Great Expectations and Business as Usual

Senator Barack Obama’s decisive victory will forever stand witness to America’s founding principles of opportunity for all, and will symbolize the achievement of Martin Luther King’s dream.

Americans clearly decided to take a gamble on Obama’s youth, sense of purpose and his extremely effective description of a future that continues to fulfill the American Dream.

The election seems to justify American University professor Gary Weaver’s assertion in his recent book (America’s Mid-Life Crisis) that “Ironically … the American people may be more sophisticated, mature and progressive than many of their political leaders.”

There are great expectations surrounding an Obama presidency. But the challenges are immense.

For the first time in decades, the US is faced with extraordinary internal as well as external challenges. The collapse of the credit and financial markets undermines the developed countries and poses grave danger of privation in much of the developing world. The continued threats of international terrorism and of instability in the Middle East are ever-present.

Newly elected presidents always have to abandon some of their pre-election promises and move the policy pendulum closer to the center.

Domestically, meeting the credit crunch and addressing the financial crisis will test the new president even before the inauguration. His choice for Treasury Secretary will be under a microscope, yet Secretary Paulson will be in control for another 75 days, and the Democratic Congress will want immediate stimulus to offset recession. Working to reestablish confidence will continue to be top priority.

Given the interventionist measures being taken across the globe to stabilize the financial system and stem recession, a return to neo-Keynesian principles -- public works spending, stronger financial regulation, careful oversight and strict accountability – is inevitable.

Obama will likely tax more progressively the top 5% of the wealthy segment of America. But far from being a socialist, he will most probably adopt more centrist, Bill Clinton-style approaches to reenergize the housing market and the sluggish economy with infrastructure spending and, at long last, major investments in alternative energy to reduce the billions currently spent on foreign oil. Over-all, his health care proposals and other initiatives will bring America closer to Western European social policies.

With comfortable Democratic majorities in Congress there are clear dangers of single-party domination of the political process. There was much wisdom on the part of America’s founders when they invented the system of checks and balances.

The Democratic Congress will neither check nor balance Obama – indeed it will try to push him to the Left. Obama’s biggest domestic challenge may be to moderate his Congressional colleagues and, as all presidents find they must do, govern from the center.

In foreign and security policy, the new Obama administration will certainly abandon the Bush policies of unilateralism and preemptive war to effect regime change. Considering his popularity in most parts of the world, he will be quite successful initially in restoring America’s tainted international image.

In time, however, given the imperatives of great power behavior and the necessity of maintaining America’s global reach, some of the overseas expectations will gradually turn to disappointment or even frustration. But the United States will surely regain much greater legitimacy abroad in the foreseeable future.

The threat of international terrorism will remain at the very top of the new administration’s foreign policy priorities, with focus on Osama bin Laden’s al Qaeda networks, but also a resurgent Taliban. Combating terrorism effectively means expanding human intelligence collection, special operations and various forms of unorthodox warfare, as well as measures to prevent Pakistan from collapsing and becoming even more fertile territory for extremist causes. At the same time, troop reductions and orderly disengagement from Iraq, as well as more active NATO collaboration, could permit the troop increases called for in the worsening conflict in Afghanistan.

On the eve of the election, many European leaders were welcoming in advance the prospect of much closer trans-Atlantic relations, regardless of who won. They included issues such global warming, but also thornier problems of trade, finance, and the roles of Russia and China. The potential for a pricklier relationship with China is real if Obama stands by his positions on trade, Chinese currency valuation, and Chinese support for the Sudanese and Burmese regimes.

While it is clear that an Obama foreign policy will embrace broader multilateralism and “smart power” to work with Europe and other major countries along the lines of a more traditional global concert of powers, it is also clear that there is one area of the world where multilateralism will not be allowed to delay or obstruct resolute American action: the Middle East.

Given America’s long standing commitment to the survival and territorial integrity of Israel and the continued importance of Middle Eastern oil to the world’s economies, we should expect renewed American leadership of reinvigorated multilateral initiatives to resolve the Israeli-Palestinian conflict.

Both Iran and Russia remain wild cards. But both are suffering from the collapse in world oil prices, which may reduce their short-term adventurism.

Longer term, Russia must be reengaged by both the EU and the US as a partner whose interests parallel those of the other powers: maintaining global political and economic stability and development.