Bloomberg News

Obama’s Soul Mate Down Under May Be Down and Out: William Pesek

September 13, 2011

Sept. 14 (Bloomberg) -- It’s as predictable as political leadership gets: When things go awry at home, escape overseas for a while, grip and grin with a foreign head of state and change the subject.

Barack Obama may have this tried-and-true strategy in mind as he plans to visit Australia, which is about as far as a U.S. president can get from the rancor in Washington. Yet as he meets with Prime Minister Julia Gillard in November, it will be hard not to wonder about the weak leadership imperiling not only their economies, but also the world at large.

The similarities between Gillard and Obama are striking. Both are trailblazers -- Australia’s first female leader, the U.S.’s first black one -- who pledged to change the tone in their capitals. Both are likable politicians who inspire visceral and often inexplicable dislike and face daunting levels of opposition from cynical foes out to derail their every effort. Both confront a news media that has swung from fawning to churlish.

Obama is struggling to get any legislation passed while the economy stalls and U.S. standing wanes. Gillard’s inability to get her policies passed risks squandering a once-in-a-lifetime opportunity to harness the benefits of a mining boom and prepare for when the resources run out.

So maddened are their opponents that they forget what they once stood for. Gillard can’t garner support for a refugee bill that lawmakers probably would have supported before June 2010, when she came to power. Opposition leader Tony Abbott now opposes an emissions-trading system his party championed a few years ago.

Bad Hands

In the U.S., Republicans are down on Obama’s plan to cut payroll taxes, something they would have supported in an instant in the past. In both cases, the opposition would rather hand leaders political defeats than stay true to their own convictions.

What’s more, both Obama and Gillard were, to varying degrees, dealt bad hands of cards.

Australia’s economy steered around the worst of the 2008 financial crisis, its national budget isn’t far from balance and exporters have a reliable customer in China. One might argue that Gillard’s predicament is partly of her own making as an ouster of predecessor Kevin Rudd in a political coup fueled public discontent.

On Autopilot

Yet Gillard inherited a long to-do list because Rudd (2007 to 2010) and John Howard (1996 to 2007) had largely left the economy on autopilot. Most of the heavy lifting was done by past prime ministers like Bob Hawke (1983 to 1991) and Paul Keating (1991 to 1996). Howard and Rudd opted to coast and ride China’s boom. Gillard doesn’t have that luxury as the world economy slides anew.

Obama faces a far more intractable set of obstacles. A variety of crises came to a head as he entered the White House in 2009. Yet Republicans have taken an over-our-dead-body position against Obama’s every effort.

The only answer for Gillard and Obama is to get radical -- be bold, think big and fight for your ideals. Neither leader seems set to do that, or able to sell their messages. Much the same can be said of the rest of the world, not to mention Asia.

Japan’s growing list of premiers since 2000 is a who’s who of weak leaders. From India to Malaysia to South Korea, Asians are struggling amid tepid stewardship. Those with vision and backbone, Susilo Bambang Yudhoyono of Indonesia and Benigno Aquino of the Philippines, are up against institutionalized corruption fighting their every move.

China to Rescue

Europe too is a mess. Germany’s Chancellor Angela Merkel personifies the long list of leaders needing opposition support just to stay in power. As Greece burns and euro-area credit ratings get slashed, leaders are looking to a developing nation for help. Italy is the latest to reach out to China about buying its bonds. Who needs the International Monetary Fund when China is ready to step up with its surplus cash?

And if you think we’re going to get leadership from the Group of 20, you’re dreaming. It’s great that this broader, more representative group replaced the Group of Seven. The time when the G-7 could have its way with markets passed long before Lehman Brothers Holdings Inc. collapsed in 2008.

The trouble is, which G-20 leader is coming to the table with new and innovative ideas? In a more perfect world, Australia would be doing just that. For all its challenges, it boasts the kinds of statistics officials in Brussels, Tokyo and Washington would kill for. While the Federal Reserve and Bank of Japan hold interest rates at zero, Australia’s central bank has set overnight rates at 4.75 percent. That gives it plenty of monetary ammunition should world growth crash.

Front Line

Australia is also on the front lines of globalization’s biggest challenges: the effects of climate change, an aging population, immigration, a widening gap between rich and poor, creaky infrastructure and an education system that needs an overhaul to maintain competitiveness. On these and other issues, ones shared by Obama, Australia’s voice should be sought early and often.

Yes, Gillard and Obama will have much to discuss come November. That is, if she’s even in office. Canberra is abuzz with talk that the Labor Party will soon dump Gillard and go with Rudd once again. Stranger things have happened, as Gillard’s peer in Washington can tell you all about, too.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

--Editors: James Greiff, Stacey Shick

Click on “Send Comment” in the sidebar display to send a letter to the editor.

To contact the writer of this article: William Pesek in Tokyo at wpesek@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.


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