term. But the country’s long-term fiscal problem is immense: it taxes like a small-government country but spends like a big-government one. Eventually demography—and the huge tribe of retiring baby-boomers who expect pensions and health care—will bankrupt the country. By the IMF’s calculation, if America is to reduce its debt to what it regards as a sensible level by 2030, allowing for all this age-related spending, it needs a “fiscal adjustment” of 11.7% of GDP—more than any other advanced country other than Japan. Yet the Republicans refuse to discuss tax rises, without which Barack Obama and the Democrats refuse to discuss cuts to entitlements: neither of those things had anything to do with the impasse of the past few weeks. Read more…

As published in www.economist.com on October 19, 2013 (from the print edition).

16
Oct

There’s little awareness of how the budget crisis has eroded US credibility. It’s time for a reverse Christopher Columbus

By Timothy Garton Ash

Capitol Hill October 3

‘If the US goes on like this, then one day – one year, one decade – the copper bottom of investors’ confidence will fall out.’ Photograph: Brendan Smialowski/AFP/Getty

On Monday, government offices were closed in Washington DC, to mark Columbus Day. Except that most of them had been closed anyway, because of the US government shutdown. As everyone knows, Christopher Columbus was an Italian navigator who, in the service of the Spanish crown, supposedly “discovered” America and reported its potential to a wondering world. I have spent the summer in the United States watching, with growing alarm, a country engaged in a degree of self-harming which, if observed in a teenager, would lead any friend to cry “call the doctor at once”. As I set course back to Europe, my conclusion is this: America should do a reverse Columbus. The world no longer needs to discover America; but America urgently needs to discover the world’s view of America.

Ordinary Americans, and especially the small minority active in Democrat and Republican primaries, must learn more of what people across the globe are thinking and saying about the US. For if you follow that, you realise that the erosion of American power is happening faster than most of us predicted – while the politicians in Washington behave like rutting stags with locked antlers.

The 24/7 US news coverage follows every last lunge and twist of the stagfight. It is the political equivalent of ESPN, the non-stop sports network. Just occasionally, the rest of the world breaks through: for instance, when the World Bank and the IMF hold their annual meetings – right there in Washington – and the heads of both institutions, Jim Yong Kim and Christine Lagarde, warn of dire consequences. That gets a few column inches. Or when the government shutdown and debt-ceiling brinkmanship leads Barack Obama to cancel a major trip to Asia, including the Apec summit in Bali, leaving the floor wide open for president Xi Jinping to assert China’s regional leadership (“the Asia-Pacific cannot prosper without China”).

A more direct taste of foreign news is available just a few clicks away. On my cable TV control, if I scroll down to channel number 73, or 355, or whatever it is, I can get Al-Jazeera, China’s CCTV and Russia’s RT. Their reporters often speak perfect American-accented journalese, and sometimes actually are career American journalists, lured away from job-shedding US news organisations to give credibility to these channels. CCTV’s Washington bureau chief, for instance, is Jim Spellman, formerly of CNN. These channels’ take on the Washington dégringolade is much harder edged than the ESPN version. The website of the Russian state-backed RT quotes an editorial published by the Chinese state news agency, Xinhua, proposing that, in the light of this crisis, “several cornerstones should be laid to underpin a de-Americanised world”. Read more…

As published in www.theguardian.com on October 15, 2013.

1
Oct

The Shutdown Won’t Break the U.S. Foreign Policy Machine (Right Away)

By Ty McCormick, Yochi Dreazen

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Four hundred thousand Defense Department employees, sent home. Internal watchdogs, defanged. Congressional investigations, stymied. A billion dollars a day in government contracts, stopped up.

If there’s a government shutdown on Tuesday, the United States will continue to be able to conduct its key foreign policy, national security, and intelligence missions — at least for a little while. But beyond that, well, it’s not going to be pretty.

The effects of political dysfunction in Washington are already reverberating across the globe. Markets in Europe and Asia took a hit on Monday and both the NASDAQ and Dow Jones Industrial Average fell sharply this morning when trading got underway in New York. But rattling global markets is only the first of many potential effects of the shutdown.

While government employees engaged in essential national security and intelligence-gathering activities would report to work as usual — at least in the short term — many could face considerable personal hardship because of delayed paychecks. Active-duty servicemembers might be compensated; civilians, not so much.

A government shutdown would also affect U.S. foreign policy more subtly by delaying critical foreign-policy related hearings in Congress, paring back nuclear and other critical energy programs to the bare minimum, and interfering with the State Department’s ability to police itself.

“Spies will still spy. The machinery will go on,” said a retired senior CIA official who spoke on the condition of anonymity. “The problem is if something extra falls into the system. If guys are worried about their paychecks, they’re not concentrating on their job.”

The Department of Defense will likewise “continue to support all key military operations such as the war in Afghanistan and various other missions around the world,” Pentagon spokesman Cdr. Bill Urban told Foreign Policy. But a shutdown would “place significant hardships on a workforce already strained by recent administrative furloughs.

For the hundreds of thousands of non-essential civilian personnel employed in the U.S. foreign policy machine, it will most likely mean being furloughed. This includes roughly 400,000 employees at the Defense Department alone. Read more…

As published in www.foreignpolicy.com on September 30, 2013.

30
Sep

By Robin Wright

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How 5 Countries Could Become 14

The map of the modern Middle East, a political and economic pivot in the international order, is in tatters. Syria’s ruinous war is the turning point. But the centrifugal forces of rival beliefs, tribes and ethnicities — empowered by unintended consequences of the Arab Spring — are also pulling apart a region defined by European colonial powers a century ago and defended by Arab autocrats ever since.

A different map would be a strategic game changer for just about everybody, potentially reconfiguring alliances, security challenges, trade and energy flows for much of the world, too.

Syria’s prime location and muscle make it the strategic center of the Middle East. But it is a complex country, rich in religious and ethnic variety, and therefore fragile. After independence, Syria reeled from more than a half-dozen coups between 1949 and 1970, when the Assad dynasty seized full control. Now, after 30 months of bloodletting, diversity has turned deadly, killing both people and country. Syria has crumbled into three identifiable regions, each with its own flag and security forces. A different future is taking shape: a narrow statelet along a corridor from the south through Damascus, Homs and Hama to the northern Mediterranean coast controlled by the Assads’ minority Alawite sect. In the north, a small Kurdistan, largely autonomous since mid-2012. The biggest chunk is the Sunni-dominated heartland.

Syria’s unraveling would set precedents for the region, beginning next door. Until now, Iraq resisted falling apart because of foreign pressure, regional fear of going it alone and oil wealth that bought loyalty, at least on paper. But Syria is now sucking Iraq into its maelstrom.

“The battlefields are merging,” the United Nations envoy Martin Kobler told the Security Council in July. “Iraq is the fault line between the Shia and the Sunni world and everything which happens in Syria, of course, has repercussions on the political landscape in Iraq.”

Over time, Iraq’s Sunni minority — notably in western Anbar Province, site of anti-government protests — may feel more commonality with eastern Syria’s Sunni majority. Tribal ties and smuggling span the border. Together, they could form a de facto or formal Sunnistan. Iraq’s south would effectively become Shiitestan, although separation is not likely to be that neat. Read more…

As published in www.nytimes.com on September 28, 2013 (a version of this op-ed appears in print on September 29, 2013, on page SR7 of the New York edition with the headline: Imagining a Remapped Middle East).

23
Sep

By Cameron Abadi

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To state the obvious: Angela Merkel, who has just won a third term as German chancellor, isn’t very macho. Her preferred free-time pursuit is recreational nature walking. (Also, baking: she admitted during the campaign season that her husband was sometimes displeased by the paucity of crumbs atop her cakes.) She hardly ever indulges in public demonstrations of authority; she speaks softly, and mostly refrains from displays of emotion, except for occasional flashes of a nervous smile. As for body language, her signature gesture is the Merkel diamond, which seems laboratory-tested to avoid appearing confrontational.

Compare that, for a moment, with the testosterone-soaked state of U.S.-Russian diplomacy, which has devolved in recent weeks into a high-profile pissing match. Vladimir Putin raided U.S.-backed NGOs, while Barack Obama chided Putin’s posture; Putin extended asylum to America’s most-wanted fugitive, as Obama canceled a bilateral Moscow summit. For a while, it seemed as if the confrontation would have to be settled with a round of one-on-one basketball or some judo sparring. Eventually, they both managed to claim credit for averting war with Syria—Putin from the op-ed page of the one newspaper that Barack Obama professes to care about.

There was something transfixing about the display of presidential one-upsmanship; even Germans seemed more drawn to the Putin-Obama show than their own election campaign. But if Putin and Obama ever do manage to stop their reciprocal bouts of preening, they’d do well to consider cribbing from Merkel’s machismo-less political methods. There’s an argument to be made that it’s Merkel who is the Machiavelli of our day—better, and certainly shrewder, at power politics than any of her peers, including her colleagues in the White House and Kremlin.

Merkel’s quiet affect shouldn’t obscure her influence. Germany has more power today than at any time since World War II. Merkel is prima inter pares in the European Union, capable of determining the shape of the bailout packages given to the continent’s ailing economies and, thus, capable of determining the shape of their national economies for years on end. Even the ostensibly independent European Central Bank seems to take its directions from the chancellory in Berlin, afraid to get too far ahead of Merkel’s plans. Read more…

Cameron Abadi is Deputy Web Editor at Foreign Affairs.

As published in www.newrepublic.com September 22, 2103.