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Friday, December 11, 2009

Barack Obama Journey to ‘Remake’ America

“We are here to mark the beginning of our journey to Washington and this is fitting, because it was here in this city that our American journey began,” declared Barack Obama, the President-elect of the US, commencing his journey to walk the talk from the historical city of Philadelphia.

Adopting the more than a century-old tradition of many US presidents-elect, particularly Abraham Lincoln, to travel to the capital for inauguration by train, Obama, reflected on the mammoth crisis that the US is today passing through, saying: “Only a handful of times in our history has a generation been confronted with challenges so vast. An economy that is faltering. Two wars, one that needs to be ended responsibly, one that needs to be waged wisely. A planet that is warming from our unsustainable dependence on oil.”

Rhetoric aside, today, America is not what it was: it is no longer a super economic power. It is in the midst of a crisis: the unemployment rate has already reached a 16-year high of 7.2% and is likely to rise further; its banking system is still in distress (despite capital injection by the government, Citi found no alternative but to split itself into two, with the idea of eventually disposing of the Citi Holdings consisting of ‘bad assets’; nor is it any different with Bank of America which has posted a loss of $2.39 bn for the fourth quarter and is looking at government for fresh capital); domestic demand is in free fall; consumers are unwilling to spend; and car sales have plummeted, throwing General Motors and Chrysler almost out of business. To put it in the words of the President-elect, “It is not clear that the economy’s bottomed out.”

Nor is the global economy any better: GDP of Eurozone is predicted to shrink by 2% in 2009. The economic outlook for Germany is looking bleak. Its export of capital goods to emerging markets is witnessing poor demand, as is reflected by the fall in export revenue by 12% year-on-year in November. Nor are the economies of France, Italy, Spain and the UK any better.

Till a while ago, Asia appeared better. But the recent data indicate that exports from Japan fell by 27% year-on-year in the month of November. The Bank of Japan’s quarterly Tankan index has fallen to a 30-year low, forecasting bleak prospects for the future, which is why pundits have predicted the economy to contract by an alarming 2.9%. That aside, the most disturbing news for global economy is coming from China: its GDP in 2009 is forecasted to grow by 6%—a stunning fall of seven percentage points from the 13% growth recorded in 2007.

Cumulatively, the prospects of recovery from the ongoing global recession, the severity of which has not been witnessed in the last 80 years, appear dim; and it will become still worse if governments across the globe delay initiating aggressive policies to kick-start the economy collectively.
America is also facing many political challenges and they are real. The first test that the new President will face immediately after assuming office is finding ways and means to diffuse the recent Gaza crisis and resolving the larger Arab-Israel conflict. Next is to find a way to responsibly exit from Iraq, a country where, not long ago, a shoe was hurled at the outgoing US President. Third is the crying need “to make a series of adjustments”—both military and diplomatic—to contain the attempts to re-Talibanize Afghanistan. The fourth important issue that calls for America’s attention is the issue of nuclear non-proliferation. And, remember, these are over and above the urgency to contain the ill-effects of ‘imploding economy’ and the ‘whimper of collapsing climate’.

Ironically, none of the other powers, such as Eurozone, Russia and China, is evincing any interest in addressing these global concerns, and obviously the world is looking at America for appropriate leadership initiatives. At the same time, the rest of the world would no longer tolerate America continuing with “Bush’s Manichaean arrogance”—undermining the authority of global institutions is no longer welcomed. It, however, does not mean that America should remain isolated. Contrarily, it should come forward but with appropriate leadership initiatives to usher in a new era of peace in which “our common humanity shall reveal itself.” It also needs to take initiatives to lead the globe out of the current recession. But in its anxiety to set right its economy first, America should not resort to ‘protectionism’ in its trade dealings, for that is neither in the long-term interests of the world nor that of America.

Encouragingly, Obama appears to be aware of these hard realities, as is revealed by his cleverly seizing the opportunity offered by the train-journey to set the tone right for the future, saying: “We recognize that such enormous challenges will not be solved quickly. There will be false starts, there will be setbacks, frustrations and disappointments. I will make some mistakes. But we will be called to show patience even as we act with fierce urgency.” Borrowing a phrase from Abraham Lincoln’s inaugural address, Obama also exhorted his people thus: “What is required is a new declaration of independence, not just in our nation, but in our own lives—from ideology and small thinking, prejudice and bigotry—an appeal not to our easy instincts but to our ‘better angels.’” And Americans appear to be well behind him as the Washington Post-ABC News survey indicates that 80% of people are favorably disposed towards him. He has also assembled a very competent team of office-bearers cutting across political barriers. A well begun journey?

So, a smart and intelligent man right there well cut out for his job. Amen.

- GRK Murty


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