As the first black president of the United States, Obama stirred the hearts and minds of the majority and minorities alike. An American dream, the power of democracy, an event unforeseen and only dreamed of. Now, with 2009 coming to an end, optimism has fallen, enthusiasm has been tempered and the all too familiar grave political mood has returned, as ubiquitous as ever?
To give you some examples, people now say of him that ‘he is easy to push around’ and ‘is politically too correct’. He did little to pull down expectations during his electoral campaign, for obvious reasons. Now he’ll have to take the dubious credit of not being able to live up to those promises, or so it seems. Stabilizing his image to Native Americans by showing he is a global heavy-weight, without being so only as the result of a long tradition, will be quite hard, which is quite awkward. For Obama’s first year was troublesome, though no failure. What can we say about his performance so far, as an intermediate conclusion and judgment on his time in office?
Domestic affairs: Finances
This question is easiest to answer if we look at some of the major problems the world is facing today. Partly as a result of recent economic crisis, but more due to economic misbehavior in America’s past it is best to start with fiscal debt. At this moment it is about 70% of GDP, making it no small feat. Little consensus on policies makes matters complicated, which is like saying, in more pragmatic terms: When and how to act?
It is beyond reasonable doubt that America will have to cut spending or raise income. It is beyond all doubt that no one can come up with a plan supported by Congress. From the bright side, at least for Obama, we can say that acting now will be foolish. Cuts in spending could in principle stop the economy dead in its tracks, making any image-revival of Obama virtually impossible. What he and his team should do is provide the country, and the world for that matter, with a scheme on how America will act, given the chance in the near future. If America’s fiscal policy is sound in the eyes of economists, journalists and businesses this will boost morale and confidence. One clear reason why this is so important is the fuel that drives America’s economy: Research and development, or in another word just ‘innovation’. In many areas vast amounts of money are involved. Seeing these flee to find luck elsewhere would do great harm, not just to an economic revival, to future growth as well.
As the White House is supported by several Think-Tanks, I have little doubt that sooner or later they will propose ways to tackle the problem. Of all sides they will be most likely to walk at a slow pace, possibly reassured by Japan. This Asian country has a debt to GDP ratio much higher than America (about 200%), and it has not resulted in a collapse of either economy or currency. In fact, the Yen has only risen in value. Only don’t be fooled by staring at similarities. It is to the credit of Japanese companies that their efficiency and quality – as well as their monopoly in the production of basic elements for electronics assembly-lines – that they are still going strong. Most countries would probably have seen their export go down rapidly, especially with a currency going strong, making their products expensive. America needs to learn from this. It could prove a near fatal blow to growth if the dollar would suddenly go strong in comparison to the Euro, Yen, Yuan and Pound (..if only China would de-couple the Yuan from the dollar).
A good way to achieve this would be by making sure spending is kept on level, if necessary by more government market-intervention or quantitative easing (it would be lethal to abuse this option however: Too much money would mean higher interest rates, resulting in financial burdens that would bend any knee). All the same, it is better to spend too much, than to cut too early. More money circulating is likely to hold the dollar back, improving prospects for exporting firms. A shift from consuming products to exporting them is desired in any case, just as it is the other way around for ‘counterweight’ China. Good hopes tell us that this will stimulate economies worldwide, providing a much better balance.
Fiscal policies hang tightly together with currency control, albeit not China style. Another discussed topic this year was the so called ‘demise of the dollar’. In particular as a trusted reserve currency, in more general terms as a total eclipse. With America’s image falling and economies taking hard punches, this only seemed to be the next logical step, but it isn’t. It is a far-fetched scenario, an unwanted scenario. First of all Japan has already shown that fiscal debt does not mean a weak currency, so there is as yet no reason to come up with doom-predictions. Second, the American state has a habit of doing pay-backs in time, which is good for mutual trust and bonds. Thirdly the dollar simply does not have any real competitors. No currency is as well trusted, known and liked as the dollar, which is the simple truth of the matter. Adding a fourth will not be necessary, since it is entailed by the third: By having bought huge amounts of American State obligations, China and Japan hold its fate in their hands. But it also means that, if the dollar collapses, nearly all Chinese and Japanese reserves evaporate. The dollar stronghold goes deep to the hearts of many economies. It might not be essential, but it sure as hell is important.
All this might make you think America cleverly held a firm grip on the world. This is not exactly the case. China and Japan are perhaps in theory able to wreck the dollar, America is only to a certain extent able to steer it where it wants it to go. If they let their currency fall too steeply, interest rates will increase rapidly, making loans too expensive and risky in light of future, possibly higher, values of the dollar. So Obama will need to get out of his office again and take firm steps. Controlling the deficit comes in as a first priority in the years to come. When the government will not face the deficit it will probably amount to about 4% of GDP in 2014, whereas European standards allow no more than 2 or 3% as acceptable. Furthermore, it would postpone the burden of a higher debt to future generations.
Raising income is at this point his only option. Obama needs to be cunning to get this to work, for this generally means more or higher taxes. And taxes, especially with republicans keen on pointing to Obama’s campaign promises (no income under $250.000 would see its taxes rise), are notoriously difficult to get through Congress. Our only hope focuses itself on Congress’ and public’s realizations of how large the problem is. A good number of proposals have so far been made (no, not by government institutions. They are still reluctant to burn their hands). Best of these would be a value-added tax, meaning taxing products in every state of production. Actually, America is the only OECD-country not yet to have implemented this system. Normally this would be a good argument in favour of the hypothesis that it is a decent way to go. Not in this case: In European countries VAT’s are quite normal, however in America no one is used to the idea, so a complete new tax will have to be introduced, arguably being more problematic than raising old ones. How and when that is going to be shoved down people’s throats is no light-issue. As politicians who oppose this system have also pointed out, VAT’s are handy in creating ‘small’ changes in tax-revenues by increasing percentages via a slippery slope.
Domestic affairs 2: Health-care
Drawing the discussion on domestic finances to an end, we see that it is still quite neutral. Almost all will depend on decisions that have yet to be made, or even worse: drafted. When it comes to health-care we land in a wholly different landscape. Everything has been discussed many times over already, details rather than general economic ‘laws’ count. Discussed several times previously on this site, health-care is all that is American politics: Sensitive, detailed, riddled with tradition and full of principles.
At this moment it is no longer just a battle between leftish Democrats and right-winged Republicans. The House of Representatives already passed a bill, it is now up to the Senate in order to come up with their own version, and then to combine both into one law for the president to sign. In many ways the two versions are already quite similar. One big difference is the fact that the Senate included an opt-out to each-state for government-run insurance schemes. This is a clever way to work around demand such as the one by Nancy Pelosi who stated that “no bill would be accepted without a government-run scheme”. On the whole, the Senate’s proposal is slightly favourable because it also cures a disease that goes deeper beneath the surface of America’s health-care problems: Subsidies given to employer-provided insurance, resulting in over-insurance. This is not done, as the House would have it, by just taxing the rich. Rather the Senate chose to cut taxes on the most expensive health-policies, which will, in the most positive case, bring more private- and less company-insurance, therefore less tinkering with payrolls in order to get the subsidies, hence higher loans.
Don’t worry, there are still negative issues left to write about. Obama’s magical budget of $900 billion dollars for instance. It is not at all clear if it will be met or thrown aside. Yes, all the numbers tell us it will cost less so that it will not add to America’s deficit. However, those numbers pre-suppose magical cuts in, to name an example, doctors’ salaries. No small cuts: About a fifth. Failed attempts in the past are numerous, no one knows why and if they will succeed in getting a decent ‘pay for quality’ instead of ‘pay for service’ this time. Whatever happens in the near future, we have arrived at the president’s first (modest?) success: Health-care reform. And let’s be honest, no one managed to get as far as he did for decades.
Afghan reinforcements and allies
Earlier it was pointed out that Obama’s image changed for the worse. Up till now, we saw finances as a relatively neutral area, where not much blame or praise can be ascribed to Obama, and health-care, where he seems to head at modest success, at least and last. We will now start looking at some more controversial aspects, starting with Afghanistan, a bit on Iraq, then Guantanamo, Palestine and Israel, China and Japan and ending with climate change.
Last week we finally got a look into Obama’s aims in Afghanistan. More troops, not the requested 45.000, but about 30.000. This shows no lack of rigor. Obviously no government would send as many troops when it did not back it. In a speech in which he announced and explained his thoughts, Obama also pointed towards a (tentative) deadline of retreat: 2011. My first impression was one of hopeless presidential optimism. Reasons provided afterwards, by drawing on the need for Afghanistan to stand on its own legs and that America had no long term interest in staying there, nuanced my opinion for the better. Recalling memories of the war in Iraq, it is not very hard to see why Obama’s deadline is a clever move. It spreads a clear message of Afghan-independence, but it has also barricaded or delayed large American protests, lethal to public opinion. American people are bound to realize they are the only one putting up a real fight anyway. On the other side, coming up with even a further removed deadline will always create possibilities to manipulate the message, and it is not hard for the Taliban to claim that America ‘is not capable, willing and strong enough to put up a lasting fight’. A retreat by the Taliban is not necessary, since they’re on home grounds. Success then will depend on how much Afghan people believe that there is enough time to eradicate evil to secure the future.
Particularly important is that Afghanistan will go on without foreign interventions and aid. America realizes this, shown by the official request of Mrs Clinton earlier this week to the Dutch government. The Netherlands, stationed in Uruzgan and partly occupied with training troops, are due to leave Afghanistan in August 2010, a very dubious step. The Dutch have been there since 2006 and are not just familiar with Afghan grounds, also with its people. This was later underlined by Hadam, governor of Uruzgan. He requested van Middelkoop, Dutch minister of Defense, to prolong their stay, concluding that if they were to leave now, they would have done only half a job. In the unlikely event of Hadam influencing opinions in The Hague, we still have Mrs Clinton’s request. And though no Dutch politician will admit it, they all glow when high officials ask for a ‘small favour’. Perhaps Obama and Clinton should pay closer attention to such potential snow-ball effects. When more European countries are dragged into this war, opposition or opts-out will be under pressure. How ironic is it that there has been hardly any attention, from America’ side, to Britain’s gesture of sending more troops? The number wasn’t very high; nevertheless it was an increase, not a discussion about withdrawal.
On Afghanistan our conclusions are slightly positive then. Obama has shown a willingness to make decisive steps while keeping objectives in clear-sight, realizing a withdrawal cannot be postponed indefinitely. By doing so, he chose side not with his own nation, but with the people of Afghanistan. And that is of major importance. I argued something similar on Iraq several weeks ago, by stating that leaving should not be taken as the only option if a small lengthening of the stay improves security. Unlikely as that might seem he has at least shown to be not as quick on jumping to conclusions as his voters: Anyone not supporting the war would have withdrawn quicker. Some credit goes to the political situation as well, as the wars in Afghanistan and Iraq are in a sense much less likely to create problems in Congress than issues like health-care. Republicans didn’t want to leave Iraq nor Afghanistan. They are unwilling to lose face, so they’ll support Obama in his plans for more troops. His own party, the Democrats, supports the wars much less; luckily for Obama they want to back their president.
Problems: Israel & Palestine and Iran
Hot and fierce as always: The unpolished, double faced coin of Israel and Palestine. Obama’s administration has done little more than wasting energy, and it is sometimes doubted whether America took the issue seriously enough this year. Building settlements is a thorn in the eyes of Palestinians, but America did not dare to openly condemn it, resulting in indignation after Clinton’s infamous and bizarre words of praise. That was before Netanyahu, on November 25th, announced that Israel would stop building settlements on the West Bank for ten months. Naturally this was not nearly enough according to Abbas, leader of secular Fatah which is in control of the West Bank. Their demand is a complete halt to any new and old settlements building, for which they have good reasons. America doesn’t recognize the legitimacy of the settlements either. Israel on the other hand speaks of “far-reaching and painful steps”. Concessions are inevitable. Both sides have seen more than enough bloodshed to know what is in their best interests, and both sides are also held back by a relatively small number of extremists and fundamentalists, ruining relations.
What interests us here is what Obama should do. Which route to take? Not one of unconditional friendship of the Israeli’s. Support their existence and security by any means you want, but learn to condemn any practices you deem immoral or illegitimate, of which war-crimes and settlements are two. Full blown attention will be a prerequisite. At this moment, with Copenhagen, Afghanistan and health-care consuming his time, it is unrealistic to think he will be able to help achieving peace. There are reasons why all his predecessors failed: Complexity, emotions and a history of presumptuous prejudices. To ask of a president who hasn’t even visited the country to solve its problems is lunacy.
Things get even messier when this year comes to an end. December will be the last month in which Iran gets friendly options to stop enriching uranium. Officials vehemently state that they’re only doing it to produce energy, though even sceptics are now unable to buy this story. Especially after discovering a new secret military base where more uranium is probably being enriched. With Ahmadinejad walking the provocative route, we’ll do best to prepare our sanctions in writing, so that they’ll get into effect from the 1st of January. Not that this will happen, Russia and China are still reluctant to impose sanctions as economic interests will be endangered. China depends on the country for oil supplies for instance. Saudi-Arabia probably wouldn’t mind though, if Iran blocks supplies to China because of sanctions, they will have one big, extra client.
All the same, we should hurry. Terrorism is one thing that worries, a corrupt, anti-Western state with nuclear arms is another, much bigger worry. The best route to take is imposing sanctions that will make proceeding economically so devastating, that it is just too expensive to continue enriching uranium and preventing checks by western-officials. Some sketch an even gloomier prospect in which, by Israel’s hands, we’ll end up with another war. No one wants another war, and how probable it is remains unclear. Israel is a powerful state and they will be weary to see Iran becoming a nuclear power. Remind yourself of the 80’s: Bombing nuclear power plants is no science-fiction. That they’ll succeed without America’s help is unlikely, but no success without an attempt. If it ever gets as far as that, we can suspect Israel having America’s backing in any case. Best to prevent such, at this moment still far-fetched, calamities by other means.
Human rights and cultures
Guantanamo-Bay is another issue making people regard Obama as a president that is way too soft. Human-right watchers were among those who got their hopes up last year, awed by wonderful one-liners such as “We reject as false the choice between our safety and ideals.” He might still believe in that, only he does not live up to it. As expected, Guantanamo Bay is now by official words deemed unlikely, political words for impossible, to close in January next year. It proved incredible hard to transfer prisoners elsewhere, because no state or country wants to the prisoners under their roof. Another pain-staking question is if trials should be held according to public law, or to military law. If it’s going to be public law, then the master-mind behind the 9/11 attacks will be judged before a court in New York, and many seriously doubt if a panel of citizens can remain objective. Besides, many prisoners that are held in Guantanamo are held for reasons ‘worthy’ of a military trial. You can spot the difficulties, not in the least sense ethical ones. Anyway, holding people without a trial under dubious conditions cannot be justified by their own, or any, standards.
China too becomes interesting again from this perspective. Ethicists will have plenty of work to do there. The vast country was honored by a visit of Obama and a part of his administration in November. They probably spoke about climate change and economic ties. What was likely to escape their attention is summed up as human-rights. No questions were allowed during a press-conference, something quite different than from the time of Bill Clinton. Possibly the Chinese government is afraid of their people getting into touch with freedom-thoughts. Westerners don’t seem particularly bothered with this, underlined by the way in which contacts with the Dalai-Lama were handled. Dutch prime-minister Balkenende decided not to speak with him prior to the Olympic Games in Beijing, and now Obama has done the same. Why, so as not to hurt China’s feelings or because economic interests are more important than ethical-norms?
Another noteworthy event in his visit to Asia was his meeting with the Japanese Emperor. Obama once again showed more respect and political sensibility than any of his predecessors. When meeting Emperor Akihito and Empress Michiko at the Imperial Palace, Obama bowed. Not just a tiny flick of the back, but a courteous, near 90 degrees bow. Critics surged at him for defying ‘state department protocol’: Presidents bow to no one! Even L.A. times writer Andrew Malcolm went as far as suggesting that his bow was undignified and showed a lack of understanding of the history between the two countries.
Well not at all. It was Malcolm who showed a lack of understanding of Japanese history, and Obama, who apparently took notice of Japanese values and traditions, implicitly put to rest a lot of tensions, of which many were the result of haunted, 20th century memories. It’s of no use to dwell in past misgivings, especially not if it gets in the way of a better future. What has happened will not be undone, and important is that everyone realizes it must never happen again. The foolhardy, unimaginative idealists miss the point of bowing; it was not an act of inferiority. It was a courteous act, one that showed respect and willingness to cooperate on equal footing.
The importance of that should not be underestimated. America has had a treaty with Japan for decades, known as the Treaty of Mutual Cooperation and Security between the United States and Japan. The USA will be obliged to defend Japan when this becomes necessary in light of disasters or war, albeit in close cooperation with the Japan Self-Defence Forces. America in return has military bases stationed on Japan, currently holding about 33.000 soldiers. With North-Korea as a (potential) nuclear power and China holding an arms-race it is of strategic importance for all free societies if America stays in Japan. Many Japanese used to be fond of the pact, although several deaths and a case of rape have damaged the army’s status. Aircraft noise, pollution and crimes by US service personnel only make a turn of public opinion go faster, as recent protests indicated. This especially relates to the base on Okinawa Island, called Futenma, because it is located in the middle of a densely populated area. That island’s geography is too good to leave behind however, since the US can reach China, Taiwan and North-Korea without moving. This is another one of those difficult matters in which Obama needs to convince other governments that it is not just in America’s interest to extend further cooperation.
These are hard issues. Not because the solutions are vague, most of them are not. What they do show us is that it is easy for two fields of human activity to clash: Economic activities as opposed to issues of justice. Of course Obama knows this. He has shown know-how on sensitive cultural issues. But whereas he did a good job on this in Japan, he failed to do so in China, where he should clearly have taken a firmer stand on human-rights. Guantanamo is probably different. It is not a question of being unwilling, it is more the fact of the task’s difficulties, something that was previously underestimated.
The concept of cooperation gets more important as days pass by. Military and economic arguments are ready at hand to prove it. Climate change is another one of these highly prestigious projects. I am not a skeptic when it comes to climate change, even if I don’t think the proof is conclusive. Actually, proof is never conclusive. Not acting and turning out to be wrong would be much worse than acting and turning out to be wrong however, and we only have one planet so we better not take the risk. Obama seems to think along these lines too, as his decision to visit Copenhagen in person indicates. It would have become a joke if he hadn’t, since his country is one of the world’s biggest polluters.
Copenhagen
The last international troubling thing we will discuss is the summit in Copenhagen. The aim is a replacement for the Kyoto protocol, which was never ratified by the Senate. America’s Congress, mainly the Senate, is hardly filled with enthusiasm to counter climate change. Activists have put their faith in Obama, who seems keen to prevent his image from sliding into one that neglects milieu. Copenhagen offers the last meeting on government level before the climate agreement will be renewed, but sadly general expectations are low.
The White House might have words with a nice sound to them; so far no notable goals have been achieved. Passing a cap and trade bill would be an enormous boost, yet no one reasonable believes this will happen before or during the Copenhagen meeting. This means damage to America’s image. Mainly developing countries stress the responsibility of wealthy, industrialized nations: They have been able to pluck the fruits of pollution, now they should pay the price. It’s an odd fact that China will not have to change course to reach its goals. America has used this as a critique by saying standards are too low. This is unjustified: They have already taken measures. Sure, they could do more, only not before America acts. Cooperation is a key word here: No treaty will work if neither the US nor China is involved (Obama’s goal of 80% reduction by 2050 will certainly not). In the times of Bush Sr. the cuts that would have to be made seemed too severe and unworthy. These days the messages are different, as Mrs. Clinton’s acknowledgment of past climate emissions makes clear: “The US is no longer absent without leave”. Hoping for Obama to loosen the tongues and turn the tie by assuring other nations that America will cut emissions in the near future is not very realistic, as his visit to Denmark will probably be of short notice.
Not this year, maybe next year
Now we can start summing up some of what has been said. Financial times are getting better. And as long as hot heads are overruled by good hearts they will hopefully remain doing so. No cuts, perhaps some more economic stimulation and a good plan for the years to come are pillars that should be kept in mind. Change in health-care is on its way. Wars and human-rights are the most obscure of all. Afghanistan has now seen some of what goes on in his head, but Israel and Palestine are still on the waiting-list. Boosting his image by putting Iran back into place will make him a stronger person in the eyes of many, and it might also win him favors on the side of Israel, making future demands taking off from higher grounds.
You might, as I do, spot a trend in all these things: We cannot see how Obama will be received in history. We don’t know what his grand schemes will do, whether these roads are strong enough to carry a country’s weight. A judgement on his presidency only on first year arguments will not be fair. Maybe we can now say: 2009 was the year of inauguration, press and glamour, decline and criticism? And then, maybe next year: This was the year of president Obama, where he did not finish the roads he started building on, but where he showed us at least that they lead somewhere?
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