The Lead Actor Slides Down The World Stage
By Farooque Chowdhury
27 October, 2013
Countercurrents.org
Only days ago, the Ohio Clock, sitting near the US Senate Chamber since 1815, turned silent as the US government risked running out of money. After 16 days, a hastily healed cross-party deal made the Ohio Clock tick again.
Now, the clock continues to tick, and the time continues to move, and new time travels in. But the times of yesterdays and of tomorrows are not the same.
An old time talks of a passing phase, and a new time tattles a changing circumstance, and the world stage witnesses dramatic mo as elements of change are turning bold.
The partial US gov. shut down presents all these: the clock, the time, the elements, etc. It took its cost in home, the US, and alerted the world, and shall come into compromise with increasingly changing world reality.
Costs in home
The standoff hurt the US economy, said US treasury secretary Jack Lew. He was speaking on NBC’s “Meet the Press” program.
In the economy, the cost was at least $24 billion, estimated Standard & Poor’s, and it “shaved at least 0.6 percent off annualized fourth-quarter 2013 GDP growth.” Moody’s Analytics cited a similar number: a $23 billion hit to US GDP.
Citing IHS, US Travel Association, the National Park Service, ABC’s estimate of the costs of the shutdown included $3.1 billion in lost government services, $152 million per day in all spending related to travel lost. Washington DC was especially hit hard. Regional (DC/Maryland/Virginia) impact: $217 million a day from lost/deferred federal and contractor wages. Washington DC economic activity impact: $44 million a week decrease, and tax revenue impact: $6 million a week decrease. (October 17, 2013, Shushannah Walshe, “The Costs of the Government Shutdown”)
Something is told by press
Press, from People’s Daily to The New York Times, echoed an emerging reality: The US dollar’s weakened reputation and the state of related politics.
In The Washington Post, Zachary A. Goldfarb reminded the fact of “weakened US economy facing new threats.”
People’s Daily did not fail to mention changes that “have started to occur” in the “currently unmatched” “status of the US dollar”, and said “countries are increasingly bypassing the US dollar and entering into currency swap agreements. These have all dimmed the aura of the dollar as a reserve currency.”
China’s The Nan Fang Daily suggested a reduced “role of the US dollar and the US debt in the global market.”
An editorial in The New York Times didn’t spare the right-right: “The Republicans pushed the nation to the brink of default”.
In Rossiyskaya Gazeta, Anna Fedyakina sarcastically said: “The congressmen’s debate looked like another episode of a political blockbuster, which, according to Hollywood traditions, should have a happy ending. It seems that the American legislators are used to living like they were in a movie: letting the situation reach a boiling point, making a decision at the last moment and then declaring that they once again have saved everyone.”
Anna tells at least a part of US politics, the part related to the elites.
In Le Figaro, Philippe Gelie’s tone was more biting about “irresponsible leaders” in the US: “[T]he spectacle presented in Washington over the last few weeks goes beyond the excessive taste of the Americans for political drama. … A minority of Tea Party MPs dictating the law in the name of a lost cause … Parliamentary leaders unable to discipline their rank and file. A president … isolated, who is paying for years of absence of dialogue with MPs.”
The movie-like political act on the stage of legislature has its roots, and also a destination.
So, Dan Roberts and Paul Lewis predicts in The Guardian: “[A] more lasting split is not inconceivable”.
The assumed split is also not without roots and fruits. The roots are deep in elite interests, increasingly factionalized, and, the fruits are for different sections of the entire society with varying types and tastes, acting and reacting in areas of political lessons and experiences of the masses of people.
Function of dysfunction
The just concluded Washington-dysfunction, a political function, was spectacular. It raised question: Is this the beginning of breaking down of the political system?
Jack Lew described events leading to the standoff as a political crisis rather than an economic one.
It’s not always possible to ignore the political aspect. Recognizing the “event” as political crisis is significant as it tells level and depth of related contradictions.
Republican senator John McCain told the NBC’s “Meet the Press”: “Those involved in it went on a fool’s errand, that’s just a fact.”
Everyone doesn’t prefer fruitless mission. Why and how they, those who understand, failed to prevent the “fool’s errand”? Are mindless characters more powerful? Or, was the travel a political necessity? In any of the cases, what’s there in future?
“This has harmed the lives of millions of people”, said McCain.
One of the contradictions – an elite faction’s political stand harming people – has been identified, and acknowledged. At least the faction’s politics, essentially interests, turns clear: To have a chunk, quarrel, even at the cost of people.
Lew said: “We need some infrastructure. The farm bill needs to pass. The immigration bill is hugely important to the economy.”
Infrastructure and immigration are required for the interests of the elites, for their faster and bigger accumulation. Then, why the elites failed to prevent the shut down and move into the business? Was the tact more profitable? Or, was the incident their incapacity, failure in governance, a rupture, at least temporary, in collaboration among ruling factions?
In a White House speech, president Barack Obama scolded congressional Republicans. His observations, as news agencies reported, included: The US went to the brink of an economic calamity; “The American people are completely fed up with Washington”; events had inflicted “completely unnecessary” damage on the US economy; “There was no economic rationale for all of this”; “Nothing has done more to undermine our economy the last three years than the kind of tactics that create these kinds of manufactured crises”, the “spectacle” had hurt America’s credibility in the world.
Obama’s opinion tells the emerging reality elites face: a faction imposes its tact while another finds it hard to resist it.
There is factional fight within the US political right-right camp. One faction – the Tea Party – imposes its will on its broader party. This means there are conditions conducive within the entire body that enables a faction to impose its tact – the government shutdown – on the whole. Their “maturity” inspires them to adopt a political tact that gives pains to the ordinary citizens and takes toll from the party. The party gains experience at a cost.
Senate minority leader Mitch McConnell said on CBS's "Face the Nation": The shutdowns were a bad idea not consistent with conservative ideals. (The Christian Science Monitor, “McConnell vows no more government shutdowns. Does tea party agree?”)
The factional fight, political obviously, that denies ideological position goes to nowhere. It’s not immaturity; it’s a reflection of narrowed down scope for political fight. Harry Reid, Democratic Senate leader, expressed his feeling: I’m tired. […L]et’s be honest: this was pain inflicted on the nation for no good reason.
The political tact of a faction of the elites turns clear: take toll from people, which is essentially punish the people.
And, what’s the condition of the societies in the country as people is the most important part of it?
Robert Reich, former US labor secretary said: “Of all the advanced economies, we are the most unequal and we are surging forward greater inequality at the fastest rate. The 400 richest Americans own more wealth than the bottom 150 million Americans put together.” The richest 1% of Americans own more than 35% of the country’s wealth while the bottom 50% control just 2.5%; the annual income of the typical American household has fallen 9% since 1999; since the recession ended in 2009, incomes for all Americans except the top 1% have hardly changed. Incomes grew by only 4% for the bottom 99% but surged by more than 31% for the top 1%. And last year the top 1% accounted for 22% of the nation’s income; the top 0.1% took home half of that. (Daily Ticker, October 18, 2013, Bernice Napach, “Income Inequality Is the Enemy of Economic Growth: Robert Reich”)
With this reality in the US, the ruling elites face difficult question: Whether to help people out of poverty or not. Now, it’s an urgent issue. The ruling capital has to decide whether to increase minimum wage, invest in education and infrastructure, reform the tax system, keep finance gamblers in control or not. And, here lies incapability of the dominating capital. It can’t move to all areas. And, it can move to some areas, but with bickering within its camp. These quarrels, rifts and incapability will weaken the system and continue exposing the system to the people.
The dollar
Gone are the golden days of the US economy. The US dollar is in trouble. Gold saw its good day during the default drama in the world’s biggest economy and military.
US government debt was rising 360% faster than economic growth! The US GDP has been increasing at an average annual rate of 2.39% over the past six years while government debt has been growing at an annual pace of 11% since 2008. (Michael Lombardi, October 18, 2013, “U.S. Credit Rating Downgraded to Same Level as Brazil?”)
The hopeless reality found its reflection. China’s Dagong Global Credit Rating agency downgraded ratings of the US to the level of Brazil, Israel and Panama.
The sliding down situation is not sudden and recent.
In September 2009, Robert B. Zoellick, the World Bank president, made the following observation while delivering a speech at the School for Advanced International Studies at Johns Hopkins: The dollar was likely to lose its favored position; the US would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency; in the next 10 to 20 years, the dollar will face growing competition from the renminbi, China’s currency; the US was losing its clout; days of the US as an unchallenged economic superpower might be numbered.
Four years have gone after the broad assessment by Zoellick.
A number of countries are now changing their policy on US dollar-backed reserves. Central banks are losing trust on the US dollar, and moving away from it. About 18 percent of China’s trade is settled in yuan, its currency.
A number of countries, especially China will increase pressure for global acceptance of their currencies as alternative to the US dollar in international trade as the US, as a state and as its ruling elites’ political maneuvering show, are turning unreliable.
The European Central Bank and the People’s Bank of China have established a currency swap line, which will last three years: 350 billion yuan will be given to the ECB and 45 billion euros to the central bank of China.
Rapidly growing trade and investment between the euro area and China was the context of the arrangement while the need was “to ensure the stability of financial markets.” (ECB, October 10, 2013, “Press Release: ECB and the People’s Bank of China establish a bilateral currency swap agreement”)
China and Singapore have agreed to trade their currencies directly. In Singapore, Chinese institutional investors will be able to buy foreign securities with yuan. The limit for currency trades by financial institutions in Singapore that invest in China’s domestic securities was stipulated at 50 billion yuan ($8.2 billion).
The UK has already decided to ease rules for Chinese banks willing to set up in London. China has also decided to open up its markets to British-based investors.
It appears things are moving away from the US without much noise.
In markets abroad
The US ruling elites’ factional fight cast its shadow in markets abroad: a damaged credibility. Chuck Hagel, the US defence secretary, expressed concern that the shutdown could damage the country’s credibility.
Nicholas Kitchen, a political scientist at the London School of Economics, said: “In showing itself to be unable to even run its own affairs competently the US in some sense surrenders claims to global leadership. It’s difficult to tell other people how to run their affairs when you can't keep your own house in order. The US is not doing a very good job at the moment in showing itself to be a model of good governance.” (AP, Oct. 17, 2013, “Disbelief to relief: World greets US budget deal”)
Xenia Dormandy, director of the Americas program at London’s Chatham House, said: Economic and political credentials of the US called into question. “There is a sense that the US as a reliable ally is not necessarily the case anymore.” (ibid.)
American allies and adversaries have probably drawn the conclusion.
During the shut down drama the US state appeared ungovernable although it was providing suggestions on governance to some other states.
Nicholas Burns, professor of the practice of diplomacy and international politics at Harvard’s Kennedy School of Government, describes the situation: “[M]any see us as an inward-looking, dysfunctional Gulliver, tied down by partisan infighting in Washington.…No other government would contemplate such a disastrous step.” (The Boston Globe, October 9, 2013, “Shutdown diminishes US as a global power”) “The world”, Nicholas Burns writes, “seems puzzled that Congress can’t even uphold the most elementary responsibilities of governance …” “We are the undisputed world heavyweight champion superpower and yet we allow Congress to close most of the federal bureaucracy”, adds Nicholas Burns.
The dysfunction, Nicholas Burns finds, compelled Obama to stay at home while Xi Jinping, Vladimir Putin and Shinzo Abe were taking center stage in meetings related to Asia, one of the most critical regions in the present day world. China’s Xi was traveling to some of the same countries Obama would have visited had the government not been forced to close its doors. “If our president is effectively blocked by partisan politics from even showing up in the region, we risk falling behind in our competitive contest with China for primacy in Asia as that race begins.” (ibid.)
It’s not only the case in eastern part of Asia.
Irrespective of its posture the US appeared faltering in Libya, Egypt and Syria: unsure and uncertain; tied to unstable and non-dependable alliances. During Libya invasion, it took a back seat.
“The peak of US power was probably right after the invasion [of Iraq]”, writes Richard Engel, NBC Chief Foreign Correspondent. “(But) once Americans were caught in this quagmire, there was this myth of invincibility that started to break. Events are taking place so quickly across the Middle East…the United States is not really a factor. The US looked weak in Iraq and now, in Egypt and Libya and Syria … You can see a real decline in the US influence in the region,” says Engel. (The Daily Rundown, quoted in msnbc, March19, 2013, David Murphy, “US role in Mideast diminished by Iraq War”)
Terming the US as “the world’s most powerful nation” Tom Switzer, research associate at the United States Studies Centre at the University of Sydney, said: “[T]he Syrian episode highlights the limits of American power and influence in the post-Iraq war world. And Obama knows this.
In recent years, he has attempted to define a new US role in a way that reflects the nation’s limited resources and changing circumstances. … [T]he reality is that he is withdrawing troops from long wars in the Middle East that have cost America dearly in blood and treasure. … [I]n Syria, [prestige and credibility] have been diminished. (ABC, September 11, 2013, “US credibility is MIA in battle to solve Syrian crisis”)
The New York Times has referred a classified State Department briefing paper from June 10 that painted a grim picture of the rebellion: “We are headed toward our worst case scenario: rebel gains evaporating, the moderate opposition … imploding,… [Bashar al-Assad] holding on indefinitely, neighbors endangered, and Iran, Hizbollah, and Iraqi militias taking root.” The scene seems gaining ground: The proxy war in Syria is now in retreat and the warriors appear more fragmented.
Style of conducting the proxy war in Syria has caused more troubles. Saudi Arabia, the world’s biggest oil exporter, has indicated its unhappiness with its protector and closest ally – the US. The country, as has been indicated, is going to make a “major shift” in relations with the US. The reasons are US position on proxy war in Syria and its assumed moves towards Iran.
In Power Systems: Conversations on Global Democratic Uprisings and the New Challenges to US Empire, Noam Chomsky describes the Iraq case in a lively way:
The United States was seriously defeated in Iraq by Iraqi nationalism, mostly by nonviolent resistance. The US could kill the insurgents, but it couldn’t deal with half a million people demonstrating in the streets. Step by step, Iraq was able to dismantle controls imposed by the occupying forces. By November 2007, it was turning clear that it was going to be very hard to reach US goals. So in November 2007, the Bush II administration declared its future arrangement with Iraq, which included the US freehand in carrying out combat operations, and, two, encourage foreign investments, especially US investments in Iraq. Within months, in the face of Iraqi resistance, the US had to give that up. The US control of Iraq is now disappearing. Iraq was an attempt to reinstitute by force something like the old system of control, but it was beaten back. US policies remain constant – going back to the Second World War. But the capacity to implement them is declining.
Even in Europe, the US is not always succeeding in pulling all its allies together. The Snowden Syndrome, the now “famous” NSA case, is appearing as a blow to the US position.
The NSA business – US spying – has united European leaders in outrage and anger. Now, the leaders, some of them were probably involved with Evo Morales-plane incident, find a shattered trust undermining crucial trans-Atlantic relationship. Thomas Oppermann, head of German parliamentary committee overseeing the country’s intelligence service felt “deceived by the American side.”
Their basic problem is with competition in the market, a breach in respective competition strategy.
Martin Schulz, president of the European Parliament, said Europe’s undermined confidence in the US meant it should suspend negotiations for a two-way free-trade agreement that would account for almost half of the global economy. The Americans, Schulz said, now must prove they can be trusted. “If we go to the negotiations and we have the feeling those people with whom we negotiate know everything that we want to deal with in advance, how can we trust each other?” Schulz questioned.
These negotiations and trust are fundamentally related to interests concerning trade, etc. Who knows how far these shall move? And, who knew Europe shall question reliability of the US? Loss of trust in this relationship is a fundamental issue, and trust in economic and financial relationship is a more powerful issue than diplomatic statements as diplomacy is shaped by those interests.
Latin America is no more, at least up to now, the US backyard. In Africa, China is making competition tough for the US.
Chomsky observes: We “lost” China, we’ve lost southeast Asia and South America. And, he assumes: Maybe the Middle East and north African countries will be lost. The capacity to preserve US control has sharply declined. So it’s harder to carry out US policies. (op. cit.)
The days of using force at will are moving towards its sunset time. Incidents of violation of international law and human rights and of sovereignty of other countries by the Empire are now being increasingly questioned.
However, the US can still act effectively, both economically and militarily.
Politically, as former US secretary of state Madeleine Albright used to say, the US is the “indispensable country.” Militarily, US power is unassailable and far outweighs the 10 next strongest countries combined. Economically, US is the world’s largest and innovative economy.
(Nicholas Burns, op. cit.)
These facts should not be kept out of view while assessing the empire’s path of travel. A modest view is better than an adventurous attitude. One may also like to refer the Ottoman Empire, which required more than 600 years coming down to nowhere.
Farooque Chowdhury is Dhaka-based freelancer.
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