Wednesday, November 5, 2008

Obama beset by threats

He’s won: now what? New President-elect Barack Obama must now deal with a collapsing economy, the resurgence of Iran as a thorn in the United States’ side, Obama in capitaland a mischievous Russia, which seems intent on restoring ground and prestige lost since the fall of the Soviet Union.

The fact that the economy is in the doldrums may actually provide part of the solution for some of the other challenges Obama will face. For one thing, budgetary restraints made worse by a shrinking tax base may provide incentive and justification for speeding up withdrawal from Iraq. And some of the troops from Iraq can then be transferred to Afghanistan where they are desperately needed.

Consider also that a shrinking world economy will result in lower oil prices and decrease the leverage now exercised by Iran and Russia.

Much of Russia’s recent boisterousness and aggression in Georgia is made possible by the financial independence it enjoys as a result of massive increases in its oil revenues. A rapid decrease in the price of crude oil and Russia becomes much more cooperative.

Obama’s willingness to engage diplomatically suggests he will succeed in building an international alliance that will isolate Iran.

Israel and Syria have apparently been engaged in back-channel talks through Turkey and have all but reached an agreement. Syria is now seen as being close to agreeing to pull itself out of Iran’s orbit and to cut off terrorist groups. The remaining hurdle is satisfying Syria’s desire to get back into the good graces of the United States, something that American Republican hawks have been resisting.

If Obama gives a green light, the deal is done and Iran is further isolated. And, with Iran’s isolation, it is going to be much easier for Obama to sell the international community on sanctions against that country.

Iran could then face a ban on imports of refined fuel. (Iran, despite being a major source of crude oil, actually imports 40 per cent of its refined petroleum.) Such a ban, coupled with the decline in the price of crude, should hit the Iranian economy hard, and there will be a much better chance of getting Iran to stand down from its weapons program.

And, if all this fails, an Obama administration will at least have earned greater credibility if it is forced into using a military option. Moreover, the chances that such military action will be multilateral are greatly increased.

As to the failing economy, I’ll have to leave that to others. One hopes, though, that with the goodwill usually extended to a newly elected president and with the quality of advisors with which Obama seems ready to surround himself, one can be optimistic of a turnaround by next spring or early summer.

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