[President Obama is clearly
trying to hold the stage, at least rhetorically. Pitching his efforts to secure
a major trade accord with 11 other Pacific nations, he told reporters on
Friday, “the fastest-growing markets, the most populous markers, are going to
be in Asia, and if we do not help to shape the rules so that our businesses and
our workers can compete in those markets, then China will set up the rules that
advantage Chinese workers and Chinese businesses.”]
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Treasury Secretary Jacob J. Lew,
left, with Japan's finance minister, Taro Aso,
on Thursday. Photo: Jose Luis Magana/Associated Press
|
WASHINGTON — As world leaders
converge here for their semiannual trek to the capital of what is still the
world’s most powerful economy, concern is rising in many quarters that the
United States is retreating from global economic leadership just when it is
needed most.
The spring meetings of
the International Monetary Fund and World Bank have filled Washington with
motorcades and traffic jams and loaded the schedules of President Obama and
Treasury Secretary Jacob J. Lew. But they have also highlighted what some see
as a United States government so bitterly divided that it is on the verge of
ceding the global economic stage it built at the end of World War II and has
largely directed ever since.
“It’s almost handing over
legitimacy to the rising powers,” Arvind Subramanian, the chief economic
adviser to the government of India, said of the United States in an interview
on Friday. “People can’t be too public about these things, but I would argue
this is the single most important issue of these spring meetings.”
Washington’s retreat is
not so much by intent, Mr. Subramanian said, but a result of dysfunction and a
lack of resources to project economic power the way it once did. Because of
tight budgets and competing financial demands, the United States is less able
to maintain its economic power, and because of political infighting, it has
been unable to formally share it either.
President Obama is clearly
trying to hold the stage, at least rhetorically. Pitching his efforts to secure
a major trade accord with 11 other Pacific nations, he told reporters on
Friday, “the fastest-growing markets, the most populous markers, are going to
be in Asia, and if we do not help to shape the rules so that our businesses and
our workers can compete in those markets, then China will set up the rules that
advantage Chinese workers and Chinese businesses.”
In an interview on
Friday, Mr. Lew hotly contested the notion of any diminution of the American
position. If anything, he said, the world is too dependent on the American
economic engine when many countries should be doing more on their own to
advance global prosperity.
In an interview, Mr. Lew
hotly contested that characterization. If anything, he said, the world is too
dependent on the American economic engine when many countries should be doing
more on their own to help advance global prosperity.
“I think there is a
bipartisan desire for the United States to play a strong leadership role in the
world,” Mr. Lew said. “There may be individuals who feel differently about how
you express that and how you project it, but I don’t think you can find anyone
who would say they don’t want the United States to play a leadership role.”
But the challenges keep
mounting.
An overhaul of the
I.M.F.’s governance structure, negotiated five years ago in large part by
President Obama to give China and other emerging powers more authority
commensurate with their growing economic strength, has languished in Congress.
That, in part, propelled China to create its own multilateral lending
institution in direct competition with the behemoths in Washington.
The efforts to secure an
ambitious 12-nation Pacific trade agreement, also championed by Mr. Obama, has
set off perhaps the biggest fight of his presidency within his own party, with
trade unions, environmentalists and liberal activists lining up to fight the
White House.
Even the United States’
Export-Import Bank, a lending agency similar to export financing arms in
countries around the world, could be killed in June by conservatives in
Congress, leaving would-be foreign customers in the cold and many American
exporters at a disadvantage to competitors abroad.
“I’ve been searching for
a word to describe it, and the one I use is ‘withdrawal,’ best I can come up
with,” said Edwin M. Truman, a former Obama Treasury official now with the
Peterson Institute for International Economics. “We’re withdrawing from the
central place we held on the international stage.”
That concern is
bipartisan.
“This is really about a
crossroads for America and its leadership for the world,” said Representative
Dave G. Reichert, Republican of Washington. “We set the tone, we set the path
for the global economy by being leaders. And if we don’t, other countries step
in.”
The costs could be real.
Failure to bolster the I.M.F. and other institutions weakens the West’s hand in
confrontations like the one with Russia over Ukraine, which has begged for
multilateral economic assistance. Senator Lindsey Graham, Republican of South
Carolina, pointed to conflicts like the one in Syria, suggesting that when it
ends, the inability of the I.M.F. and World Bank to help rebuild only opens the
door to confrontational actors like Iran.
“Sometimes we can only
hope it’s China that steps in,” he said.
For much of Washington
and the world’s economic leaders, China’s creation of the Asian Infrastructure
Investment Bank crystallized the choice policy makers face. For years, China
had threatened to establish institutions to rival those dominated by the West,
like the I.M.F., World Bank and Asian Development Bank — or even to establish
its currency, the renminbi, as a reserve currency to rival the dollar.
In 2010, Mr. Obama
brokered a deal to raise China’s stake in the I.M.F. to 6 percent from 3.8
percent, still far below the United States’ vetoing share of 16.5 percent but
enough to give Beijing a larger say. Congress has blocked the proposed
adjustment.
Meantime, China’s
international lending has soared. Fred P. Hochberg, who heads the Export-Import
Bank, said that in the last two years alone, Chinese state-run lenders have
lent $670 billion. Ex-Im has lent $590 billion since it was created during the
Depression of the 1930s.
With nearly $4 trillion
in foreign exchange reserves, China has plenty of resources to project its
rising economic power. For example, China’s president, Xi Jinping, plans to
offer $46 billion to Pakistan for infrastructure assistance that would open new
transportation routes across Asia and challenge the United States as the
dominant power in the region.
“The United States has lost its way and is
rapidly forfeiting claims to global financial, economic, political and moral
leadership,” Kevin Rafferty, a former World Bank official, wrote recently. He
blamed the White House: “Not for the first time, Obama has shown he can talk
eloquently, but does not have a political clue how to get things done.”
Many experts and
historians, however, say too much can be made of the moment. Walter Russell
Mead, a professor of foreign affairs at Bard College, noted that the rise of
China as an economic force was inevitable, and that its establishment of a
rival, multilateral lending institution was far different from the
international behavior of the Soviet Union and communist Chinese during the
Cold War.
Then, he said, America’s
rivals were trying to destroy and replace the economic order established by the
United States and Britain after World War II. Now, emerging powers are
emulating it, however imperfectly.
“That may not be such a
bad thing,” he said. “The English national team often loses to India in
cricket, but you can’t say the British have no influence on India. They’re
playing cricket.”
Joseph Nye of the Kennedy
School of Government at Harvard called the recent missteps that led to the
Asian infrastructure bank more like “one of a long line of dumb decisions” the
United States has made in its history “than a canary in a coal mine” signaling
long-term decline.
Whatever the ultimate
consequences, it is clear that there is plenty of finger-pointing going on.
Senator Bob Corker of Tennessee, chairman of the Foreign Relations Committee
and a potential ally on international economics, echoed Mr. Rafferty. In an
interview, he said he included the I.M.F. quota adjustment in an aid package
last year to beleaguered Ukraine, but Mr. Obama, he insisted, did not
personally intervene to push it through.
He fretted that new
legislation granting the president “fast track” trade-promotion authority to
complete major trade deals with Asia and Europe would stall without enough
White House attention.
“I was in Southeast Asia
in August, and the countries there know there’s no real capital being expended,
and they’re worried,” Mr. Corker said, his voice rising in frustration. “They
just cannot pull themselves together to push for something, whether it be
T.P.A. or I.M.F., that requires any degree of effort. They just can’t do it.”
Administration officials
scoffed at the charge.
“I can tell you I have
spent dozens if not hundreds of hours talking to central bankers and finance
ministers,” Mr. Lew said. “They understand we are sparing no expense.”
The leader of the
opposition both to the I.M.F. reforms and the Export-Import Bank has been
Representative Jeb Hensarling of Texas, the chairman of the House Financial
Services Committee, backed by the Tea
Party wing of the Republican Party.
Even Senator Graham
fretted about the isolationism creeping into his party, on defense and economic
policy.
The opposition to
international trade alliances, on the other hand, is being led loudly by
Democrats who had previously been the president’s most stalwart backers, with
an assist from ardent conservatives who oppose anything Mr. Obama does.
Senator Tim Kaine,
Democrat of Virginia and an emerging internationalist advocate, suggested that
two decades of war were turning elements of both parties inward.
“The network of
international rules and institutions is a peculiarly U.S. creation” that has
helped foster peace and prosperity for decades, he said. “The U.S. has built
this up, not only for our own benefit but for the world. That we are now
stepping back from a leadership role is highly, highly problematic.”
