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Posted by on Oct 7, 2013 in Breaking News, Economy, Featured, International, Politics | 7 comments

The foreign toll of America’s political civil war

Olle Johansson, Sweden

Olle Johansson, Sweden

Whatever else happens, the political civil war between the Congress and President Barack Obama has already damaged US foreign policy and fuelled doubts that American democracy is an appropriate model for others.

Some in the US may see as legitimate democratic process the maneuver by an extremist parliamentary minority to force an ignominious default upon the world’s richest nation, after shutting down large parts of the government.

To others around the globe, this is a fundamentalist assault on the foundations of democracy. Many are struggling at great personal cost in their own countries against abuse of democratic processes by radicals to force ideology-based changes upon everyone.

They suddenly see an ideology-driven minority ready to bring disgrace to an economy stuffed with talented companies and worth $15 trillion. Meanwhile, the majority’s choice, the world’s most powerful President Obama, seemingly wrings his hands. They see the minority as totally uncaring of the impacts of a US default on the lives of billions in poorer nations. Western investors are already withdrawing funds again from the emerging markets, fearing a plunge in the dollar’s value if the debt ceiling is not renewed in coming weeks.

Nobody seriously believes that the Republicans will have the guts to force a default but Obama’s credibility is undercut because the political civil war sends a message that America’s democratic process has become too divisive to make reasonable choices. So governments are hedging their bets with other partnerships, thinking that such internal conflict could happen many times again.

This is allowing China to start shifting the balance of economic power in Asia away from the US, undermining the Obama administration’s pivot towards Asia.

Chinese President Xi Jinping immediately leapt into the breach left by Obama’s absence this week from an Asia-Pacific Economic Cooperation meeting at Bali and an East Asia Summit in Brunei. He became the first outsider to address Indonesia’s parliament, upstaging Obama who spent a part of his childhood there. He will be at center stage in the two summits.

For the moment, China is generous and unlike Washington does not use trade and financial relationships to put political pressure on smaller partners. Apart from the Philippines, it is the largest trading partner of all countries in the region at a total of about $250 billion in 2012 (compared to the region’s $200 billion with the US).

Xi wants to lift that trade to one trillion dollars by 2020, which is likely because all the countries are becoming more dependent as Chinese investors to pour in.

The Chinese have many consumer goods to sell but are now also increasingly proficient at infrastructure, including harbors, airports and high speed trains, and high technology exports, such as backbones for telecommunication and the Internet.

With typically thoughtful methodology, Beijing has established a Chinese Infrastructure Bank with an initial $50 billion capital base to channel Chinese investments to the region. The US and Japan control the Asian Development Bank in Manila and are concerned, but cannot do much to slow down Beijing.

Washington is promoting its Trans-Pacific Partnership, a giant trade pact excluding China, but negotiations are tied in knots because Obama is demanding wide market access following his election pledge to create more export sector jobs in America. The Asians fear that those demands will keep growing without creating jobs in their countries. Civil society critics fear the TPP will give more power to corporations while hurting consumer, labor and environmental rights.

Beijing is pushing for a rival Regional Comprehensive Economic Partnership (RCEP) with the 10-nation ASEAN and others by 2015. It would bring China, India and Japan within one agreement for a free trade bloc with over $21 trillion in GDP and containing some 3.4 billion people. It has not yet been accused of giving power to corporations because the US is excluded.

China forms its own world distant from European and American values. Its one party system replaced the country’s 200-year-old inferiority complex with a global economic and military powerhouse in less than four decades.

As such, its values and governance present a credible alternative for many countries, making China a core challenge to Western democratic methods. Western financial, legal and private enterprise models are also being questioned. Now, Washington’s somewhat ludicrous battles are making China’s system look more stable despite its severe corruption and human rights violations.

For instance, during the last three years most protests in Muslim countries began with middle class yearning for jobs and freedom from tyranny or corruption. Currently, none is fuelled by burning desire for US-style democracy.

None of the Eurasian countries, including Russia, Belarus, Ukraine, Georgia and Azerbaijan is following American footsteps. Nor are the Central Asian “Stans” — Uzbekistan, Turkmenistan, Kazakhstan, Kyrgyzstan and Tajikistan – or West Asia and the Middle East, including Saudi Arabia, the Gulf Emirates, Iraq and Jordan.

Almost all are ripening for their own “Springs” or “Color” revolutions driven by middle class people seeking more freedoms and better lives. A few years ago, the US model was widely admired as the one to emulate depending on local conditions.

That is less clear now, especially with China presenting a semi-authoritarian but stable path to countries in which authoritarians are refusing to let go, as in Egypt and oil-rich Kazakhstan.

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