Wednesday, November 07, 2012

The Challenges facing the Obama Administration in foreign economic policy.

Source: Christine Pifer (my friend and colleague Marilyn Pifer's daughter)
Bruce Stokes of the the Pew Research Center has an interesting article published by CNN World. It suggests that the U.S. public has a pretty good understanding of the challenges that the Obama administration now faces in foreign policy.

I am reminded of an old friend who used to say that there are urgent challenges, important challenges, and that he tried to focus on those that are both urgent and important.

Avoiding the fiscal cliff is both. If we do not develop a reasoned long term plan for the federal budget and change the federal budget for 2013, the United States will go into recession in 2013 and drag the rest of the world with it. Our foreign policy depends on our economic strength! Clearly the Congress and the White House should be working from the Simpson-Bowles proposals to develop an agreed upon budget and plan.

It is time for the gridlock in Washington to end. When the Republicans took control of the House of Representatives in 2010 they chose to avoid compromise with the White House as a general strategy. That decision was detrimental to the nation in the past two years, but apparently seemed justified to the Republicans in terms of the long term health of the nation. Now the electorate has decided that the Obama administration will be in office for four more years, and four more years of gridlock would be hugely painful for the U.S. economy and thus U.S. foreign policy. Negotiation and compromise are now necessary! This is not rocket science.

Were Iran to obtain nuclear weapons (and the means to deliver them), the entire region would be destabilized. Thus there is an urgent need to stop Iran from developing those weapons, and to prove to the world that Iran has stopped. I certainly hope that the sanctions that are in place will lead to successful negotiations. If a military option must be used, I would hope it is the least aggressive necessary to achieve the desired ends.

There are huge foreign policy problems in the region -- Syria, the evolution following the Arab Spring, Israel and Palestine, the apparent tension between Sunni and Shiite. These are both urgent and long term, and important in both cases. The United States should be seen as seeking peace, as empathizing with the legitimate aspirations of all the peoples of the region, and our foreign policy should be seeking broad international coalitions to stimulate and participate in negotiations.

The global economy is a major concern. The European Union is facing its own cliff, and U.S. foreign economic policy should work to help and encourage the European nations to take the steps necessary to avoid that cliff and put the European economy on a path to long term growth and stability.

Many other nations including China, India, Russia, Brazil, Mexico and Indonesia are seeking economic growth necessary for the welfare of their people, and in so doing are participating more fully in international commerce. There is a strong possibility that the growth of these economies will offer considerable benefits to the U.S. economy if we are smart enough to manage the "creative destruction" needed to achieve those benefits. There also seems to be a possibility that the economic growth these countries achieved in recent decades will be threatened by recessions in their economies. Indeed, their export led growth strategies will have to be modified to promote more development of internal consumption and production for that internal market. The United States should seek to help these nations to achieve their legitimate aspirations and to avoid the dangers in the economic transformations that they will undergo.

Underlying all of this is an appropriate long term growth strategy for the United States. The government can and must participate in this strategy. The main role will be to provide the institutions and policies that permit growth. Government must also develop the educational services, infrastructure, and basis of scientific and technological knowledge needed by the society. As the Republicans correctly maintain, government must not drain away financial resources needed for investment in physical, human and social capital.

The really long term challenge for the Obama administration is sustainable development. Obviously, the nation must protect its own domestic environment and resources, and the government has a leadership role as well as a role in regulation and sequestering areas of national and global natural heritage. This is a major foreign policy concern for the government, since global climate change and more generally the global environment is affected by the entire community of nations.

Good luck to the Obama administration as it confronts these challenges!

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