Lloyd's - Presidential ponderings

Elections in the US could have a global impact.

By Roddy Langley

The US is gearing up for a new President, and with Super Tuesday primaries approaching the nation is a step closer to making its final choice of candidate. Across the world, speculation surrounds the shape of a new administration, but what affect will change have on global business? Will it make any difference at all? Could a change of foreign policy have an impact on the global terrorist threat? And how will the US domestic agenda impact global economics?

The controversy over Iraq looks set to continue despite a change in US administration. Maintaining troops in Iraq is becoming increasingly unpopular with the US public, but some believe it will prevent the region from exploding into civil war and also, arguably, limits the activities and growth of Al-Qaeda. Tom Carver, Senior Vice President, Global Services, at risk management consultancy Control Risks, notes that with the exception of John McCain, all the candidates across both parties have indicated some form of reduced presence in Iraq.  “However, whoever is elected will be faced with the same political realities on the ground, namely that Shias and Sunnis are still not functioning as a coherent unity government and that any dramatic pullback risks pitching Iraq into civil war.”

While it naturally depends on who is elected, some experts think that the tone of US foreign policy may also become less strident and more conciliatory under a new administration.  Financial Times White House correspondent Andrew Ward suggests that a Democratic President might be “more diplomatic in terms of their foreign policy and favour re-engaging the global community.”

Others are quick to point out the potential global impact of a change in foreign policy, including Lisa S. Howard, the director of Mid-Atlantic Media Ltd., a London-based communications consultancy: “The global economy is affected by how confident consumers and businesses feel - a determined new US administration could indirectly build that confidence by de-escalating world tensions.”

Although a change in US foreign policy by either party is likely to have a global impact, the extent of this impact on world geopolitics is difficult to predict, and likely to take a period of years rather than months to emerge fully. However as recent events in the financial market prove, the impact of US economic uncertainty can be immediate and often dramatic.  Mark Anderson, Chief Executive Officer of US-based Strategic News Service maintains that “despite the relative decline of the US contribution to the global economy, the selection of the President remains the most important political/economic event in determining global economic health.”

With growing worries about an economic downturn and a recession potentially on the horizon, economic policy is emerging as one of the key campaign platforms of the election, according to Andrew Ward. Increasing concern among the US public is forcing all the Presidential candidates to move further to the left in their economic policies. He argues: “The Democrats are swiftly retreating from bipartisanism and are increasingly sceptical about free trade. The Republicans are broadly pro-free trade, but are increasingly having to respond to public concern over the economy.”

Much will rest on the shoulders of the new President as he or she takes the oath of office on the White House lawn, and global business leaders will be eagerly watching as events unfold. Right now, we can only speculate. The world’s attention right now is on the US global economy, which will undoubtedly be effected by a change of administration. However, the long-term effect of foreign policy must not be underestimated. In terms of the world economy and its stability alike, the US remains a vital world player.