Wednesday, November 7, 2012




To be fair to President Barack Obama, one cannot deny that he inherited a bad economy from his predecessor Mr.George Bush. It became worse partly  due to lack of energetic handling by his economic team  and partly due to the global economic melt-down during his first term.

2. The cumulative effect was a seemingly bad economic record which was sought to be exploited skilfully by his challenger Mr.Mitt Romney. During the first Presidential debate, Mr.Romney managed to keep the spotlight  focussed on Mr.Obama for the declining state of the economy.

3. After the first debate, the economy started showing glacial signs of improvement. The unemployment rate stopped increasing. More jobs were being created. More people started getting jobs. The deficit position remained as bad as ever, but the job market was not as gloomy as it was before the first Presidential debate.

4. Not many analysts noticed these glacial changes for the better in the job market. The BBC’s economic analyst was one of the very few to have done so.

5. When the American voters went to the polls on November 6, they had before their eyes a job market which had stopped deteriorating. Should they give credit for this to Mr.Obama’s economic policies and give time to those policies to reduce the negativity in the economy by giving Mr.Obama a second term, or should they turn to Mr.Romney and his proposed policy package without any guarantee of its success should Mr.Romney become the President? They chose the first option and decided to let Mr.Obama continue for a second term in view of what seemed a turn-around in the job market.

6. That is how I would explain the remarkable success of Mr.Obama despite his lack-lustre handling of the economy during the first term. Other factors contributed to his success too such as his demonstrated leadership in handling the hurricane disaster which stood in sharp contrast to the lack of leadership of Mr.Bush in dealing with natural disasters. But these factors alone would not have led to the  win of Mr.Obama if the clouds of economic gloom had not started showing signs of dissipation in respect of the job market before voting day.

7. Mr.Obama is going to face three major mine-fields during his second term. The first will relate to the economy. Despite incipient signs of an improvement in the job market, an economic upswing is not round the corner. Whether there is an economic upswing would depend on how he and his advisers handle the deficit. Controlling the deficit will take time.

8. During the campaign, Mr.Romney managed to plant in the minds of sections of US voters seeds of suspicion   that China was partly responsible for the USA’s economic woes. He said during the third debate devoted to foreign policy that if he became the President he would declare China a  foreign exchange manipulator.

9.The references to China by both the candidates during the Presidential debates in the context of the economic situation would augment the attention given to China during Mr.Obama’s second term. There will be more attention to China from the point of view of the economy as well as the tensions in the Asia Pacific region.

10. The lack of references to India during the debates showed how inconsequential India is from the point of view of the economy as well as the Asia-Pacific tensions. India would not be a beneficiary of the increased attention to the China-centric concerns during Mr.Obama’s second term. We should not nurse any illusions of a greater importance to India in view of the China factor.

11. The second minefield will be with regard to Afghanistan. Mr.Obama has taken an irreversible decision to thin down the US troop presence in Afghanistan. There is going to be continuing instability in Afghanistan. President Hamid Karzai is going to complete his second term. He will not be eligible for a third term. A new Afghan President will add to ground uncertainties at a time when the US and other NATO troops thin out.

12. Pakistani co-operation for ensuring stability on the ground in Afghanistan during the second term of Mr.Obama will become more important than it was during his first term. He may not be able to adopt the same tough line towards Pakistan as he did during his first term. He may find himself increasingly compelled to pay more attention to Pakistani sensitivities. That would mean less attention to Indian interests. The convergence of Indian and US interests and policies in Afghanistan would not be sharp.

13. The third minefield would be relating to Syria and Iran. Mr.Obama is pledged to bring about a regime change in Syria, if need be, by strengthening the capabilities of the anti-Assad forces in Syria. He is also pledged to increase pressure on Iran on the nuclear issue. The Jewish voters are believed to have largely voted for Mr.Romney due to their belief that he would take a tougher line towards the Assad regime in Syria and Iran than Mr.Obama.

14. Mr.Obama has to placate the Jewish sensitivities. He cannot afford to be indifferent to them. Dealing with Syria will not be as easy as dealing with Libya was because of Iran’s close interests in Syria and the  Lebanese factor. Any fresh instability in the Lebanon as a result of the US policies in Syria will complicate the ground situation increasing the possibility of fresh Israeli intervention in the Lebanon. Dealing with the new complexities in the region without opening a fresh Pandora’s Box is going to be a tricky matter.

15. Mr.Obama’s preoccupation is going to be with these three minefields. The options available for India for further strengthening our strategic partnership with the US will remain limited. We must focus on reviving and strengthening our economy and stabilising and increasing our regional influence without  exaggerated hopes of a surge in our links with the US. ( 8-11-12)

(The  writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai, and Associate of the Chennai Centre For China Studies. E-mail:  Twitter @SORBONNE75)