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Australia and Obama’s return

Now that Barack Obama has been re-elected for a second term, what are the implications for Australia? EPA/Shawn Thew

All the world has a stake America’s presidential election. Barack Obama has seen off a surprisingly strong showing from Republican candidate Mitt Romney and now has four final years in the executive office.

The most immediate consequence of this for Australia is that it can enjoy the benefits of continuity. Significant amounts of time are lost as an outgoing president enters a “lame duck” phase and the new administration begins a steep learning curve. This has been avoided. PM Julia Gillard has an excellent relationship with President Obama, and she does not have to spend time waiting for and then developing a relationship with a new president.

Obama does not intend to make any drastic changes to his policy settings. The high value placed on the alliance with Australia will continue. The advantages – of support, intelligence and equipment as well as political access – will persist, but so will the downsides. Australia will continue to have to manage the knock-on effects of being so closely linked to the US. This includes the risk of being drawn into conflicts that could otherwise have been avoided, or fuelling the lingering perception that Australia is a reluctant Asian power.

American foreign policy will continue to be shaped by fiscal austerity. The alliance has been an astonishingly good deal for Australia for a very long time and it should come as no surprise that, when faced with grim economic times at home, the US asks its allies to carry a greater burden. Given how well Australia has fared in recent years, and how loudly the government has crowed about it, Australia must expect that Washington will seek a greater contribution to the alliance in coming years.

The main foreign policy focus of the first Obama administration has been the “rebalancing” of its global efforts away from the conflicts in Iraq and Afghanistan and toward Asia. The Asian focus has three priorities: that China’s rise aligns with America’s interests; that the US remains the region’s pre-eminent power; and that the existing foundations of the region’s order remain in place. Australia is tied to America’s vision of Asia and it should be grateful that Romney was not elected as he promised to challenge China much more explicitly.

Yet even with Obama’s more measured diplomacy, it seems increasingly unlikely that China’s and America’s approach to Asia are compatible. The next four years will see more friction among Asia’s major powers than in the past. This friction will result from both minor disputes as well as the bigger contest about how the region’s international relations should be arranged. Australia is tied to the US in this bigger contest and managing the consequences of this will be a pre-eminent challenge for Australian diplomacy.

As both Romney and Obama emphasised in the campaign, America’s foreign policy will be fundamentally shaped by the state of the American economy. In particular the most important item in Obama’s in-tray will be striking a budget deal with Congress that prevents the automatic cuts to spending and taxation that will throw the US back into recession. If he fails then the implications for Australia and the world will be immense.

Most obviously it would tip the world economy into a “triple dip” recession with flow on consequences for Australia’s economy. The huge cuts in defence spending would also significantly influence America’s military capacity in Asia. This would destabilise the region and put even greater pressure on Australia to increase its defence spending.

PM Julia Gillard calls President Obama to congratulate him on his re-election. AAP/Auspic

The problem is that the campaign further revealed the huge divisions within the US that created the political gridlock behind the budget problems. Obama’s victory in both the Electoral College and popular vote should help but given that he now has a reduced share of the popular vote he does not have much leverage to force a reluctant Congress to compromise. Indeed, Romney may have been better placed to deal with the Republican-dominated House. The cliff remains are very real prospect.

America has retained the services of President Obama. For Australia, there are distinct advantages in this choice: continuing good relations, excellent access in Washington, a more predictable regional policy and no time lost in administration transition. However, just because the alliance with the US is strong and Canberra’s standing in the US is high, it does not follow that this is an unmitigated good for Australia. The nature of our relationship with the US brings risks – risks that so far we have been able to manage – but which we tend to pretend do not exist.

Along with welcoming a second Obama administration, Australians would do well to begin to think much more carefully about the challenges that our close relationship with America will bring in the coming four years.

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