Obama and an Unmistakable Absence

The global financial crisis was discussed at the World Economic Forum in Switzerland without the participation of a crucial player, the President of the United States. Important questions remain to be answered concerning international commerce, one of the main catalysts of growth, in addition to the coordination of an anti-recession policy.

Government heads of big countries, like Gordon Brown of the U.K., Vladimir Putin of Russia, Wen Jiabao of China, Angela Merkel of Germany and Taro Aso of Japan, tackled the issue in Davos in the company of important representatives and high-ranking international officials: the President of the Central European Bank, Jean-Claude Trichet; the Director-General of the World Trade Organization (WTO), Pascal Lamy; and the Secretary-General of the United Nations, Ban Ki-moon. The advisor and assistant to the President for intergovernmental affairs and public liaison, Valerie Jarrett, an old friend of Barack and Michelle Obama, was the only one to appear from the American government.

Two decades ago, Ms. Jarrett worked for the mayor of Chicago. It was then that she met Michelle Robinson and her boyfriend, Barack. They were passionate and wanted to change the world, according to a long speech given by the special envoy from the White House. The rest of her statement was a repetition of the opinions and promises from her boss and friend, with references to his very special commitment to working for environmental conservation and peace in the Middle East. Not a single concrete word was spoken about international economic action and much less about trade and the Doha Round.

Hours before the speech, the Director-General of the WTO had reported in a meeting with journalists that he had not had any contact with Obama’s administration. Diplomatically, he tried to soften the information: after all, he pondered, the government is new and the nominee for U.S. trade representative still has not been approved by Congress. However, the man nominated, Ron Kirk, ex-mayor of Dallas, does not have experience in the sector and is vaguely described as favoring free trade.

From Washington, the only concrete news concerning trade policy to come out this week was negative. The $819 billion fiscal stimulus package approved by the House has a restrictive clause: those who realize infrastructure works with imported iron or steel will not have access to the funds. The world will have to stomach this decision “at least temporarily”, remarked senator Brian Baird, a member of Obama’s party, in Davos.

Perhaps based on these facts one cannot draw clear conclusions about how the economic diplomacy of the new American government will be. With the country hindered by the recession and the financial system still not showing the extent of its plummet, it is understandable that a domestic agenda would be of priority for the President. Nonetheless, that agenda does not involve the entire government and, furthermore, he has had a sufficient amount of time since campaigning to define an international economic policy. One could not expect less from an aspiring candidate to the government of the most important economy in the world.

Anyhow, with or without the participation of a top-ranking representative from the American government, it would be difficult to propose solutions for the global crisis days away from the Davos summit. Nevertheless, American involvement would be useful for outlining possible coordinated measures. Ever since the crisis worsened in September of last year, the governments of the major world powers decided on more or less coordinated action, like the capitalization of banks. It did not help to avoid the recession, but it did soften the immediate impact of the financial problems.

Coordinated action continues to be fundamental. One of the most urgent challenges is the reestablishment of credit. After the sub-prime mortgage spree and the large amount of financing granted without criteria, banks were closed in an apparent effort to instantly go from immoderation to extreme prudence. This superfluous change only contributed in intensifying the recession, warned the president of the Central European Bank, Jean-Claude Trichet, in Davos. This is one of the various urgent themes on the cooperative agenda between authorities. On this issue, as well as that of commerce, the American government’s position is essential.