USA: A GREAT NATION ON ROAD TO DECLINE – THIRD RATE POLITICIANS AND ASCENDANCY OF MEDIOCRITY PRIMARY CAUSES (PART-I-OBAMA)

If someone is asked to sum up his/her perception of today’s USA in brief, the pearl points might look like this (in no particular order):

·       World’s largest economy

·       Very powerful military – perhaps the most powerful

·       Gargantuan debt (will be financially broke if debt ceilings are not raised continually)

·       Large country, with different areas having different weather patterns

·       Home of the UN and the World Bank

·       Home of some of the biggest corporate entities

·       Land of some top class educational institutions, laboratories, companies

·       Bickering politicians, dysfunctional Congress

·       A presidency that started with a bang (and great promise) seems to be on way to end with a whimper (and disappointment)  

·       Uninspiring leadership

·       Decline at the international stage

·       Massive world-wide electronic surveillance reach

·       Melting pot of immigrants

·       Land of opportunity

Over the last 6-7 years, the general perception of the US has been changing, unfortunately, for the worse – of a nation which is in decline. A decline which is epitomized in the US being regarded more of a rhetoric-loving/reluctant world power than being a dominant/effective world power. The US’s role in Middle East, Ukraine and East Asia has come under fire. Also, with concomitant rise of China as an economic power (and thence stronger military power), America’s influence is getting challenged more and more, East China Sea being a test case.

Just towards the end of George W Bush’s tenure, the financial meltdown took place which caused havoc in the US and the whole of G-7 (barring Canada which came out of it less scathed than its peers). In the last 7 years, the economic state of US worsened: debt ballooned from 4-5 Trillion dollars to >17 Trillion dollars, unemployment reached close to 9%, GDP grew miserably slowly. Since 2013, the employment situation has been improving gradually and GDP growth numbers also looking up. Notwithstanding this gradual improvement, the debt level continues to be a very disturbing element of overall economic health of US.

Six years ago, an unprecedented event took place. US elected its first African-American as its president: Barack Obama. When he took office the Democrats were in power in both houses of Congress, however, in the fall of 2012 the Republicans won majority in the House of Representatives. Ever since Obama got elected, the political dynamics in Washington DC has gone from bad to worse. President Obama rode on anti-war feeling in the country apart from the health care reform platform he had created (later known as Obamacare). The Republicans despise Obamacare, and have been on collision course with him almost on most issues.

So, what are the prime reasons for the apparent decline – the US which used to be perceived as the sole super power striding the world stage unchallenged, is now considered to be a less effective, withdrawing, bumbling, hesitating and reluctant to intervene kind of world power?

The main reasons for this decline could possibly be attributed to the following:

·         Mediocre but ambitious politicians including the president

·         US economy is not as strong as used to be (very high level of debt makes it vulnerable)

·         Apparent decline in military superiority (which is emboldening other countries and radical elements to challenge the US might)

·         Increasing polarization between the rich class – due to their ruthless and aggressive profit making approaches – and the middle and the poorer class 

·         Bad publicity arising out of alleged surveillance carried out by NSA

·         Loss of technological edge and superiority that US used to have in various fields

·         Mediocre, pandering and self-serving media

 

Let’s look at the aforesaid points in brief:
 

Mediocre but ambitious politicians: First, President Obama:

Why Obama conducts American foreign policy (which is said to be predicated on his mantra “don’t do stupid stuff”) the way he does can be explained by the following factors that probably weigh agonizingly heavily on him (when he has to decide about a foreign policy trajectory):

v  United States is too financially broke to get involved militarily in any part of the world (however small the involvement be)

v  As the first African-American president what would be his legacy, how would the historians judge him

v  The millstone of Nobel Peace prize around his neck: Being a recipient of this honor, he is almost death scared of appearing to be pro-war or pro-interventionist (militarily)

v  His presidential campaign platform which was heavily predicated on getting the American troops out of Iraq and Afghanistan. Therefore, any scenario that even remotely suggests that American boots may need to be put on a foreign soil, he balks at it, he shudders, he panics

v  His personality: Which is more professorial rather than that of a CEO of a top company who is not fearful of making tough decisions (he almost suffers from paralysis by over-analysis on various international issues, especially, the ones that have potential of the US getting involved militarily). Consequently he painfully dithers on an on.

On thorny international issues, Obama tends to behave like an escapist, like an ostrich that buries his head and thinks the threat has gone away, Obama just wishes the problems go away on their own. He is a shy person; he does not like socializing with his foreign counterparts or the politicians in Washington DC, that’s why he fails to cobble up coalitions or agreements abroad or at home. He is just not the type of a leader who could fearlessly play political chess games executing different stratagems.

Obama does not like the role of a global policeman; he believes that the international issues would get solved just through delivering a lecture – whether at home or abroad – using pompous phrases that make good sound bytes. But he forgets that some responsibilities automatically devolve to the president of the USA as soon as s/he gets to sit in the Oval Office – being a global policeman, unfortunately, is one of them. After the breakup of Soviet Union, the world had come to accept that the US will generally set and/or manage the global agenda, pre-empt events, thwart evil designs and so on. But Obama does not relish at all presiding over such activities.

Obama seems to have a tendency to needle people, especially, the allies. He seems to relish needling Canada, harangue Israel, or create instability in innocuous countries. He does not seem to be getting along that well with the British too. In fact, he is not pally with any international leader unlike some of his predecessors.

On a related topic, Obama, of late, seems to be behaving in a weird manner. In a recent speech he said he does not ‘sympathize with Hamas’. Really? How can someone, in one’s sane mind, ever think of using the word ‘sympathy’ in relation to Hamas? Also for some strange reason, he does not condemn ISIS in strong terms. It seems Obama believes that if he avoids being harsh to Hamas or elements like ISIS, threat to US would be less from these terror outfits. If he indeed thinks on these lines, he should get his head examined. Seriously.  

Obama tends to look far ahead on some grand design but shies away from near or medium term realities. The five factors listed above seem to virtually paralyze him whenever he is deciding on a course of action on a tricky international situation – whether it is Syria or Iraq or Ukraine or East China Sea. He somehow tries to keep postponing his decision making under the pretext of ‘situation analysis’/’information gathering’.

Due to the above pattern of his conduct in regard to international issues, Obama’s personal image, and by extension, US’s image (internationally and to many Americans domestically) has more or less morphed in to that of:

-      Dithering

-      Weak

-      Unreliable

-      More of hot air than action

Some of America’s allies have realized that they might have to fend for themselves. Japan has already started working towards developing necessary military muscle to deal with any hostility on its own (potentially with China because of the disputed islands in East China Sea), Israel is going ahead on its own in its fight against Hamas, the Saudis are devising their own strategy vis-à-vis Iran and Sunni extremists ISIS. Turkey is an unhappy ally, so are some of the other allies of the US.

Surely, there has been a decline in respect to US’s stature at the international stage. The tragedy is that probably this decline was avoidable notwithstanding the near bankrupt state of the American economy. Some other person, who was not living under the crushing weight of the five factors listed above, might have been able to adopt different strategies, and thus might have been successful in maintaining the image the US had till President George W. Bush’s tenure. This is indeed sad for the people of the United States. They are feeling it, realizing it and are conveying their frustration through various opinion polls.  

NO MEANS TO DEAL WITH GLOBAL RECESSION? HOW ABOUT A TURMOIL IN MIDDLE-EAST?

From a price of $147.27 per barrel on July 11, 2008, the price of crude oil tumbled to alarmingly low levels - levels which couldn't be explained based on any rational economic principle. Yes, there is a situation of recession in US, Euro zone, Japan but that situation can not justify a demand contraction happening overnight which should trigger a drop in crude price more than 70% below the July 11 level.

Anyway, in the aftermath of this precipitous fall from the cliff the oil companies worldwide started behaving like pansies - new E&P projects started getting put on hold, especially, projects related to non-conventional crude sources, like oilsands in Canada.

[One wonders what kind of economic model these companies follow that low crude prices prevailing even for a month sends their economic viability haywire. It is well known that economic analyses of such projects are done over the life cycle of the source of oil - the life cycle ranging from 25-40 years. So, it is hard to imagine that the oil companies chicken out just on the basis of one, two or six month period of relative low crude prices.]

More than the oil companies, most of whom have reasonably good balance sheet position, the oil producing countries are hurting more. So much so that even a country like Saudi Arabia was forced to delay the issuance of Request for Bids for their two refinery projects which were slated to go out in Q4 2008.

Iran, Venezuela and Russia are already in bad shape. Venezuela is considering to nationalise some profitable foreign owned mining leases to supplement their national revenue. Russian Rouble has plunged to unprecedented lows. Iran has had to ration their fuel supplies. Well, if these three countries find themselves in trouble it is music to West's ears.

With recession casting a pall of gloom globally, and US, Japan and Europe not knowing what to do to get out of this morass, is a crisis in the Middle-east a welcome event at the moment? Who would gain if there is a turmoil in that region? Will a military conflict, which can potentially become a full blown crisis in the region threatening to cut off oil supplies, be helpful to global economy at this time?

The world's top three GDP regions are struggling to find ways to bring about higher liquidity in the markets so as to increase aggregate demand for goods, housing and so on. So, in such a scenario will these economies not suffer a whammy by having to cope with higher crude oil prices which invariably happens whenever there is a conflict in Middle-east?

But this is exactly what is happening at the moment. Israel is going full blast at Hamas in Gaza, and there are fears that this operation might escalate. Crude prices are nudging their way upwards.

Granted that Israel will have their parliamentary elections in two months and Prime Minister Olmert is allegedly gambling on this military operation to come back in power. But the billion dollar question is: Will Israel ever carry out this kind of an operation and, more importantly, at this point in time without the knowledge and/or acquiescence of their godfather - USA? Hard to digest that they have gone ahead without keeping Washington informed.

Further, US and its lackey (UK) would have immediately figured out the consequential economic ramifications of a potential Middle-east crisis. Yet they would have apparently agreed. Why? Is there some smart Alec who theorised that should there be a disruption of sea lanes (and the trade dependent on it) leading to 'perception' of disruption of goods globally, there can be a rebound in consumer demand triggered by panic buying?

Bear in mind, consumer spending is key to the big economies getting back on track. So, if the consumer spending can be triggered for some reason it is most welcome. And, apart from increased consumer spending there is a potential of arms supply by major powers, like, US, UK and to some extent, Russia. Dollars and Pounds flowing in exchange of arms supply can grease the economic wheels of these countries. Never mind, if Russia also gets some crumbs.

Moreover, rise in crude prices will again restore the projected inflow of money for OPEC countries who will then have funds for their new oil & gas projects which will in turn be good news for vendors, contractors and EPC companies - most of which come from G-7 countries.

So, it may seem that after all a crisis in Middle-east is what the doctor ordered for at this very moment. Is it likely that this is an event which has been engendered in a scripted manner? Will it escalate? Will it suck in Hamas supporters, like, Iran and Syria? And, will this provide an opportune time to Israel (and US) to hit at Iranian nuclear facilities, since Iran is down in dumps economically?

The concern is: Will it be possible for Israel (and its allies) to play this crisis as a scripted event? If the crisis goes out of hand and/or plays outside the script what will happen? Or, are the phantom scriptwriters damn sure that they can control it right till the denouement? By the way, on the flip side, who knows, this event can end up in a whimper too without bringing in the spin-offs for the G-7 visualised so glibly in the foregoing. Let's wait and watch!