Insights and Analysis

Will the Debt-Ceiling Logjam Undermine U.S. Influence?

July 27, 2011

By Nilan Fernando

In Hong Kong on Monday, Secretary of State Hillary Clinton urged Asian business leaders to stay calm and not “overreact” to the U.S. debt-ceiling crisis. Despite such a call for calm, some say the saga is swiftly eroding American moral standing in Asia and throughout the world in the areas of governance and democracy.

The admiration that the world has had for the U.S. system of government rests not only on its elegant Jeffersonian principles, but its capacity to deliver economic prosperity and a better standard of living, or the “American dream” for each successive generation. In past political battles, deeply held ideological differences and the quest for power that drives politics in any country eventually gave way in Washington to compromise and progress for everyone’s good; the country moved forward and faith in the system was eventually restored. This time might be different. Even if a last-minute deal can be reached between Democrats and Republicans, and the White House and Congress that averts default on the United States’ $14.3 trillion debt, the spectacle of America’s leaders playing chicken on an issue of such enormous consequence for its citizens and the rest of the world – a spectacle transmitted to every corner by global media – suggests that something is broken, perhaps irrevocably. For me, this political deadlock has further sharpened what I see as inconsistencies between America’s words and deeds about “good governance.” As the United States continues to call on other countries to make difficult political choices in order to secure their economic future – a staple of U.S. policy dialogue with developing countries for years – these same leaders are not surprisingly raising questions about the United States’ ability to govern its own affairs effectively.

In the case of Sri Lanka, the United States has long argued that the key to a permanent political solution to the ethnic conflict should be based on, if not federalism, devolution to provincial governments, particularly in Tamil-majority areas. If the United States’ “national question” revolves around the trade-offs required to grow the economy, pay for social entitlement programs, while containing the budget deficit, the question of how much power the central government should cede to provinces is Sri Lanka’s. The U.S. government knows there is little political support among Sri Lanka’s national parties and the Sinhalese majority for devolution, especially now that the war with the Tigers has been won. The Tamil community in Sri Lanka is too small and its political parties too weak to exert much pressure on the government to grant these concessions. However, the United States and others argue that to secure Sri Lanka’s long-term stability and security and to prevent Tamil grievances from bubbling over into another armed rebellion, the country’s ruling party should put aside its fears that granting autonomy would lead to a separate state and muster the “political will” to make unpopular choices for the greater good, even if it risks a populist backlash. Sri Lankan politicians are short-term tacticians, goes the narrative, who lack long-term strategy and vision; they are politicians not statesmen, after all. The process of “ethnic outbidding,” in which the two major national parties take turns proposing reforms when in power and obstructing them when in the opposition, should stop.

The purpose of pointing out these contradictions is not to argue that the United States’ current circumstances justify the governance mistakes of other countries. Rather, it is to say that U.S. influence in economically dynamic Asia is built on its image as a country whose political economy works fairly effectively. Whether in countries like Sri Lanka where U.S. strategic interests are minimal, or in countries where it has vital interests, the United States will find it harder to insist on difficult reforms if it can no longer lead by example. And if it can’t lead by example, perhaps it will cede its leadership position to other countries that can.

Nilan Fernando is The Asia Foundation’s country representative in Sri Lanka. He can be reached at [email protected]. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.


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