x Abu Dhabi, UAETuesday 25 July 2017

Uncle Sam hobbles to the G20 summit a diminished man

America's global leadership has shrunk to being the world's most important shoppers, the ones whose purchases keep the economies of other nations spinning.

Barack Obama was quick to admit that returning to Jakarta, his childhood home from 1967 to 1971, was "a little disorienting". He knew the city as a sprawl of single-storey buildings, like an overblown village. It was a magical place for a boy to grow up, he recalls in his memoir, Dreams from my Father, but also "violent, unpredictable and often cruel". One of his school friends told him that his baby brother had just died from "an evil spirit brought in by the wind".
At that time America was the master of what was called the free world, having inherited the mantle of the decayed European empires. Washington intervened with force to support its proxies and undermine its enemies. America ran the global financial system.
It is not just the look of Jakarta that has changed. To a travelling US president, the globe now seems to have tipped on its axis. For young Barrie, as the president-to-be was known, the future was clearly in America; now it seems to belong to the booming economies of India, China and the rest of Asia. The evil spirits which supposedly killed babies in 1960s Indonesia have moved to America, spreading strange beliefs among the people so that 18 per cent of them think Mr Obama is a secret Muslim.
Mr Obama is not visiting China on his 10-day Asian tour, but he will effectively be sparring with Beijing during the two-day summit meeting in Seoul, South Korea, of the Group of 20 nations. The criteria for membership of this financial club are hard to fathom, but the reason for its existence is clear.
For decades, thanks to the mighty dollar, Washington ran the world financial system single-handed. Then the Japanese, the Europeans and the Canadians were allowed to sit at the high table, but it was still Washington that called the shots. That era is over, and power and wealth are spread more evenly around the world, with rising powers such as China, India, Brazil and Indonesia all having a say. The role of top dog is up for grabs.
The weakness of the US president has never been so clear. Israel, perhaps the US's closest ally, thumbed its nose this week at Mr Obama by revealing plans to build more than 1,300 homes of Jewish settlers in East Jerusalem. America's other great ally, Pakistan, has outmanoeuvred Washington for decades in the subtle art of milking US aid funds while pursuing interests contrary to Uncle Sam's. In Afghanistan, President Hamid Karzai keeps himself and his allies in power while the insurgency spreads.
The voice of US presidents used to ring out clear but now Mr Obama's mouth seems zipped. In 2008, Mr Obama declared that healing the festering wound of Kashmir was one of the "critical tasks" of his presidency. By any standard, the level of violence has to be reduced as part of a regional settlement which would permit US troops to leave Afghanistan. Yet when he was in India, he barely dared to mention the K-word, for fear of upsetting his Indian hosts.
It used to be a requirement that visiting western leaders to China would raise the issue of human rights and democracy to their hosts, who would bristle with anger or dismiss these concerns as irrelevant to the Middle Kingdom's march back to greatness. The old game of pulling the dragon's tail is no longer played by petitioners in Beijing. When David Cameron, the British prime minister, visited the Chinese capital this week, he was careful not to lecture, or even to mention the name of the imprisoned Nobel peace prize laureate, Liu Xiaobo. To borrow an old phrase from Indian history, visiting foreign leaders in Beijing now come not as statesmen but as "boxwallahs", the traders who thrived under the British Raj.
In any case, the US experiment in spreading democracy by force has little to show: Iraq languished without a government for eight months, while Afghanistan's latest election is mired in fraud allegations.
The strange truth is that America's role in the global financial system, while still dominant, has dwindled to that of consumer of last resort: the American shopper, thanks to credit provided by China and other supposedly poor nations, has kept global demand buoyant by buying whatever the world has to sell.
This form of global leadership by credit card has had its day. As Mr Obama said on his arrival in Seoul, Asia can no longer rely on the US consumer to keep the world economy spinning. There can be no sustainable recovery, he said, if American households go back to the old ways of debt-fuelled spending.
For the first time, there is an open row between the US and the great exporting nations, China and Germany. Pressed by an angry electorate to create jobs for Americans, Mr Obama wants China to export less and buy more American goods. This requires China to revalue its exchange rate, which the US sees as kept artificially low in order to spur exports and create jobs for Chinese workers.
Meanwhile, the dollar is losing value, prompting howls of anguish from China and other countries, which accuse Washington of manipulating its exchange rate - the same crime that it accuses Beijing of committing.
No great breakthroughs can be expected from this summit. If the world economy was teetering on a cliff's edge, the participants would cling together to save the world. Instead the summiteers are faced with something less threatening: a slowly unfurling disaster.
Right-wing American commentators accuse Mr Obama of having no big idea to encompass the issues which trouble Asia - looming currency wars and fears among the smaller countries of a resurgent China throwing its weight around. But this is not the time for big ideas. They got the previous administration into unwinnable wars and huge debt.
The truth is that there is no magic wand for Mr Obama or any other president to wave. The US is weakened. These are uncertain times, and if this is disorienting, then we have to live with it.
aphilps@thenational.ae