Five
years after the financial crisis in the United States helped spread a deep
global recession, policy makers around the world again fear collateral damage,
this time with their nations becoming victims not of Wall Street’s excesses but
of a political system in Washington that to many foreign eyes no longer seems
to be able to function efficiently.
There
is plenty of evidence that the United States remains engaged globally on many
levels, with the dual commando raids on targets in Africa this
weekend the most recent. But the partial shutdown of the United States
government has shown again that Washington’s problems extend beyond American
borders. Effectively grounded by the political crisis at home, President Obama
was absent from a summit meeting of Pacific Rim leaders in Indonesia on Monday,
giving China greater opportunity to highlight its role in the region.
One
of the attendees, President Vladimir V. Putin of Russia, provided a possibly
sardonic statement of sympathy for Mr. Obama. “We see what is happening in U.S.
domestic politics and this is not an easy situation,” Mr. Putin said, adding,
“If I was in his situation, I would not come, either.”
In
Europe, the effort to reach a big new trade accord with the United States is at
a standstill, with many government agencies in Washington operating with
skeletal staffs. And as worrisome as that kind of delay is in Europe, it is
only a precursor to the almost certain economic fallout if the United States
does not raise the debt limit and defaults for the first time on government
securities.
Foreigners
often complain, usually with some forbearance, that the United States is so
powerful that its president is in some important sense their president, too. In
their case, however, they lack the opportunity to cast a vote.
There
is not much that any foreigner can do about Mr. Obama’s confrontation with the
House speaker, John A. Boehner, who said Sunday that his Republican
members would not accept a clean bill — one with no conditions — that
would raise the American debt limit before the government hits its borrowing
limit and risks technical default as soon as next week. At the same time, Mr.
Boehner has told colleagues privately that he would avert a default, but
whether he actually has the ability to do so remains uncertain.
“The
international community is asking, ‘Does the U.S. still have the will to act?’
” said Xenia Dormandy, a senior fellow at London’s Chatham House and a former
American official in the State Department and the National Security Council
under President George W. Bush.
“Both
the Syria vote and the current budget crisis are nerve-racking for the world,”
she said, referring to Mr. Obama’s sudden decision to ask Congress to authorize
a strike on Syria and then changing his mind.
Alain
Frachon, a columnist and former Washington correspondent for the French
newspaper Le Monde, said, “Washington is looking more like the Italian
political system, with its permanent crises, and not a presidential system, as
before.”
“People
are worried about the debt ceiling — it could be the little drop that could
trigger another crisis in financial markets,” he said. “And it’s just when
there was the perception for the first time in the long sovereign debt crisis
that there is a window of opportunity to breathe a little bit, and to introduce
a bit more suppleness into the way we’ve managed it.”
The
anxiety is all over Europe, Mr. Frachon said, and it comes just as Greece and
Spain seem to be turning around, as there are spurts of growth that promise an
end to recession, and as Germany has gotten through its elections and Rome
through another political crisis. Another financial meltdown would hurt France,
too, he said, not just Greece, Portugal and Spain.
“People
don’t want to see all this fragile equilibrium destabilized by a possible
financial crisis provoked in Washington,” he said.
Jean-Paul
Fitoussi, an economist at the Institut d’Études Politiques de Paris, said a
default would slow the American economy and depreciate the dollar, “so it would
lead to a loss of competitiveness in Europe at the very moment when all
policies in Europe are aimed at increasing competitiveness, and that would be
very bad news.”
Perhaps
worse, he said, is that “the banking system in Europe remains fragile, so more
bad news could have unforeseen consequences on the world’s financial system.”
The
United States has gone through government shutdowns before, Mr. Fitoussi noted,
but this time it feels different, even if it turns out to be short-lived.
“Perhaps
we have not completely understood the American Constitution, and the effective
power of the president is not as strong as we believed,” he said. “And maybe
it’s because Obama is not using his constitutional power very well.”
The
weekend military strikes on terrorist targets in Libya and Somalia are a
perfect indication that the American government can act when its direct
interests are at stake, said Ms. Dormandy of Chatham House. But the deeper
question is whether a more insular, less globally active United States is
emerging for the longer term, or is just a function of the Obama
administration’s reaction to events.
“The
jury is still out,” Ms. Dormandy said, “but I would say it seems like a more
profound transition.”
Alexander
Lambsdorff, a member of the European Parliament for the German Free Democratic
Party, sees a possible benefit for the euro and the euro zone if the United
States defaults, however briefly. Investors will seek an alternative to the
dollar in German, Dutch and Finnish bonds, he said. “If European leaders have
proven one thing,” he said, “it is their resolve to keep the euro afloat and
their countries out of default.”
Mr.
Lambsdorff said that he admires the United States Constitution, but that the
founders never imagined “a media democracy.” The weakness of the American
system is in the constant political campaigning required for the House of
Representatives, he said.
“In
the permanent campaign mode the representatives find themselves, there is an
incentive to be more radical and less compromising,” he said. “But no democracy
works without compromise, and if compromise starts to be elusive, then a
democratic system has to rethink itself.”
