What the Rest of the World Thinks About the US Shutdown

What the Rest of the World Thinks About the US Shutdown…as Obama Cancels APEC Trip

Posted by on October 4, 2013                                       /   Comments Off

    Category: World Economy   Tags: , , ,

different-people<img style=”margin: 10px;” alt=”different-people” src=”https://d3ojdig7p1k9j.cloudfront.net/wp-content/uploads/2013/10/different-people-200×200.jpg” width=”200″ height=”200″ />From AFP – October 3, 2013

http://tinyurl.com/nhlppfq

From Chinese bloggers to European central bankers, the world is watching the US government shutdown with a mixture of bewilderment and growing nervousness that any debt default could hit struggling economies.

The effects of the dramatic spending freeze have rippled around the globe, paralysing a leading earthquake alert system, forcing American scientists to pull out of international conferences and leading an embarrassed President Barack Obama to postpone visits to two Asian countries.

In emerging superpower China, a one-party state where legislative deadlock holds little fear for the Communist rulers, the official Xinhua news agency said the situation had once again brought to the fore “the ugly side of partisan politics in Washington”.

“Though its immediate impact looks limited, the damage will multiply if the drama drags on for days or even weeks, arousing concerns over its spillover effect,” it said in a commentary, referring to the US economy.

Chinese social media users took a largely mocking tone in response to the first US government shutdown in 17 years.

“Shutdown! What about the money China put in there?” posted one user on Sina Weibo, a Chinese version of Twitter, a reference to Beijing’s massive purchases of US Treasury debt.

While global markets have so far been relatively resilient, there are growing jitters about the impact on the US economy at a time of heightened uncertainty over a possible winding-down of the Federal Reserve’s massive stimulus measures.

Apart from reaching a budget deal to end the shutdown, Congress must agree within two weeks to raise the $16.7 trillion US debt ceiling — or risk a default on government debt.

“If the US actually defaults on its debt, that might send a signal to markets that the United States is no longer a credible borrower, and given how much debt there is sloshing around in the American system, that could be catastrophic,” said David Smith, a lecturer at the University of Sydney’s United States Studies Centre.

There were signs of mounting nervousness in emerging economies that have borne the brunt of recent market jitters over the expected tapering of US quantitative easing.

The US shutdown “is highly unfortunate for the rest of the world, as even countries like the Philippines are taken on a wild economic ride because of the political game of chicken in Washington,” Philippine Finance Secretary Cesar Purisima said in a statement.

He appealed to the United States to resolve the stalemate over raising the debt ceiling — a particular concern to Asian countries including China and Japan, which are major holders of US Treasuries.

“A US default, unimaginable for most of history yet now in the realm of the possible because of current political circumstances, can only lead to unprecedented chaos in the global financial markets,” Purisima warned.

The Indian Express newspaper called it a “depressingly familiar chicken dance in Washington”. In Japan — where TV channels have shown images of closed monuments such as the Statue of Liberty — the Nikkei business daily lamented a “pointless political conflict”.

“This political mishandling must not destroy the buds of growth that we see for the US and global economies,” it said.

In Europe, where recession-hit economies are struggling to get back on their feet after years of turmoil, finance chiefs expressed concern about the threat to the fragile recovery.

The US shutdown “is a risk if it is protracted… it would be a risk not only for the US, but also the world economy,” said European Central Bank chief Mario Draghi.

While US visa and passport operations are unaffected, the crisis in Washington has forced hundreds of thousands of federal workers to stay at home, closed museums and national parks and put much scientific research on hold.

One US researcher who travelled 30 hours to Perth in Australia for a science conference found himself barred from presenting his work on Parkinson’s disease.

“It’s actually a federal offence if I do go ahead and give the talk or even continue attending the conference,” Michael Lazarou told the Australian Broadcasting Corporation.

“I had prepared for such a long time to come here and give this talk — all that effort and it goes to waste now.”

Obama APEC<img style=”margin: 10px;” alt=”Obama APECsrc=”https://d3ojdig7p1k9j.cloudfront.net/wp-content/uploads/2013/10/Obama-APEC-300×194.jpg” width=”240″ height=”155″ />Obama Cancels APEC Trip

From AFP – October 4, 2103

http://tinyurl.com/oy3hcla

Washington (AFP) – President Barack Obama scrapped trips to two key Asian summits on Thursday, blaming the US government shutdown for the cancelation of a tour designed to advance a central prong of his foreign policy.

After days of speculation that the trip was in jeopardy following the shutdown crisis, a White House statement late Thursday confirmed Obama would miss the Asia Pacific Economic Cooperation (APEC) summit in Bali and the East Asia summit in Brunei next week.

The president had already cancelled plans to visit Malaysia and the Philippines, but had delayed taking a decision on the summit meetings, both seen as an opportunity to push important foreign policy initiatives in the region.

“Due to the government shutdown, President Obama’s travel to Indonesia and Brunei has been canceled,” the White House statement said.

“The President made this decision based on the difficulty in moving forward with foreign travel in the face of a shutdown, and his determination to continue pressing his case that Republicans should immediately allow a vote to reopen the government.”

The White House said Obama had called Indonesia President Susilo Bambang Yudhoyono to inform him of the cancelation.

“He expressed his regret that the ongoing government shutdown in the United States will prevent him from attending the Summit,” the statement said.

Obama had also called the Sultan of Brunei, the White House said.

Secretary of State John Kerry would lead the US delegations to both countries in place of Obama, the statement said, before rounding on Republicans for causing a “completely avoidable shutdown.”

“The cancelation of this trip is another consequence of the House Republicans forcing a shutdown of the government,” the White House statement said.

“This completely avoidable shutdown is setting back our ability to create jobs through promotion of US exports and advance US leadership and interests in the largest emerging region in the world.”

The budget impasse which has shuttered swathes of government departments and sent hundreds of thousands of federal workers home had left Obama torn between his political priorities at home and important foreign policy goals.

White House spokesman Jay Carney had already hinted that the trip to Asia was at risk if the government shutdown was not resolved by the time of Obama’s scheduled departure on Saturday.

Political analysts had questioned whether Obama would risk traveling abroad and present an opening to domestic foes while on the other side of the globe.

Republicans would almost certainly accuse the president of placing more importance on striding the world stage while neglecting his duties at home.

However analysts had warned a no-show by Obama could hurt US interests in Asia, allowing competitors in the region such as China to make the case that Washington is an unreliable partner.

“I think there?s a lot at stake here with this trip,” said Ernie Bower, a Southeast Asia specialist at the Center for Strategic and International Studies before the cancelation was made official.

“The geopolitical ramifications of the president not making a trip if he decides indeed that he has to cancel… — it would leave a big geopolitical mark.”

Bower said US allies would also question the extent of Obama’s commitment to Asia amid concerns that Washington lacked the political focus and capital to advance its pivot to Asia.

By nixing the Asia visit, Obama will be missing a chance to rub shoulders with leaders like China’s Xi Jinping and Russia’s Vladimir Putin, key players in ongoing geopolitical crises from Syria to North Korea.

Obama in his first term, sensed an opening with Southeast Asian nations irked by China’s increasingly abrasive foreign policy and power plays in simmering maritime territorial disputes in the region.

But the exit of administration heavyweights like former Secretary of State Hillary Clinton and national security advisor Tom Donilon — both closely identified with the pivot — have deprived US Asia policy of a figurehead.

Senior administration officials however point to repeated visits to Asia by Defense Secretary Chuck Hagel and noted their commitment to concluding a Trans Pacific Partnership (TPP) region-wide trade deal as proof of US commitment.

They also cite Obama’s repeated travel to Asia, most recently in November last year, when he visited Thailand, Cambodia and Myanmar.

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