The world is crowing over America’s near-economic meltdown.
BY JOSHUA E. KEATING | AUGUST 2, 2011
Neither the left nor the right is particularly happy about the deal that was passed this week to avert a U.S. default — memorably described by one congressman as a “sugar-coated Satan sandwich.” Overseas, the reactions to Washington’s dysfunction have ranged from confusion, to concern, to barely contained gloating.
As the largest foreign holder of U.S. debt, China’s interest in the debt ceiling debate was hardly academic. State wire service Xinhua expressed its dismay at the potential of a default in the run-up to the final debt decisions, calling the political brinkmanship in Washington “dangerously irresponsible” in an editorial last week and noting that the “ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight.”
But now that Democrats and Republicans have come to an agreement, Xinhua hardly seems satisfied with the conclusion, enlisting American economist Dan Steinbock who writes, “Despite all the hype and drama,” the deal is “unlikely to avert the downgrading of US credit rating.”
The state-sponsored paper Global Times takes a bigger picture view, editorializing on how the -debate has already negatively affected U.S. standing in the world. “The US is well-known for promoting rules and regulations to other countries, but now countries are increasingly realizing Washington can stamp all over its own rules and regulations,” the editors write.
The piece goes on to speculate that U.S. instability could lead the country to lash out militarily at its rivals. “When the country prospers, it will use more civilized methods to secure its national priorities, but when it faces a crisis, it will use all methods to defend itself.”
And as a final turn of the screw, the United States is made to look like an unruly, wayward child — the editors lament that “the US debt China holds is too small to have any major leverage” and suggest that China needs “more patience and wisdom to acquire the capability to deal with the US.”
You know you’re in trouble when even the losers start picking on you. Piling on, the debt-ridden economies of Europe — the so-called “PIGS” — have responded to the United States’ near failure to get its fiscal house in order. The Greek broadsheet Ekathimerini writes that the United States today “displays all the signs of decadence that condemned all previous superpowers: Stability and prosperity allowed small groups to gather disproportionate power, and they then forced the state to serve their interests at the expense of those of society as a whole.” Much like Greece, the editors write, the United States is now “paying the price of complacency.”
The Irish may still love Barack Obama but Lara Marlowe, Washington correspondent for the Irish Times, writes that despite the deal, “the damage to Obama’s reputation and to faith in the ability of the US to lead a global economic recovery may be irreparable”. Bemoaning the U.S. president’s failure to stand-up to the Tea Party, Marlowe writes that “as the country surveyed the smouldering detritus of the debt crisis yesterday, the Tea Party stood triumphant in the ashes.”
In Spain, where recent street protests over high unemployment recently brought the government to a standstill, El País argues that, “The United States is now in the same basic trap as the Old Continent,” forced to enact harsh austerity measures in order to reduce the deficit, but hampering economic growth in the process. The deal “transmits the message that the policies proposed by the radical core of the Republican Party, the Tea Party, will be an obstacle for crisis management in Washington,” the editors conclude.
Most world leaders have been fairly tight-lipped about the deal, given that their economies are so dependent on the U.S. market. A spokesman for German Chancellor Angela Merkel, for instance, would only say that the German government was “satisfied that there has been an agreement in this difficult question in the United States.” But Russian Prime Minister Vladimir Putin has generally done things his own way:
“[The United States] lives beyond its means, taxing the global economy with its problems and living like a parasite off the global economy and the monopoly of the dollar,” Putin told a meeting of the nationalist youth group Nashi this week, echoing the sort of language once used to describe capitalists in Soviet-era propaganda. This came after remarks last month in which Putin branded the U.S. government “hooligans” for printing money. All the same, after getting his licks in the prime minister welcomed the final agreement, saying that a U.S. default would have been “no good at all” for the world economy.
The newspaper Nezavisimaya Gazeta believed that the U.S. crisis helped put Russia’s dire economic problems in perspective, writing, “[There is] one unfortunate thing that Russia does not need to fear: at least, it will not face a default in the next few days.” Cold comfort indeed.
Perhaps it’s not surprising, what with near double-digit GDP growth in India, that American decline is on the minds of the country’s commentators today. The Hindustan Times editorializes that “If routine has become Armageddon, the US cannot be counted on when the tough decisions are being made.” That may have security implications, in addition to economic ones. While the current round of budget cuts may be severe, the editors worry more about what will happen to the U.S. defense infrastructure if Republicans and Democrats cannot agree to a second round of cuts, which would trigger $1.2 trillion worth of security cuts: “[S]uch cuts would eviscerate US defence capability. The US would be a greatly reduced superpower, one with little leeway if bits of the world go rancid or sour. Among other things, it would mean a China with more space to expand its military influence than it probably has capacity to fill. It will also mean large chunks of ocean and remoter bits of the world, presently policed or at least contained by the U.S., would be allowed to run wild.” Sounds like a call to India’s politicians for a ramp-up in defense preparations.
And apparently the world’s largest democracy has some lessons for Congress. Columnist Mihir Sharma in an Indian Express op-ed takes aim at the most august of American institutions: “The United States is the home of what Americans like to say is the world’s greatest constitution, but is in fact the world’s most outdated.” Sharma argues that a document “written for an age before railroads, let alone before cable news” has led to the current crisis. Tricorner-hat-wearing Tea Partiers would probably disagree.
The British press has been characteristically brutal in its assessment of both Republicans’ intransigence and Obama’s failure to stand up to their demands. The Independent writes in its lead editorial that while “Armageddon has been averted … as long as a generation of Republican politicians feel entitled to hold a gun to the head of the credit of America to secure their political ends — disaster will never be far away.”
Guardian economic editor Larry Elliott compares the United States to a “tinpot Latin American dictatorship circa 1980” and calls it a “country where a plutocracy is firmly in control,” suggesting that “If the U.S. were any other country it would be seeking help from the International Monetary Fund.” In the same paper, writer and activist George Monbiot writes that the Tea Party “consists of people who have been harmed by tax cuts for the rich and spending cuts for the poor” amd who have been misled by corporate owned media. But Monbiot also senses another evil lurking: The current state of affairs in Congress is “a kind of political coup,” he writes. “A handful of billionaires have shoved a spanner into the legislative process.”
In the Telegraph, Toby Young notes the irony that the Democratic U.S. president now appears to be leaning to the right of the British Conservatives: “A year ago, American conservatives were showering David Cameron with praise for adopting such a radical approach to reducing Britain’s deficit and contrasting him unfavourably with their own spendthrift President. Now, our Prime Minister looks like a weak-kneed liberal in contrast to the hard-headed Obama.” Young believes that on both sides of the pond, a “sea change has taken place” and that “Socialist welfare programmes have become politically toxic.”
Last year, it was the normally free-market United States that was taken aback by the harshness of British and European budget cuts. Things appear to have returned to normal.
Joshua Keating is an associate editor at Foreign Policy.