Category Archives: United States

Economic, Government, Politics, United States

America’s shutdown and the wider malaise…

AMERICA’S CRISIS

At the beginning of this week, the federal government of the United States of America closed its doors for business.

At the heart of the dispute is the refusal by Congressional Republicans to fund the activities of the U.S. Government so long as they include the provision of ‘Obamacare’, the President’s important signature health reform policy. The White House insists that a group of Tea Party radicals is holding the nation hostage with polls suggesting that the majority of voters share that sentiment. Until the two sides are ready and able to agree a budget resolution, all but essential federal employees will go unpaid. A shutdown of this nature will inevitably have an impact on America’s economy, with some estimates suggesting that as much as 1 per cent from the country’s GDP could be knocked off if a prolonged stand-off ensues.

Yet, what is more worrying is the true significance of the crisis in that it is symptomatic of how America has become – ungovernable. With congressional districts heavily gerrymandered, coupled with a wider, decades-long process of social polarisation, has produced an electoral system that packs Congress with partisan politicians who have no incentive to reach accommodation with the other side. What is more, even if the current impasse can be resolved, there is a much darker cloud on the horizon: later this month America hits the ceiling on its debt limits, with agreement in Congress needed to avoid the pitfalls of the fiscal cliff.

This could provoke an economic as well as a constitutional crisis. In a worst-case scenario, the nation would be forced to default on its borrowing, plunging the global financial system back into chaos – and one which would easily eclipse that seen following the 2008 financial crisis. Many will say that seems inconceivable for politicians on Capitol Hill to allow such a disaster to unfold, but given the obduracy on display, nothing should be ruled out.

The Republican leadership remains in thrall to its Tea Party caucus, but that shouldn’t necessarily deflect from the fact that the hardliners do actually have a point. Like so many other nations around the world, this stand-off in America stems from the promises Washington made to its people that it cannot afford. The argument in favour of lifting the debt ceiling (limit) is that Congress has already written the cheques, and should be required to honour them. Indicative of the problem, though, is that the state wants to spend more without raising taxes.

America’s position, then, is more than just administrative paralysis: it reflects a much wider malaise. Undoubtedly, the U.S. is going through an identity crisis, and remains unsure whether it is to embrace a European social model of higher taxes and a bigger state, as well as what role it should be playing in policing the world.

We can only hope that the current shutdown will prompt a serious attempt for compromise between the parties that will put America’s finances on a more sustainable footing. However, given the dysfunction and lack of coordinated direction in Washington, we should at least prepare for the worst.

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Britain, Economic, Environment, Government, Politics, Society, United Nations, United States

Climate change and the need for a global price on carbon…

CLIMATE CHANGE

The recent findings of the United Nations Intergovernmental Panel on Climate Change (IPCC) are alarmingly clear. The environment is incontestably warming – evidenced through the fact that each of the past three decades has been successfully warmer than any since 1850 – and it is now beyond reasonable doubt that human activities are the cause.

The IPCC report, the fifth of its kind, whilst not containing much that is absolutely new, does offer a higher degree of certainty than the previous report delivered in 2007. It is now as sure that human beings are causing climate change (a probability of 95 per cent) as of cigarettes causing cancer. This is not the judgement of politicians or those campaigners with vested interests, but the consensus of thousands of scientists from all over the world. With scientists having considered all the available evidence, one can only hope that it will banish the scepticism of the ignorant.

The effects of the alterations in the Earth’s environment are already being felt, and not just in extreme weather patterns. The polar ice sheets are thinning, sea levels are rising and the oceans are increasingly acidic. But of concern is what is still to come. The likelihood that rising temperatures will stay below the 2°C threshold, above which changes become catastrophic, looks far less achievable.  Quantifying this is not difficult if we consider that we have already burned through 54 per cent of the ‘carbon budget’ calculated to equate to a spike of 2°C.

Without radical action, the inference implied is that the outlook is bleak. Yet, the politics of long-term, counter-factual disaster-avoidance are no easier now than they were in the past. Last week, The International Development Secretary made all the right noises, commenting that Britain must play its part, only to be countered by the Chancellor who judges the green agenda an unaffordable luxury in times of public austerity. Ed Miliband, talks of a good game, too, with his pledge of carbon-free electricity by 2030. However, his promise to freeze energy bills raises serious questions about where the investment will come from and has already spooked potential investors.

In America, John Kerry, U.S. Secretary of State, responded to the IPCC in stirring terms… ‘This is yet another wake-up call: those who deny the science or choose excuses over action are playing with fire.’ But while Mr Kerry went on to affirm that the U.S. is ‘deeply committed to leading on climate change’ Congress is in the midst of yet another budget fight, upon which Republicans are demanding that any new borrowing is conditional on the weakening of carbon-emission regulations.

The sceptics are certainly right when they say that the cost of mitigating climate change is high. But it is also unavoidable, and the longer we delay the greater the bill will be – both in terms of money and human lives. We must then, throw, all we have at the problem, from the incremental (such as better insulation for our houses) to the fundamental (re-thinking how industry and transport, for example, uses energy). And then there is the thorny diplomatic issues over who should pay – the rich countries that did the historical polluting, or emerging economies from the developing world that are now industrialising in double-quick time.

Ultimately, though, the solution lies with the market. Europe’s ground-breaking carbon trading scheme has floundered, and with its price being meaninglessly low it could be easy to write it off. In America, President Obama’s hopes for national cap-and-trade were dashed by the Senate, leaving only a smattering of regional initiatives. The Australian Prime Minister wants to repeal his predecessor’s ‘carbon tax’. Despite the teething problems, however, a global price on carbon is vital and must be a priority. With China and South Korea now putting together their own schemes, there is at least some progress being made in dealing with the climate change threat.

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Government, Iran, Middle East, Politics, United Nations, United States

US-Iran rapprochement requires time…

US-IRANIAN RELATIONS

Where a diplomatic stalemate that has lasted, off and on, for several decades, it would be foolhardy in being anything but wary before dealing again. No more so when the country in question is Iran who has made peaceful overtures towards the United States. The opportunity for misrepresentations and misunderstandings – on both sides – is more pronounced than most others.  Greater still, given the unpredictability of a domestic political scene in Tehran in which the remit of the President and the Supreme Leader are not always clear.

However, Iran’s new President, Hassan Rouhani, has made encouraging noises. He has released political prisoners, exchanged letters with the U.S. President and even used social media to offer New Year greetings to Iran’s Jews earlier this month. And, most significantly of all, he has shifted responsibility for the nuclear programme to a moderate former diplomat who has long established ties to the United States. Mr Rouhani says this has the express support of the Ayatollah.

With Washington responding in good faith, the world’s media expected a meeting to be held between the US and Iranian presidents following Mr Rouhani’s speech at the United Nations earlier this week. Not since the toppling of the Shah in 1979 have both presidents met.

In the end, though, no meeting took place. After more than 30 years without diplomatic relations, some commentators later argued that the absence of a meeting may have been for the best. Undoubtedly, there remains great hurt and pain on both sides. The US has had no official representation in Tehran for almost two generations, with a gulf of understanding left widely prized open. Compared with Iran, the US is an open book. The risk of misunderstandings, especially on the American side, would have been great. It would have been little short of tragic if the early signals from Tehran had been misread which might have squandered any chance of forging better relations.

It was apparent, from their respective speeches at the UN General Assembly that both leaders treaded carefully. They did, after all, have their own public opinion to consider, as well as the expectations that were running so high elsewhere in the world. Mr Rouhani’s stated readiness, though, to engage in ‘results-orientated’ talks on his country’s nuclear programme, and his disclosure that he has negotiating authority, delegated from the Supreme Leader, does raise hope. President Obama would be derelict if he did not now try to test them out in some way.

The rewards from improved US-Iranian relations could be far reaching, particularly if agreement can be made on the nuclear issue. Iran would be brought in from the cold at a crucial time, and the regional map – which looks increasingly hostile to the West – would seem a little friendlier. With the stakes so high rapprochement must be given time rather than scuppering any deal by rushing it through.

Mr Obama, of course, risks charges of capitulation. The concern of Israel, which has Iranian nuclear facilities on its radar, and is ready and willing to bomb them, is again raising its head. But the prize of a safer and less divided Middle East must be pursued with as much vigour as the West can muster. Syria’s bloody civil war, and the threat of regional meltdown, only makes the need for a deal with Iran more urgent.

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