CoverStory

Restoring solvency

Barack Obama climbed mountains to win the presidency. His task now is to restore the United States' good reputation, a diplomatic challenge made more daunting by the global economic crisis.

By Stephen Walt

It is by now a cliché to observe that Barack Obama took office facing the greatest challenge of any United States president since Franklin Roosevelt. The US economy had been in free-fall since the northern summer of 2008, the nation’s image around the world had taken a beating over the previous eight years. Obama inherited a losing war in Iraq, a deteriorating situation in Afghanistan and a wide array of unresolved foreign policy problems. No president in living memory had taken office with so much to solve and such limited room to manoeuvre.

The new president wasted little time in responding. In his first 100 days, Obama pushed through an ambitious economic recovery program that included a major fiscal stimulus package, a controversial plan to buy up toxic assets in the banking industry, a limited bail-out for automobile manufacturers and proposals for a new regulatory regime for Wall Street. At the same time, he launched a dizzying set of foreign policy initiatives. After six months, Obama almost  seemed to be the miracle worker his campaign had promised. As former advisor to President Clinton, William Galston, commented after Obama’s first 100 days: “If he’s right, our traditional notion of the limits of the possible—the idea that Washington can only handle so much at one time—will be blown to smithereens.”

Yet appearances can be deceiving, and this is almost certainly the case when it comes to foreign policy. Although Obama has made a number of positive moves, his actions to date are more style than substance. To be blunt, anyone who expects Obama to produce a dramatic transformation in America’s global position is going to be disappointed.

There are three reasons why major foreign policy achievements are unlikely. First, the big issue is still the economy, and Obama is going to focus most of his time and political capital there. Success in this area is critical to the rest of his agenda and to his prospects for re-election in 2012. Second, Obama is a pragmatic centrist and his foreign policy team is made up of mainstream liberal internationalists who believe active US leadership is essential to solving most international problems. Although they will undoubtedly try to reverse the excesses of the Bush administration, this group is unlikely to undertake a fundamental rethinking of the US’s global role. Third, and most important, there are no easy problems on Obama’s foreign policy “to-do” list. Even if he was able to devote his full attention to these issues, it would be difficult to resolve any of them quickly.

In terms of grand strategy, his ultimate aim must be to bring US commitments back into alignment with its interests and resources—to restore what Walter Lippmann termed “solvency” to US foreign policy. This broad goal can be achieved by extricating the nation from some current obligations, by improving relations with adversaries, by getting other states to bear a greater share of America’s burden, or a combination of all three. Obama will try to keep US commitments within bounds and to improve relations with several adversaries, while taking symbolic steps to repair the damage the Bush administration did to the country’s global reputation. But he is unlikely to achieve any far-reaching breakthroughs. The foreign policy agenda at the end of his first term is likely to look a lot like it does today. To see why, let us look more closely at the crises he faces.

All presidents make mistakes, but George W. Bush made far more than his share. Not only did the September 11 terrorist attacks occur on Bush’s watch, but he failed to follow through on Afghanistan’s reconstruction, invaded Iraq on false pretences and then bungled its occupation, allowed the Arab-Israeli conflict to worsen and did nothing to curb Iran’s nuclear ambitions. The administration’s ‘‘war on terror’’ led to the deliberate use of torture and the unlawful detention of suspected terrorists at Guantanamo, making a mockery of the country’s professed values and contributing to a sharp decline in the US image abroad. And, although financial deregulation began under Clinton, Bush failed to heed the warning signs of a bubble economy. It is this far-reaching legacy of failure that Obama must now deal with.

The world economy is in the midst of the most serious economic meltdown since the Great Depression. Americans lost US$11 trillion of personal wealth in 2008, as stocks plunged and investment portfolios shrank dramatically. US gross domestic product decreased at an annual rate of 6.2 per cent during the fourth quarter of 2008 and is expected to have declined further in 2009. After growing at a rate of 9.8 per cent in 2006 and 6.2 per cent in 2008, world trade will decline in 2009 for the first time in 25 years. Equally ominous, the World Bank now predicts that global economic growth will be negative for the first time since World War II.

Obama’s economic team responded with a US$789 billion fiscal stimulus package and with ambitious measures to fix the doddering financial sector and restructure several major industries. But even if all of these measures eventually succeed, they will inevitably produce record budget deficits and reinforce the already high levels of US indebtedness for many years to come. The Congressional Budget Office has predicted a budget deficit of US$1.8 trillion in 2009, equivalent to 13 per cent of the entire US economy, and if Obama wins approval for ambitious plans for national health care, the sea of red ink will get bigger before it shrinks.

The global nature of the recession suggests the slump will be prolonged. Obama is therefore likely to be dealing with a sluggish economy for his entire first term. This will make it harder to undertake costly initiatives abroad.

Obama has also inherited a set of vexing foreign policy problems, beginning with the disastrous war in Iraq. He is now responsible for ending a commitment that has already cost well over US$1 trillion, along with the lives of more than 4,000 US soldiers. These losses have brought few benefits. Saddam Hussein may be dead, but the invasion and occupation produced an unstable government that is sympathetic to Iran and increasingly wary of Washington. The 2007 “surge” reduced sectarian violence temporarily, but it failed to produce political reconciliation and the level of violence has risen steadily in 2009.

Obama faces equally serious problems in Central Asia. The ousting of the Taliban in Afghanistan in 2002 once seemed like a major foreign policy triumph, but President Hamid Karzai has proven to be a disappointment and the Bush administration’s decision to shift its focus to Iraq allowed the Taliban and al-Qaeda to regroup and fight on. Islamic extremists have expanded their activities and influence in neighbouring Pakistan—which possesses between 60 and 100 nuclear weapons—leading Secretary of State Hillary Clinton to warn of “a mortal threat to the security and safety of our country and the world”.

Other foreign policy issues will require Obama’s attention as well. Iran continues to enrich uranium and many suspect that its ultimate aim is a nuclear deterrent of its own. The convulsions that shook Iran following the presidential election in June 2009 may eventually produce a change of course, but the upheaval is unlikely to make Iran easier to deal with. North Korea is already a nuclear weapons state, is developing long-range missiles and recently announced plans to restart its own nuclear production facilities. The Middle East peace process has been on life-support since 2000, and a two-state solution between Israel and the Palestinians that would preserve Israel’s status as a democratic and Jewish-majority state may no longer possible given the large number of Jewish settlers now living in the Occupied Territories and the divisions among Israelis and Palestinians. China’s global influence has risen steadily and relations between the United States and Russia have deteriorated sharply. Domestic turmoil in places as far away as Somalia or as close as Mexico have already consumed some of the new president’s time and attention, and one could easily add the humanitarian crisis in Central Africa or the on-going civil war in Colombia to his list. And there’s the long-term threat from climate change, which may be the most serious danger of all.

A full plate, indeed. To be sure, Obama does have several advantages in trying to address this lengthy list of problems. One obvious advantage is that he is not Bush, whose approval ratings at home and abroad had sunk to near-historic lows by the time he left office. The election of the first black president was met with enthusiasm around the world, and many countries are likely to grant him an extended honeymoon. Obama’s oratorical skills and his cool but cerebral style offer a sharp contrast to the former president, and he has put them to good use in several major speeches, including a remarkable address to the Muslim world from the University of Cairo in June. Disarray within the Republican Party has made his job somewhat easier, and Democratic control of the House and Senate will help him to obtain Congressional backing.

Yet the fact remains that Obama must try to address these problems from a weaker position than most of his predecessors enjoyed. None of these problems will have quick or easy solutions.

To deal with the unpromising situation, Obama assembled a foreign policy team designed to protect his administration from partisan political attack. While he attempts to restore solvency, he is perhaps most vulnerable to the charge of being an inexperienced idealist who is appeasing US enemies and placing the country at risk. Thus, his foreign-policy appointments are partly intended to blunt this line of criticism.

Retaining Robert Gates as Secretary of Defence not only kept a competent manager in charge of a difficult bureaucracy, it also retained one of the architects of the “surge” in Iraq as a key member of his team. Gates will be responsible for getting the military to accept the cancellation of several expensive weapons programs, and his credentials as a senior official in earlier Republican administrations helps deflect the charge that Obama is soft on national security. Choosing a four-star Marine general to serve as National Security Advisor is an equally effective defence against neoconservative complaints.

Obama’s decision to appoint Hillary Clinton Secretary of State reflected similar political calculations. He didn’t pick Clinton because she has a unique or compelling vision for foreign policy; he chose her to reinforce the unity of the Democratic Party and to silence a rival and potential critic.

Obama’s final innovation was the appointment of several veteran political figures as special envoys to specific trouble spots: George Mitchell for Israel-Palestine; Richard Holbrooke for Central Asia; Dennis Ross for Iran. (Ross, it should be noted, has since moved to the White House staff, reportedly with broader responsibilities). This enables Obama to delegate while he focuses on the economy, and gives him scapegoats should diplomatic efforts fail.

Obama signalled a clear departure from Bush’s worst excesses on his first day in office. During his inaugural address, Obama pointedly rejected “as false the choice between our safety and our ideals”; said Americans “would not give up [their] ideals for expedience’s sake”; and pointed out that earlier generations had “faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions.” The contrast with Bush’s triumphalist second inaugural address was striking.

Obama has since ordered that the US detention centre at Guatanamo be closed and suspended the system of military tribunals responsible for handling the detainees. He also ordered the Department of Justice to release the confidential legal memoranda justifying the torture of detainees under Bush and condemned these practices.

Obama has made several other gestures that signal a sharp break with the past. His speech to the Turkish Parliament in March 2009 extended a hand of friendship to the Muslim world, and a subsequent speech in Prague called for a renewed global effort to reduce nuclear stockpiles. He has also called for relaxing the travel ban on Cuba, and accepted a handshake from Venezuelan President Hugo Chavez at the Summit of the Americas in April. US conservatives were apoplectic, but these subtle shifts in attitude were well received abroad and marked an obvious departure from the “with-us-or-against-us” attitude.

Yet the degree of departure should not be exaggerated. Obama will close Guantanamo Bay, but not very quickly, and the US will continue to try detainees in military tribunals rather than civil courts. He has also retained the principle of “preventive detention” for terrorist suspects deemed too dangerous to release if acquitted, a decision that sparked criticism from moderates.

During the presidential campaign, Obama pledged to withdraw troops from Iraq within 16 months of taking office. He has reaffirmed that pledge since becoming president, although he disappointed some supporters by agreeing to a slower timetable for withdrawal after consulting military leaders. Nonetheless, in a major speech at Camp Lejeune in February, Obama declared, “By August 31, 2010, our combat mission in Iraq will end.”

Unfortunately, sticking to this timetable will be difficult. Sectarian violence is rising again, and is likely to increase even more as troop levels decline. In response, Obama agreed to a military request to delay troop withdrawals, explaining that he intends to meet the deadline by increasing the pace of withdrawal next year.

He is gambling that conditions in Iraq will hold together long enough to permit most US forces to withdraw as promised. But resurgent violence could force him to renege on his pledge to withdraw, or pull out in the midst of an expanding bloodbath. In either case, Iraq is likely to remain on Obama’s agenda far longer than he has acknowledged.

When running for office, Obama balanced his pledge to get out of Iraq with a promise to do more in Afghanistan and Pakistan. This was a smart political strategy, as it allowed him to criticise an unpopular war while still sounding strong on national security. Yet it also committed him to address problems that will be extremely difficult to solve.

After ordering a comprehensive review of the options, Obama endorsed a military request to increase US troop levels in Afghanistan by about 17,000 soldiers. The administration has sought to lower expectations, most notably in Secretary of Defence Gates’ comment that the US is not trying to build “some sort of Central Asian Valhalla”.

Obama has also emphasised that success in Afghanistan cannot be achieved primarily by military means and cautioned against an open-ended commitment. Yet the administration’s White Paper on Afghanistan noted that the US faced “daunting tasks” and that success would require “a new way of thinking” and “a complete overhaul of our civilian assistance strategy”.

The decision to escalate in Afghanistan has been accompanied by increased attention to Pakistan. Pakistan’s tribal areas have provided a safe haven for the Taliban and al-Qaeda forces operating in Afghanistan, but they have also been expanding their sway in Pakistan itself. The central government has been unable or unwilling to take action against these groups, leading to growing concerns about the stability of the government and the security of Pakistan’s nuclear arsenal.

Yet Obama’s decision to increase the commitment in Central Asia remains a potentially fateful step. He clearly hopes to prevent either country from becoming a failed state on his watch. But as critics warn, he has yet to identify a clear strategy for victory, and adding more troops runs the risk of further alienating the local population and undermining the same leaders that Washington is trying to help. If the situation in Afghanistan has no military solution, as Obama has said, it is not clear why adding a few thousand more troops will make much difference. Indeed, it is equally clear that the United States has neither the capacity nor the knowledge to shape the political evolution of some 200 million Muslims in Central Asia.

If the “mini-surge” in Afghanistan fails, Obama will face an exceedingly difficult choice down the road. And, like Bush, he may discover it is easier to dispatch troops to some faraway land than to bring them home.

For Obama, reaching a modus vivendi with Iran could yield enormous benefits if it convinced Tehran to refrain from developing nuclear weapons and to reduce or eliminate support for Hezbollah and Hamas and its open antagonism towards Israel. Indeed, ending the 30-year estrangement between Washington and Tehran would enhance the security of Gulf oil supplies and help bring Iran’s vast energy resources back onto world markets. The US and Iran also have a shared interest in stabilising both Iraq and Afghanistan.
Unfortunately, achieving this sort of grand bargain will not be easy. Iran seems firmly committed to controlling the full nuclear fuel cycle and continued US insistence that it cease all enrichment is likely to be a deal-breaker. Suspicion is still high on both sides. Obama’s initial outreach has produced a lukewarm response from key Iranian officials, which suggests a lot of hard bargaining will be required before a genuine rapprochement. A protracted diplomatic stalemate is probably the best we can hope for.

As he promised in the campaign, Obama has reaffirmed the commitment to a two-state solution between Israel and the Palestinians and emphasised that he wants to achieve this during his first term. He recognises an agreement would be beneficial to both sides and consistent with basic principles of justice and human rights. He also knows that ending the long conflict would help repair the United States’ standing in the Arab and Islamic world.

To that end, Obama began by appointing a Middle East negotiator, George Mitchell, with a well-deserved reputation for evenhandedness. The president made it clear he opposed any further expansion of Israeli settlements in the occupied territories and this position has been echoed by other administration officials and, more surprisingly, by several influential Congressional leaders. Finally, he gave an eloquent defence of Israel’s right to exist but also of the Palestinians’ right to a viable homeland, and went further than any previous president in making the case for a just solution to this long and tragic conflict. Not surprisingly, this tough position has placed the right-wing government of Prime Minister Benjamin Netanyahu in an uncomfortable position.

Only a true optimist would expect rapid progress on this most intractable of issues. There are more than 500,000 Israelis in the Occupied Territories and the infrastructure of Israeli control continues to expand. A two-state solution may soon be impossible, with potentially grave consequences.

Progress therefore depends on Obama’s ability to pressure both sides to come to an agreement, but it is hard to believe he will be able to mount sufficient pressure long enough to reach the finish line. Obama pandered to the Israel lobby during his election campaign and remained conspicuously silent as hardline pro-Israel forces torpedoed the appointment of Charles Freeman to chair the National Intelligence Council in February 2009. Going beyond strong rhetoric and actually putting significant pressure on Israel would almost certainly provoke a public fight with groups such as the American Israel Public Affairs Committee, and Obama has too much on his plate. Presidential envoy Mitchell will probably get some sort of peace process started, the Israelis will drag their feet, divisions among the Palestinians will persist, and no agreement will be reached. Should Obama win a second term, the safe bet is that this issue will still be awaiting his attention.

Relations between Russia and the West deteriorated significantly under Bush, driven by US concerns about rising authoritarianism in Russia and Moscow’s heavy-handed policies towards several of its neighbours, and by Russian anger at US plans to deploy missile defence facilities in Eastern Europe. These tensions have made it impossible to gain Russian support on issues such as Iran’s nuclear program, and encouraged Moscow to play a spoiler role in Central Asia, the Balkans and the Caucasus.

In Vice-President Joseph Biden’s memorable phrase, the Obama administration wants to “push the reset button.” The hope is that the two states can find sufficient common ground to negotiate a new agreement for nuclear arms reduction. But this objective will not be easy to achieve given Russia’s concerns about the vulnerabilities of its ageing arsenal and lingering resentment at NATO expansion. Here too, Obama’s hopes for a new direction are unlikely to be gratified quickly.

Confronted by an economy in crisis, the Obama administration responded with energetic action on the economy and a set of foreign policy initiatives designed to signal a clear departure from the Bush era. The latter measures are unlikely to bear fruit quickly, but they may buy Obama the time he needs to get the economy back on track.

This paper has not even mentioned a host of difficult issues such as climate change, immigration reform, trade policy, Darfur, Somali piracy, Mexico’s drug war, Venezuela, China’s rise, or North Korea’s renewed bellicosity. Not even a well-organised, energetic, and skilled foreign policy team could make significant progress on more than one or two of these issues, which merely underscores the need to keep expectations low.

For those who want to know how Obama is likely to fare over time, three items will bear close watching. First, if events do not go as Obama hopes, how will he respond? If Iraq turns south, Central Asia does not improve, Iran and Russia remain recalcitrant and Israelis and Palestinians dig in their heels, will he commit more resources, cut his losses, or try a wholly new approach?

Second, the answer to that question will depend on how his foreign policy team evolves. No administration makes all the right appointments at first, and some advisors inevitably become more influential while others become marginalised, get fired, or quit. Keep an eye on who is occupying key positions and who has the president’s ear, because that will tell you a lot about where the policy is heading.

The third item is Obama’s ability to set priorities and stick to them. Like Clinton and Jimmy Carter, he is energetic, intelligent, broadly curious and self-confident. Carter and Clinton tried to do too much and ended up accomplishing less than they originally hoped, and one may hope that Obama is aware of this danger. The good news is that Obama is more politically savvy than Carter and more disciplined than Clinton. But he is not a miracle worker, and he and his advisors will eventually have to decide which issues to emphasise and which to let slide.

Why? Because what matters is his ability to achieve tangible results. Obama quoted the Koran, the Talmud, and the Bible in his speech to the Muslim world from Cairo, but another biblical passage offers a valuable warning from James 2:24: “For a man is justified by works, and not by faith alone.”