United States’ crisis of governance

By S P SETH

President Obama’s re-election seems to have further polarized the country’s political establishment represented by the Democratic and Republican parties. Obama certainly is in a better position politically and seems determined to have his way, as much as possible, on crucial issues. And the most important issue facing the United States is the parlous state of its economy. Broadly, there are two viewpoints on how best to handle the economy. On the Republican side, the emphasis is mostly on controlling and cutting spending to reduce budget deficit and the debt. Which, in the Republican parlance, means cutting social spending, including health and welfare. The Obama administration, on the other hand, doesn’t want the economy to sink into recession with thoughtless spending cuts, and favors raising more revenues through increasing taxes on the rich. Obama has made some advance in this direction through a compromise deal with the Republicans to raise taxes on incomes of over $400,000 annually ($450,000 for couples).

 In the next round of Republican political warfare against the Obama administration, they are once again going to take issue on the country’s debt ceiling by refusing it raise it. Which could create a situation of potential default by the US on its debt. Last year, when the debt ceiling was not raised till the last moment, it cost the country a rating downgrade of long-term US debt. A potential debt default was avoided when, at the last moment, a patch up deal was made to last till after the presidential election. Which is now unraveling.

The Republicans in the Congress, with their comfortable majority in the House of Representatives, want to bargain on debt ceiling limit to force the government into drastically cutting health and welfare spending. Obama has made it clear that he wouldn’t let congressional Republicans use debt limit as leverage on spending cuts. Hence the two sides are locked into seemingly irreconcilable position.  In the past the debt ceiling was generally raised without any fuss.  But sensing Obama’s political vulnerability close to election, the Republicans decided, last year, to make it into a political issue and to make Obama the focus of the country’s economic malaise.

Why did they target Obama? First: Obama’s election in 2008 shocked the country’s conservative white constituency. They never accepted him as a legitimate American president and continued to question his bonafides. He was an easy target with doubts raised about his US birth and being from the “wrong” race. And his talk about raising taxes on the rich and making health care accessible for relatively less well off made him also into a dangerous socialist. He seemed set on destroying the American dream of every one being able to become rich in America’s free wheeling capitalist society.  This brought on him the wrath of the rich and powerful of America’s conservative political establishment and led to the rise of the Tea Party movement, which showed its political muscle in the 2010 elections when a sizeable number of Tea Party-endorsed Republicans were elected to the House of Representatives.

 Obama’s political charm was wearing out. Which led the Republicans to become even more obstructionist, believing that the White House was there for the taking at the 2012 election. At the same time, the economy was not making any appreciable dent into the country’s high unemployment rate. The political honeymoon with Obama seemed really over with a large section of the American electorate. In other words, the country’s political polarization was becoming deeper, with the Republicans baying for blood, politically speaking.

But the Republicans had difficulty selecting their nominee, leading to a long process when each one of the potential presidential hopeful turned on each other. Which gave the Obama camp a tactical advantage. And when Mitt Romney was finally nominated as Republican presidential candidate, his own camp had already bruised him. Even though a moderate Republican, he had to burnish his conservative credentials by talking up the Tea Party kind of extremism. At a Party fundraiser attended by some of America’s richest people, he debunked the 47 per cent of the American people who, in his view, lived on government handouts.

He came out against Obama’s healthcare program that was, indeed, modeled on his own successfully tried and tested scheme when he was a state governor. His failure to pay his proper taxes and refusal to divulge the rate of payment over the last ten years didn’t help his image. And by supporting the hard Republican line on Latino immigrants, he managed to deliver a big chunk of Latino voters to Barak Obama. With Afro-Americans solidly behind Obama, and Latinos favoring him by a large margin, the Republican Party managed to turn potential victory into a real defeat for Mitt Romney.

Even after their defeat they do not seem to have learnt much, as the country goes through its crisis of governance with the Republicans set to oppose Obama on raising the country’s debt ceiling. A good number of the Tea Party constituency still believe that by consistently opposing Obama on a whole range of issues like economy, gun control, immigration, environment or any other matter where he is perceived to be advocating flexibility and liberalism---which they confuse with socialism—they are upholding American values against their President’s dangerous ideas inimical to the country’s democracy and way of life.

But many Republicans have been shaken by Obama’s victory and they certainly would like to moderate their party’s image of negativity. For instance, they seem to be gradually coming around to Obama’s position to let children of illegal Latino immigrants, who have grown up in the US, to qualify for citizenship. Having lost a chunk of the Latino votes to Obama during the recent election, they are inclined to take note of the country’s changing demographics and make necessary adjustments for electoral reasons. Because, the Republican Party’s electoral future will be increasingly dicey as the electoral mathematics of demographic change is likely to turn the whites into a minority by about 2050.

However, the Tea Party constituency---and they are a powerful component---is not keen on it because they believe that the Latino and other non-white immigrants have come into the US not for its electoral politics but for its unique values and the potential of fulfilling the American dream. And if that dream is debunked and values compromised, there is not much left of America’s uniqueness as a blessed country. In other words, the Republicans are divided between pragmatism and a hard line that spurns compromise. And this will dog American politics, with the Republicans seemingly deciding to take a tough line on debt ceiling by keeping the country on financial drip of  quarterly renewal. Which is likely to make the country increasingly ungovernable.

In this game of political chess, the people will suffer the most with the country held to ransom by political extremism.

Contact:  sushilpseth@yahoo.com.au

Will Japan revive under the LDP government?

S P SETH

The return to power of Japan’s long reigning Liberal Democratic Party (LDP), after a brief hiatus of three years, is unlikely to charter the country into calmer waters. After the US restored Japan’s sovereignty in the Fifties, the LDP was the vehicle of its post-war reconstruction, recovery and economic miracle. So much so that, in the eighties, it looked like that Japan might overtake the United States as the world’s leading economy.

There was so much hoopla about Japan as ‘the number one’ that US-Japan relations started to come under serious strain with the US demanding correction of trade imbalances between the two countries. The economic miracle had the Japanese stock market skyrocketing, and the real estate market went berserk. But the bubble burst towards end-1989 and the Japanese economy has never been the same again. Over the last two decades, it has spluttered around recording very little or no growth. This should give us an idea of the vast task that faces the new conservative Prime Minister Shinzo Abe of the LDP.

Abe’s first and foremost task, therefore, would be to resurrect the country’s economy. And he has committed to do this. For this, he is promising economic stimulus, with the help of the country’s central bank, the Bank of Japan. The Bank of Japan has already been doing its best by keeping interest rate at zero to facilitate borrowings and by injecting more liquidity into the system. Which is another way of saying that the country’s central bank has been printing more money. So far, it hasn’t been working.

Abe is going to push the central bank into doing more of this. It has reportedly already announced an expanded program of buying more assets to a total of over $1trillion. And still more might come with pressure from the new government. Among other things, an expanded program of quantitative easing (more money floating in the system) is designed to make yen cheaper against the US dollar, and make Japanese exports competitive. Hopefully, an export-driven economic recovery will pull Japan out of its economic morass to start its economic recovery.

Will it work? It hasn’t so far. Japan has the biggest debt of any advanced country in the world at over 200 per cent of its GDP and rising. It hasn’t so far got into real trouble, like the indebted European countries, because much of this debt is domestically raised. But with Abe’s promise to stimulate the economy with more debt, it might at some point come under the gaze of credit rating companies with further pressure on its economy. Therefore, if the new Abe government is not able to kick-start the economy, Japan’s increased debt might prove counter-productive sinking is economy further, and with it the fortunes of the LDP government. Looking at the story of the past few decades, Japan’s economic recovery doesn’t seem promising, even more so because of the extreme fragility of its relations with China.

China-Japan relationship has been rocked by their competing claims to sovereignty over Senkaku/Diaoyu islands in the East China Sea, with near misses in military clashes. Both sides are adamant on their respective ownership, with neither showing any sign of compromise. The islands are in Japan’s control and China keeps testing its resolve. Japan’s new conservative government is even more determined to safeguard its maritime boundaries, and favors revising the country’s US-imposed pacifist constitution to build up its armed forces against the backdrop of the perceived China threat.

Indeed, while China’s national mood is quite confident to assert its control over large swathes of the waters in the South China Sea and over the disputed islands in the East China Sea, Japan is keen to revive its national spirit, having lost its number two global economic spot to China and now having to ward off its push into the East China Sea. The sovereignty issue between the two countries is also strongly motivated by the prospect of oil and gas riches and the harvesting of fish stocks in the waters around the disputed islands.

It would appear, though, that while there is some brinkmanship involved in China-Japan relations, both sides are keen to avoid military conflict. In the case of Japan, the territorial issue also has a great bearing on its economy because not only is China Japan’s biggest trading partner, it also has considerable investments in China. And Beijing is likely to push the economic button of punishing Japan by cutting on Japanese exports to China as well as adversely affecting the investment climate.

Indeed, during the recent public demonstrations in China against Japan over the islands’ issue, Japanese businesses were targeted, and trade measures were initiated to highlight the seriousness of the Chinese position. China is not happy about the political turn around in the Japanese politics to LDP with a strongly nationalist Prime Minister in Shinzo Abe. But considering the high stakes involved, Abe is likely to tread cautiously and pragmatically in Japan’s relationship with China. Having said that, the scope for maneuver in China-Japan relations is rather limited.

Prime Minister Abe will also have the unenviable task of dealing with the aftermath of the Fukushima nuclear power disaster in 2011, with thousands of people swept away by the tsunami and vast areas of the land made uninhabitable. The then ruling Democratic Party of Japan didn’t acquit itself well during the crisis that contributed to its massive defeat. The effect on Japan’s nuclear industry and its energy sector has been devastating, with most of the nuclear power plants shut down.

Japan is dependent on nuclear power for about 30 per cent of its electricity. With the national opinion set against revival of nuclear power--though the initial anger seems to have subsided--the Abe government, believed to be keen on re-setting the nuclear power button, will need to tackle this issue with great sensitivity. While the tsunami and its Fukushima aftermath have been terrible humanitarian and economic disasters, the expected economic reconstruction has failed to rehabilitate the region. In other words, this has been a drag on Japan’s already sclerotic economy.

With so many problems and so much wrong with Japan’s once stellar economy, the country’s political paralysis has only compounded the situation. Japan has seen a number of prime ministers come and go in the last few years. The landslide victory of the LDP under Shinzo Abe’s leadership does give it an impressive mandate to overhaul the country’s affairs and institutions. But the LDP has been there before for five decades and during the last couple of decades, it simply presided over the country’s decline. Will it acquit any better under Prime Minister Abe? We will wait and see.

Note: Contact me at: sushilpseth@yahoo.com.au

North Korea and the nuclear question

S P SETH

North Korea always makes a good copy for the media, whether it is about hunger in that country and/or dynastic leadership succession. Better still when it rattles (tests) a nuclear bomb or two and, recently, by putting a satellite into orbit, raising alarm bells in Japan and South Korea, with the US rallying the world against this new danger from long range missiles. There are all sorts of horror stories that this mad regime in Pyongyang might one of these days rain bombs on Japan and South Korea and even threaten the US’ west coast by mounting a nuclear warhead on its long-range missiles.

Of course, some other countries have nuclear bombs and missiles too, and many more of them, but they supposedly handle their nuclear arsenals responsibly. But you can’t trust countries like North Korea (and Iran) to exercise responsibility. They might, in a moment of pique or religious zealotry or, who knows what, blow up the world. North Korea is a rogue country anyway and part of the former President Bush’s axis of evil. And this is notwithstanding the fact that the nuclear proliferation treaty is discriminatory in favor of the nuclear haves of the pre-treaty (in the seventies) period.

It sought to divide the world into legitimate (pre-treaty) nuclear powers and illegitimate (post-treaty) nuclear countries and those seeking to break into this exclusive club. The latter, particularly those seeking to break into the nuclear club, are subject to international sanctions like North Korea and Iran. It is not clear how such sanctions work to dissuade or pressure these countries from abjuring nuclear weapons. For instance, India and Pakistan were subjected to severe sanctions but they still managed to acquire nuclear weapons.

North Korea, with all its isolation and international sanctions, has twice tested an atomic device and has now put a satellite into orbit, which makes it into a nuclear capable country. In this big power play of punishing the so-called rogue regimes (Iran is another one), it is the people of North Korea (and Iran) who are paying a heavy price. What is the point of punishing North Korea with isolation and sanctions, when its already impoverished people are in a state of despair?

The question to examine here is: What makes the quest for nuclear weapons so attractive even at the cost of inviting some heavy punishment by the club of the nuclear haves? An important reason is that it invests a nuclear country with a certain status, suggesting that it might not be trifled with. Whether it actually translates into power or not is debatable. It creates a deterrence of sorts that comes from having the ultimate weapon that can destroy the enemy. But it is largely illusory because nuclear weapons, due to their massive destructive power, cannot easily be translated into actual use. The nuclear power that might be tempted to use them against an enemy has to contend with the fear of retaliation leading to a nuclear Armageddon.

It is true that the United States used two atomic bombs on Japan to force it to surrender during WW11. But at that time it alone had the bomb and its lethality, though massive even then in destroying Hiroshima and Nagasaki, was still limited. Since then there are other countries with nuclear weapons of mass destruction like hydrogen bombs and the likes. Therefore, risks of translating nuclear power into military use are massive. And one would hope that there are multiple layers of control in every nuclear country to prevent a deliberate or accidental explosion.

Still, the danger is there requiring concerted international action to deal with nuclear proliferation. But this will not work as long as the world is divided into nuclear haves and have-nots. Therefore for any process of non-proliferation it has to start with the permanent members of the club, like the United States, Russia, China and so on.

When the US emerged out of WW11 with atomic bomb and its manifest success (destruction) against Japan, the Soviet Union suddenly felt vulnerable. And it immediately started working on having one to redress the balance. Indeed, the race for nuclear weapons between the US and the Soviet Union was an important, if not a determining, factor in the Cold War that ensued between the two camps led by the United States and the Soviet Union. The Soviet Union became a nuclear power in 1949 and after that there was no stopping it from catching up with the United States. At times, it looked like outstripping the US. Other countries joined the club like Britain and France and China too became a member. With the nuclear members being also the permanent members of the UN Security Council, they sought to keep the club exclusive.

And when their privileged position and power was breached by other countries or threatened with  breach they sought to use their collective power to keep everyone else out. Which brought about the nuclear non-proliferation treaty in 1970. Other countries were enjoined to sign the treaty to forgo any nuclear ambition or face the consequences if they decided to go nuclear. A regime of sanctions followed when some countries refused to follow this self-serving international order, with North Korea being disciplined now for that.

North Korea is, however, protected in some ways because of China. Not that China is supportive of North Korea’s nuclear ambitions but because of its strategic connection with it going back to the days of the Korean War (1950-53) when it intervened effectively to stop the US advance towards Yalu river marking the border between the two countries. With South Korea a US ally, China is not keen on upsetting the strategic balance in the Korean peninsula by becoming part of the stringent US-led sanctions regime against North Korea. Pyongyang is heavily dependent on Beijing for aid, trade and political support and any withdrawal of such Chinese support could bring down the regime in North Korea creating a flood of refugees heading China’s way.

China has been helpful in providing the venue and support for periodic six-power talks (South Korea, North Korea, China, United States, Russia and Japan) to peacefully resolve the issue of nuclear proliferation in North Korea, but there hasn’t been much progress towards any meaningful advance. For North Korea, its nuclear and missile program is a bargaining counter for international recognition (principally from the United States) of its regime and the system, energy security, aid and trade. In return, it will phase out its nuclear program depending on the progress made in aid, trade and a replacement program of new nuclear plants (built by the US, Japan and South Korea), designed for peaceful generation of energy for North Korea.

An agreement broadly on these lines, particularly to build up two proliferation resistant nuclear reactors, was signed under President Clinton’s administration in 1994. But under his successor, President George Bush, North Korea was declared part of the axis of evil and things have since gone from bad to worse. It is probably time to revisit that agreement and to rework a new framework for a peaceful resolution of the intractable North Korean nuclear issue.

Note: e-mail contact; sushilpseth@aol.com