Archives for posts with tag: fiscalCliff


The “fiscal cliff” has been debated largely as an American issue and risk, but the impact could be even greater for some in remainder of globe, from a struggling Europe to developing economies. In short, a rise in taxes and cuts in US programs could affect economic activity and global monetary liquidity. If the fiscal cliff risks a recessionary shock for a fragile US economy, the effect on others would be that of tail being wagged. Could a new US driven austerity spark a global recession and politicians advocating closed markets as occurred during the Great Depression and established fertile grounds for the rapid ascent of fascism in the 1930’s leading eventually to WWII?

Fragile Europe most Vulnerable at Time of Austerity & Transformation?

Europe now is even more fragile as it goes through a series of austerity induced configurations and presumably is undertaking a series of economic reforms. Europe needs the US to continue to be a driver for exports and most critically to continue to deliver monetary liquidity – “easy money.” While some complain this will deal unchecked inflation in the future, the major concern now is the whole financial system potentially seizing-up again as in the 2008 financial crisis. if the US goes off the fiscal cliff it could lead to financial institutions refusing to lend to businesses/enterprises and each other, (thus, the whole financial system seizing-up), as well as loss in consumer/business confidence, spending and investment with US but also global economic activity dragged to a stall.

Roiling at Center while Tossing Around those at Periphery of Global Economic Vessel?

Developing economies from China to Mexico but also Japan, Korea, Canada, Australia as well as the Middle East and Europe would be affected by a drying-up of the US as import market and more critically by the contaminating uncertainty extending from global financial markets centered in New York and the US. Uncertainty ironically would cause investors to flock toward the US dollar as safe-haven, (even as the US political system is roiled by the fiscal cliff debate/maneuvers), and discourage investments from what may be considered more outlying markets. This is a great example of how uncertainty in the global financial system may cause some roiling at such center but would toss around the economies the farther away that they are at the periphery.

Would US also most quickly Recover or would there be more Permanent Damage?

If the US did go over the cliff in the next few days, it is most likely to recover more quickly as again more troubled economies and periphery economies may suffer from a more prolonged dislocation inflicted by the uncertainty. Some argue that the longer the roiling at the center the more prolonged and painful tossing at the edges. Some argue that going over the fiscal cliff may be a positive as it delivers a dose of needed spending cuts, particularly in entitlement programs and defense. (While many Republicans and so-called conservatives point to fact that US Government has absorbed an ever larger share of the US economy, it is actually areas as the Pentagon and Homeland Security that have been allocated the largest share of discretionary spending in the post 9/11 decade and frequently with minimum political scrutiny and financial accountability).

US Political Leadership no longer up to task to Lead Globe’s Economic/Financial Center?

We are of view that while some spending cuts may be longer-term favorable for US, the current economic environment may be too fragile for US but especially global economy. Most critically though, the US fiscal cliff, or more accurately the manner in which the US plunges over, may provide the ever more frightening message that US political leaders are not able to go beyond crude politics in doing what is most responsible for America and its citizens as a whole. Autocratic leaders as those in Beijing or Moscow are not really expected to act transparently and with a sense of greater responsibility. European leaders have also exhibited a lack of vision as well as cohesion when the world was just starting to believe in the European project. The US, despite many complaints and some failings, has been the global economic leader not only because of military power, economic might and entrepreneurial initiative but also because it has been believed to act responsibly especially when its own as well as globe’s financial interests where at stake. The current plunge over the fiscal cliff may prove otherwise.

By, Ambassador Muhamed Sacirbey

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Foreign policy surprises? After Obama’s reelection, most focus is on “fiscal cliff” and domestic policy, but could it be that international challenges/initiatives will come to forefront as the incumbent is now more liberated of political caution in his Second Term? Within a day or so of his reelection, President Obama announced a foreign trip to Myanmar, Thailand and Cambodia. While Myanmar’s thinly veiled ethnic cleansing of Rohingya and broad ethnic/chauvinism may have been cause to pause before giving credibility to what was only a year so earlier viewed as repressive, undemocratic military dictatorship, the purpose of this trip appears more strategically expedient: to counter Beijing’s growing influence and symbolically put into motion Washington’s “pivot” toward far Asia and the new challenge of China. What other foreign policy initiatives might we expect from the Obama Administration?

—Press Beijing on Human Rights?

While China has made significant economic advances, its human rights records remains poor with regards to Tibet and the Muslim indigenous population of Xinjiang and its overall population. Dissent is suffocated and there is little transparency on both the political and legal/judicial systems. President Obama would garner support from key Republicans including House Foreign Relations Chair Rep. Chris Smith. Up to now though, the Obama administration had significantly lagged its rhetoric on human rights and rule of law issues regarding China but also such areas as Sudan/Darfur.

—Will Washington take steps to bring US toward International Criminal Court Membership?

US joining the ICC would make support of human rights and the rule of law consistent with Washington’s rhetoric. However, Washington is at best ambivalent and at worst antagonistic toward the ICC. While many on the Right-Wing have sought to suffocate a permanent international criminal tribunal, on the Left there is a preference for engagement with the ICC. However, neither is inclined to subject the US to the ICC’s jurisdiction even if it is unlikely that US citizens would be prosecuted by the Court (as it operates in complementary fashion to national courts). While the UK, France, as well as Brazil, Jordan, Canada and Australia have joined almost two thirds of the globe’s states as state parties to the ICC, US continues to be a holdout along with China, Russia, Iran, India, Sudan and Israel. The minimum that should be sought from a Second-Term Obama Administration is for the US to re-sign the Rome Statute, but I’m not certain that will exists even though the Clinton Administration had moved in that direction in 1998 without adoption/ratification. (George W. Bush renounced the US signature).

—Syria Action Coming?

The Obama Administration had been avoiding any potential foreign conflict prior to the November elections, but now may feel more confident in flexing military muscle via Turkey and NATO.  Any intervention is not likely to be driven by human rights and/or humanitarian considerations but rather the risk of Syria’s conflict being gradually exported to its neighbors, from Lebanon to Israel. Further, any action would not have UN Security Council approval as Moscow and Beijing would oppose; however, regional organizations as the Arab League and neighbors as Turkey can provide legal pretext. While there is significant support for greater US response on Syria among Republican stalwarts including Mitt Romney and Senator John McCain, nonetheless, actual military intervention is most likely through proxies. The emergence of the new Syria opposition via the “National Coalition” will present new opportunities as well as dynamics.

—Palestine UN Membership?

There is no US initiative to further US peace, and to contrary, the risks/trend toward another downward spiral is rising. The current Netanyahu Government is either unable or unwilling to move ahead with a credible initiative, and is perceived as more committed to land than peace. The Palestinian Authority is losing credibility, and the risk to US and western interests is that more hardline Palestinian organizations as Hamas will gain more credibility at expense of those on the road toward co-existence with Israel. Washington now may have to deliver, even if the Israeli Government may be unwilling. Even if more symbolic, Palestine membership at UN would reset the dynamics and infuse the moderates with credibility for further engagement or at least wait until Israel delivers a Government more committed to the two-state solution.

—Latin America & Caribbean-America’s forgotten neighbors?

All of the last few US Administrations have come into office promising a new era of progressive engagement with the US’s southern neighbors, but in end little changes – Latin America and the Caribbean get lost in US domestic debate over illegal immigration or illicit narcotics. In truth, America’s neighbors to the south have been rapidly evolving in terms of economic vibrancy and political stability – most are not only members but the most active supporters of the ICC and the rule of law. Most critically, Latin America and the Caribbean cannot be addressed in a homogeneous fashion. The diversity of economic opportunities, governmental ideologies and social fabric necessitate a more tailored, individualized approach – Brazil, Venezuela and Trinidad & Tobago are as diverse from each other as Indonesia, China and the Philippines.

—Eurozone Crisis needs Greater Global Engagement, particularly US?

Both the US and Eurozone economies need more emphasis on growth and less on the drain of austerity. In the context of the US election debate it had become politically dangerous to speak of assisting Europe, but we believe it is even more risky for the US not to be an active part of the solution to the EU fiscal/economic crisis. The US/European relationship is one of most enduring and critical politically and economically. The US must work directly and via the IMF toward such solution, and it would be an unfortunate political and economic consequence if China were perceived as more committed to Europe’s health than the US.

—Africa a new engagement?

While many Africans have taken pride in President Obama’s election, the engagement of this Administration with Africa has been spotty. Most of the focus has been on providing support (at times blank check to even repressive Government’s as Ethiopia’s Meles Zenawi regime) to fight “Islamist terror” threats. However, there has been no particular overt trend toward promoting economic well being or greater human rights/democracy. The previous Bush Administration has been credited with some of the then more progressive AIDS and poverty eradication initiatives. Finally, as Latin America and the Caribbean, Africa cannot be painted with one brush stroke. From Libya, Tunisia and Egypt in the north to Ivory Coast in the West, Somalia in the East and South Africa in the South, democracy is taking ever greater root offering its own unique opportunities despite uncertain and irregular advances.

—Bosnia & New Europe:

The US via NATO was critical in catalyzing the transformation of “new Europe” in the post-Soviet era. However, in the last two decades such engagement has gradually waned. However, US interaction is still a critical ingredient as Europe continues to redefine itself, and especially as the future belonging of countries like Greece as well as Turkey are open for debate. Unfortunately Bosnia & Herzegovina (BiH) has gone too far down the priority list and is mired in the outdated and counterproductive phraseology of the Dayton Accords. Facing obstructionist forces from within the country and outside, BiH does not have the opportunity even if most population has the will to bring it forward two decades, but neither Washington nor Brussels are particularly inclined to act progressively, that is without another overt crisis challenging also their stale vision of the region.

—Afghanistan & Pakistan:

Drones, military engagement and “green on blue” killings have provided no sound foundation for future. To the contrary, civilian casualties and prolonged military intervention have poisoned the perception of the relationship on both continents. The Obama Administration is only likely to speed up the disengagement and only leave behind a veneer of previous promises/commitments.


Brazil, India and South Africa are developing both a diplomatic/political and economic alliance with China and Russia. The foundations of such alliance are not particularly homogeneous but increasingly it has come to rely upon a policy to counter Washington’s influence on a broad range of issues. The US will have to challenge such tendency but formulating policies that better address cooperation and/or coordination based upon the unique interests of each of the rising BRICS and not allow Beijing or Moscow to pull such states into their agendas.

—Indonesia, Philippines, ASEAN & SE Asia:

As part of its pivot to face the rise of China, Washington would not only seek to strengthen old alliances with East Asia, Japan and South Korea, but redefine relationships with rising democracies particularly Indonesia which has already made significant economic and political progress and the Philippines which under Benigno Aquino is seen as rapidly moving forward. These states, along with Vietnam, Malaysia, Brunei and Taiwan already face Beijing’s spreading territorial claims in the South China Sea providing Washington with a natural opportunity to play a more visible role. Finally, Indonesia’s rise as economic as well as diplomatic power complements its status as largest Muslim-majority state. Muslim does not mean Arab, or a single definition. Indonesia is a good example of how diverse the Muslim world is.

—Climate Change:

The environment and climate change have fallen off the priority list not only in US. However, both the proof of man-induced climate change and its consequences is ever more evident. The Right Wing had first sought to cast doubt upon man-induced climate change and then offered the false choice of either jobs or the environment. If you believe in God or just respect “Mother Nature,” Hurricane Sandy was a fitting reward to the Romney campaign and those who ignored the health of our Earth. Now it is up to President Obama to hear the ever more urgent message of environmental health. Climate change is a global issue. Will Washington now lead rather than be a drag in global/multilateral forums addressing solutions?

—Women’s/Girls’ Empowerment:

Increasing awareness of sexual violence against women/girls has been a growing priority particularly as it was evident that females were not merely the coincidental victims but frequently the targets of mass rapes as part of genocide/ethnic cleansing in recent conflicts, from Bosnia & Herzegovina, to Rwanda, to Syria. The ICC and the Rome Statute have also incorporated “gender based crimes” as a separate category to highlight and further empower prosecutors and victims. However, it is not only about deterring victimization. It has been evidenced that from education of girls to greater equality in the work place to more equal access/ownership of land, benefits society as a whole. Society is more productive, partners treat each other more equally, and more food is produced by women owning and tilling their land. It is women that gave President Obama his reelection victory, but the US has not necessarily been the leader on empowering women/girls. Pakistan, Bangladesh, and Turkey have had women Prime Ministers. The US has not had a woman nominated for President, and the 2012 election was a record for women elected to the US Congress; but it is still only 90 out of 535 Senators and “Congressmen”.

Human Rights & Rule of Law Consistency:

The US has exhausted its reserves of goodwill among many. While Obama’s reelection was received positively by both potential friend and foe overseas, there is a perception that much of the positive momentum of 4 years earlier has been squandered. More of substance is expected this time around but particularly that the US avoids hypocrisy and in both deed and word promote the rule of law and human rights consistently for all as shared values to be shared by all global citizens similarly committed regardless of region, religion, race and/or ethnicity.

By, Ambassador Muhamed Sacirbey

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