Dragon lecturing Eagle

Editorial-October 10, 2013,

With the political deadlock between the White House and the Republican-controlled Congress entering the second week and the federal shutdown showing no signs of going away soon, fear is being expressed internationally that the crisis is likely to spill over into the rest of the world. Apparently panic-stricken, China has lectured the US on the need to honour its commitment to debt servicing and issued a dire warning that the failure on the part of Washington to do so would lead to an international financial calamity of unprecedented proportion. Yes, the global economy will be sent into a tailspin in such an eventuality. Chinas concern about the US crisis is understandable. As the largest lender to the US, it will be the worst hit in case the Obama administration defaults on debt. President Barack Obama is at the mercy of a stubborn Congress where the question of increasing the debt ceiling is concerned. Interestingly, the person who has lectured the US on responsibility to service debt is Chinas Vice Finance Minister Zhu Guangyao. We are reminded of a Washington meeting where a World Bank vice president had the temerity to harangue the then President Chandrika Bandaranaike Kumaratunga on good governance etc; the latter need not have attended that powwow meant for lesser ones. Today, the US is being treated in a somewhat similar manner! Ironically, it is coming under pressure to respect R2P, not Responsibility to Protect but Responsibility to Pay.Whoever would have thought a few decades ago that the US would face this kind of humiliation? President Bill Clintons game of chicken with the Congress lasted for three weeks in the mid 1990s and finally the latter blinked. The US economy took a beating, but it was robust enough at that time to bounce back. Times have changed and Americas economy has weakened over the years with military fronts opened overseas at a huge cost. Unless the present crisis in Washington blows over before long, the economic doomsday scenario China and Russia have warned of is likely to come to pass. It also has the potential to trigger a mega economic tsunami across the globe. The US dollar, being the biggest reserve currency in the world, no economy will be left unaffected if America happens to default on its debtabsit omen! With hundreds of thousands of Americans losing jobs and government expenditure being curtailed, the US consumption is bound to decrease having a debilitating impact on exports from the developing world. This is a frightening proposition for countries like Sri Lanka. The federal shutdown has not only taken a heavy toll on Americas economy but also affected

its international image badly. This became patently clear at the just concluded Asia-Pacific Economic Cooperation (APEC) summit. All eyes were expected to be on President Barack Obama and his pet project, a new transpacific trade pact to be unveiled at that event, but he was not present in view of trouble at home, and it came to be dominated by Russia and China with the US represented by Secretary of State John Kerry, who failed to outshine most of the leaders gathered there. Those who were urged by the US to go for financial reforms are now laughing up their sleeve if what is reported by the foreign media is any indication. Among them are the EU and China. Strangely, the fear expressed both at home and abroad over their brinkmanship leading to an unprecedented disaster hasnt had any sobering effect on the White House and the Congress. They remain intransigent regardless of the consequences of their brinkmanship. And Washington continues to pontificate to the rest of the world on the virtues of consultation, consensus, compromise and, above all, reconciliation!