First Published: 2012-11-07

 

Challenges facing Obama: US economy, Iran, Syria

 

Re-elected US leader will face growing pressure for more robust US response on Syria, tougher stance on Iran.

 

Middle East Online

By Jo Biddle - WASHINGTON

Rocky diplomatic road

With the grueling presidential race over and victory assured, Barack Obama might be forgiven for wanting a rest.

But instead he will have to put such thoughts aside as he battles to pull America back from the looming "fiscal cliff," a budget deadline that could scupper his already stumbling attempts to revive the economy.

Averting this potential economic disaster -- now only weeks away -- will be the top priority for the Democrat, re-elected Tuesday for a second term in the White House but still facing a Republican-led lower house.

"The biggest challenge facing the president going forward is the issue of the fiscal cliff and the broader fiscal health of the United States of America," said analyst James M. Lindsay of the Council on Foreign Relations.

"If the next president cannot succeed in finding a way to put the United States on a glide path to fiscal solvency, the long term consequences for America and its foreign policy will be immense and dire," he said.

Unemployment and the fragile economy -- showing nascent signs of stuttering back to life after four tough years -- were the top concerns of voters.

But Republicans and Democrats, now sitting in a lame duck Congress as the new House and Senate prepare to take up their seats in January, need to bridge differences on tackling the nation's deficit by a December 31 deadline.

If they fail then, under a law reached as a political compromise last year, the government will be forced over the "cliff" and into automatic massive cuts, split between defense spending and non-defense spending.

The Congressional Budget Office says the austerity measures could shrink the economy by 0.5 percent next year and push unemployment back up to 9.1 percent, from the current 7.8 percent.

The August 2011 law sets out spending cuts of $1.2 trillion over 10 years from January 2, 2013 and, without a deal, the government will have to cut some $109 billion in spending next year.

At the same time a package of tax reductions set or extended in 2010 to spur economic growth, as well as an extension of unemployment benefits, are scheduled to expire, meaning taxes will rise significantly for most Americans.

While it may be the most immediate problem, the fiscal cliff is far from the only challenge facing Obama.

Iran's suspect nuclear program, bubbling away on a back-burner for months, will once again come to the fore, especially if Israeli Prime Minister Benjamin Netanyahu wins re-election in his country's elections in January.

Obama has pledged that he will not let Iran develop a nuclear weapon, and Israel will keep up the pressure to ensure he keeps his word.

Netanyahu has pushed Washington and the international community to set clear "red lines" on Iran, and will no doubt take up his clarion call again, especially if he is emboldened by a renewed mandate.

The Jewish state, the Middle East's sole but undeclared nuclear power, has refused to rule out a military strike to stop Iran obtaining nuclear arms, but there has reportedly been much jostling behind the scenes to keep it in line.

Another looming headache is what to do about Syria. Months of brutal fighting in which more than 36,000 people, mostly civilians, have died has failed to dislodge autocratic President Bashar al-Assad.

So far, the Obama administration has been wary of deeper engagement in Syria, fearful of dragging the nation into another conflict, with US troops now out of Iraq and NATO-led combat forces leaving Afghanistan.

But with the Syrian conflict at a stalemate and the death toll mounting, there will undoubtedly be growing pressure for a more robust US response.

A rising China, which is undergoing significant leadership changes, and the unfolding changes in the Arab Spring which have muddied the political landscape in the region will also figure high at the top of Obama agenda.

And then there's the problem of the eurozone crisis -- although here the Americans are largely powerless and will have to leave Europe to figure out how to rescue its economy in the hope that there will be no fallout for the US.

"But all this is irrelevant if we don't get our act together here at home," warned former assistant secretary of state Winston Lord, at a Georgetown University seminar last week.

"If we don't get over this political gridlock, and if we don't solve our economic problems ... everything else we do on foreign policy is irrelevant.

We've got to do that for our credibility as a world leader."

 

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