The Middle East and the Fiscal Cliff

Patricio Navia

Buenos Aires Herald, November 20, 2012


Two weeks after winning re-election, President Obama has several big challenges ahead of him before his first term ends in January. The fiscal cliff threatens with sending the country back into recession. The crisis in the Middle East is heating up and threatens the entire world economy. Fortunately for the President, the crisis in the Middle East offers an invaluable opportunity for Obama to show leadership.  If the president can show leadership and prevent an Israeli invasion of Gaza, his bargaining position in domestic affairs will strengthen.  


The political conditions in Washington are not the most convenient to deal with crises. Congress is entering into its traditional thanksgiving-New Year's recess mood and several key cabinet members are preparing to leave office. As the White House prepares for the second term, the priorities of the administration have not yet been fully defined. Moreover, since the next electoral cycle has already began—with Vice President Joe Biden and Secretary of State Hillary Clinton as the early favorites—Obama will gradually start to lose influence as his allies begin to take sides in what will certainly be a tough battle for the control of the Democratic Party.


Even before the race for the White House was decided, the concern over the fiscal cliff was already looming large over Washington. The automatic revenue increases and draconian spending cuts due to kick on January 1st will send the country back into a recession. Though there is plenty of room to find political compromise, Republicans will need to accept revenue increases—tax increases—and democrats will need to make some tough decisions on spending cuts.  Immediately after he was re-elected, President Obama began negotiations leaders of both parties in the Senate and House of Representatives to agree on a timeframe and an agenda for the fiscal talks.


The worsening of the crisis in the Middle East has captured the attention of Washington politicians. The U.S. is no fiscal position to afford a new war and an escalated conflict involving Israel and its Arab neighbors would have negative worldwide immediate impacts far more damaging than the fiscal cliff—though not finding a solution to the fiscal deficit in the U.S. will have worse long term consequences than any conflict in the Middle East.  President Obama, currently in an overseas trip in South East Asia, has been forced to deal with American allies and foes in trying to prevent an escalation of the conflict. Though the U.S. has the security of Israel as a top priority, Washington wants to prevent unilateral action by Israel against any of its neighboring countries.  An invasion of Gaza by Israel troops would have potentially destabilizing consequences in Syria—a country already in the middle of a civil war—and Iran.


The fact that speculations over Hillary Clinton’s departure from the State Department have rendered her to the position of a lame duck on foreign affairs has made Obama’s challenge even more complicated.  Hillary Clinton will now probably delay her departure—nominating a new Secretary of State and going through the process of Senate confirmation will take weeks—and concentrate exclusively on the Middle East crisis. However, since she has been unable to make significant progress on Israeli-Palestinian talks, it is unlikely that she will achieve notable success just before she leaves office. Appointing a special envoy to the Middle East—the name of former President Bill Clinton—might be an alternative for Obama, at least to prevent an immediate military occupation of Gaza by Israel. A viable long term solution, however, will require the engagement of the new Secretary of State.   Still, if he can maneuver to prevent Israel from invading Gaza and can get the Palestinians and Israelis to go back to the bargaining table, President Obama will come out of this crisis with renewed international reputation as a peacemaker.


Domestically, Obama will have earned the respect of hawks and doves in the foreign affairs community.  Republicans and Democrats who have accused him of being insufficiently engaged on helping solve tensions and bring peace and democracy to the Middle East will have to give him credit.


All crises can be seen as opportunities. President Obama has already signaled that he plans to use the fiscal cliff threat to broker a compromise with Republicans.  With the electorate voting for a divided government—with Republicans holding control of the House of Representatives and Democrats controlling the Senate and the White House—Washington politicians would be ill-advised to adopt intransigent positions in budget talks.  Americans wanted Obama re-elected, but they also want politicians to find compromise and broker a path to a balance budget that includes spending cuts and revenue increases. 


In order to set the stage to make a call for a grand compromise, President Obama needs to speak from above partisan feuds. Preventing a new war in the Middle East will offer an invaluable opportunity to seize the higher moral ground to make a call on Democrats and Republicans to compromise on a path to a balance budget that includes tax increases and spending cuts.