The Fiscal Cliff and US Foreign Policy

Global markets are watching nervously as the US approaches the “fiscal cliff,” knowing that falling over it could well throw America – and the world – back into recession. But foreign ministries around the world should be equally nervous: Unless the US gets its fiscal house in order, it will be forced to abdicate global leadership.

PRINCETON – The world should be worried. The possibility that US President Barack Obama and the Republicans in Congress will fail to reach a compromise before mandatory deep spending cuts and tax increases take effect on January 1 is very real. Global markets are well aware of the danger of the United States falling over the “fiscal cliff,” and are watching nervously. They know that this outcome could well throw the US – and the world – back into recession.

Foreign ministries around the world should be equally nervous. Unless the US can get its fiscal house in order, it will be forced to abdicate leadership on a wide range of critical global issues.

In the short term, Syria and its neighbors are already paying the price of America’s inability to focus on anything other than domestic politics since Obama’s re-election. In my view, the Syrian crisis is at a tipping point: while it is now apparent that the opposition will eventually win and President Bashar al-Assad will fall, the endgame’s duration will be a key element determining who actually comes into power and on what terms.

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