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Saturday 19 Aug 2017 | 12:12 | SYDNEY

Obama's herculean task

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6 November 2008 10:23

The euphoria and promise of Barak Obama’s election triumph will soon be tempered by the stark prospect of US weakness and decline. The new president has a power of work ahead of him if he is to restore the tarnished US brand and repair the financial mess that is likely to be his predecessor’s most enduring legacy.

Rightly castigated for his foreign policy failures, President Bush’s stewardship of the US economy has also been a disaster. On his watch, Bush has turned a 2000 Clinton surplus of $128 billion into a one trillion plus deficit, private debt has skyrocketed, the nation’s infrastructure has deteriorated alarmingly, and the defence budget is under serious strain.

These economic realities present Obama with two major challenges as he contemplates his domestic and foreign policy agenda. First is the Herculean task of repairing a dysfunctional financial system and dealing with the consequences of what may be the worst recession since the 1930s. Already burdened by unrealistically high expectations, Obama will have little financial wriggle room to implement his planned domestic reforms which, as a consequence, are likely to be less transformational than either he, or his supporters, would like.

The external environment is equally unpromising for the neophyte president. US strategic predominance has been underpinned by the entrepreneurship and productivity of the American people. But the wide gap which once separated the US economy from those of all others is narrowing. It has been living beyond its means on other nation’s credit for far too long. Now its economic power is being challenged not only by the rise of China and India, but also a resurgent Russia, the wealthy oil states of the Middle East and a more confident, assertive Europe.

None of these states, or agglomeration of states, is yet a peer competitor. But collectively they are diluting and challenging US suzerainty in ways that would have been unimaginable barely a decade ago, when the US basked in the sun of its ‘unipolar moment’ as the world’s only superpower. That moment has long since passed into history.

A sign of the times is the number of governments and corporations beating a path to the doors of cashed up Chinese and Middle Eastern sovereign wealth funds, the global realignment of the financial system away from its previous dependence on Wall Street, and increasingly strident calls for reform of the international institutions largely crafted and dominated by the US since 1945.

Then there are the non-state actors, who owe allegiance to no state and march to the beat of their own discordant drum. Most are no friend of America and many actively seek its downfall. Al Q’aida is the most prominent, but there are numerous, like-minded organisations around the world intent on sapping US strength and resolve.

Does this mean that Pax Americana is about to go the way of all previous hegemonies? Not for the moment, and maybe not even in our lifetime, if Obama can marshal the traditional sources of US strength.

The $13 trillion US economy remains the world’s largest by a considerable margin. Washington far outspends all other nations on defence, as well as research and development. Demographically, the US is rejuvenating itself through large scale immigration and healthy fertility rates, which over time will stimulate the economy, deepen the tax base, broaden the nation’s skill set and provide a continuing source of recruits for the military.

But to realise this potential Obama must ensure that Americans practice what they preach and lead by example. This means a return to thrift, reducing the mountain of private and public debt and restoring America’s strength and moral authority abroad.

The latter may prove especially difficult because of the multiplicity and complexity of the foreign policy challenges confronting the US. Stabilising the deteriorating and linked conflicts in Pakistan and Afghanistan will require more subtle diplomacy than has been evident in the recent past, a coherent and overarching political and military strategy, and the judicious, intelligent use of military force when required.

The US must once again learn to share power with other states and to accept that the centre of economic and financial gravity has shifted inexorably from the cosy club of G7 allies to the larger and more diverse group of G20 developed and developing economies, which are far less amenable to US influence.

This will require a difficult but necessary attitudinal shift in Washington which many Americans will oppose. If Obama is successful in rewriting the script to give the US a leading but not dominant role in the much promised but now emerging new world order, then he will have demonstrated conclusively that the US remains the world’s indispensable power.

Photo by Flickr user casch52, used under a Creative Commons license.

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