The do­mes­tic threat to US lead­er­ship

Financial Mirror (Cyprus) - - FRONT PAGE -

US Pres­i­dent Barack Obama has racked up a se­ries of for­eign-pol­icy tri­umphs over the last 12 months. But one that has gained less at­ten­tion than oth­ers was the pas­sage last De­cem­ber of leg­is­la­tion to re­form the In­ter­na­tional Mon­e­tary Fund, af­ter five years of ob­struc­tion by the US Congress. As the IMF con­vened in Wash­ing­ton, DC, for its an­nual spring meet­ings on April 15-17, we should pause to savour the im­por­tance of this achieve­ment. Af­ter all, if the United States had let yet an­other year go by with­out rat­i­fy­ing the IMF quota re­form, it would have es­sen­tially handed over the keys of global eco­nomic lead­er­ship to China.

The IMF re­form was cru­cial: The al­lo­ca­tion of mon­e­tary con­tri­bu­tions and vot­ing power among mem­ber coun­tries had to be up­dated to re­flect the shifts in global eco­nomic power in re­cent decades. Specif­i­cally, emerg­ing-mar­ket economies like Brazil, China, and In­dia gained a larger role, pri­mar­ily at the ex­pense of Euro­pean and Per­sian Gulf coun­tries.

Obama man­aged to per­suade the lead­ers of the other G-20 coun­tries to agree to the re­form at a 2010 sum­mit in Seoul. The deal’s sub­se­quent ap­proval should have been a no­brainer for Congress, as it nei­ther in­creased Amer­ica’s fi­nan­cial obli­ga­tions nor took away its vot­ing dom­i­nance. More im­por­tant, the re­form rep­re­sented a golden op­por­tu­nity for the US to demon­strate global lead­er­ship, by recog­nis­ing that the ex­ist­ing in­ter­na­tional or­der must ac­com­mo­date chang­ing eco­nomic-power dy­nam­ics.

In­stead, Congress at­tempted to block IMF re­form, ef­fec­tively deny­ing China its right­ful place at the ta­ble of global gov­er­nance. “Mov­ing the goal posts” could suc­ceed only in driv­ing the Chi­nese to es­tab­lish their own in­sti­tu­tions. In this sense, Con­gres­sional in­tran­si­gence may have un­der­mined Amer­ica’s po­si­tion in its com­pe­ti­tion with China for global power and in­flu­ence.

To most Asians, the US is a more at­trac­tive re­gional hege­mon than a China that has been ag­gres­sively pur­su­ing ter­ri­to­rial claims in the East and South China Seas. But re­cent US be­hav­iour has caused some Asian coun­tries to be­gin to ques­tion Amer­ica’s com­mit­ment to sup­port­ing re­gional se­cu­rity and pros­per­ity.

Against this back­ground, many coun­tries, both in­side and out­side Asia, were happy to join the China-led Asian In­fras­truc­ture In­vest­ment Bank, which promised to meet some of the re­gion’s fi­nanc­ing needs. The AIIB’s es­tab­lish­ment in De­cem­ber was widely viewed as a se­vere diplo­matic set­back for the US.

For­tu­nately, thanks to Obama’s re­cent string of suc­cesses in terms of global en­gage­ment, the US now has a chance to get back into the game. Last April, his ad­min­is­tra­tion over­saw a break­through agree­ment with Iran over its nu­clear pro­gramme. More­over, in Oc­to­ber, Congress was per­suaded to give it Trade Pro­mo­tion Au­thor­ity, en­abling the com­ple­tion of the 12-country Trans-Pa­cific Part­ner­ship (TPP). More re­cently, the US has reestab­lished diplo­matic re­la­tions with Cuba, end­ing a 55year pol­icy of iso­la­tion that suc­ceeded only in giv­ing Cuba’s lead­ers an ex­cuse for eco­nomic Amer­ica’s Amer­ica.

Fi­nally, rep­re­sen­ta­tives of the 195 par­ties to the UN Frame­work Con­ven­tion on Cli­mate Change reached an agree­ment in Paris last De­cem­ber to re­duce green­house­gas emis­sions, spurred in no small part by ear­lier ac­tion by Obama and Chi­nese Pres­i­dent Xi Jin­ping. The two lead­ers are sched­uled to sign the Paris agree­ment on April 22 on be­half of their re­spec­tive coun­tries, the world’s two largest emit­ters of green­house gases. Add to that the rat­i­fi­ca­tion, at long last, of IMF re­form, and the US does seem to be on a global win­ning streak.

None of th­ese five achieve­ments could have been pre­dicted a year ago. With the Repub­li­cans hav­ing taken full con­trol of the Congress in Novem­ber 2014, the over­whelm­ing con­ven­tional wis­dom was that the ad­min­is­tra­tion would be blocked from ac­com­plish­ing much in its fi­nal two years.

Mak­ing mat­ters worse, in­ter­na­tion­al­ism at­tracts op­po­si­tion from the far left as well as the far right. Though trade is the most ob­vi­ous ex­am­ple, it is not the only one. Be­yond op­pos­ing the TPP, US pres­i­den­tial can­di­date Bernie San­ders has his­tor­i­cally

fail­ure and handicapping re­la­tion­ships through­out Latin joined with con­gres­sional Repub­li­cans in try­ing to block ef­forts to res­cue emerg­ing­mar­ket coun­tries in Latin Amer­ica and Asia at times of fi­nan­cial cri­sis. Th­ese res­cues are in­vari­ably called “bailouts,” even when they cost the US noth­ing – the US Trea­sury ac­tu­ally made a profit on the 1995 loan to Mex­ico that San­ders op­posed – and help sus­tain eco­nomic growth. Sim­i­larly, New York Senator Chuck Schumer joined the Repub­li­cans in try­ing to block the Iran nu­clear agree­ment.

Obama’s re­cent in­ter­na­tional suc­cesses are not unas­sail­able. Although the IMF deal is done, Obama’s other key ini­tia­tives could still be de­railed by US pol­i­tics, es­pe­cially if the po­lit­i­cal ex­tremes unite. Congress could re­ject the TPP, in ef­fect telling Asia it is on its own. It could un­der­mine the emerg­ing re­la­tion­ship with Cuba; af­ter all, it has yet to re­peal the em­bargo. As for the Paris agree­ment, a fed­eral ap­peals court will first hear a chal­lenge to the ad­min­is­tra­tion’s im­ple­men­ta­tion strat­egy, the Clean Power Plan, on June 2.

The Repub­li­can pres­i­den­tial cam­paign adds an­other el­e­ment of un­cer­tainty. The two lead­ing can­di­dates for the party’s nom­i­na­tion, Don­ald Trump and Ted Cruz, both say that they would tear up the Iran nu­clear deal, if elected. It is worth re­call­ing the out­come of Pres­i­dent Ge­orge W. Bush’s anal­o­gous de­ci­sion to tear up Bill Clin­ton’s “frame­work agree­ment” with North Korea: the Kim regime promptly and pre­dictably de­vel­oped a nu­clear bomb.

Whether the US will con­tinue to lead the world re­mains un­clear. What is clear is that US pol­i­tics, not global de­vel­op­ments, will be the main de­ter­mi­nant.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.