November 6, 2008

“The situation President-elect Barack Obama inherits is the worst in the history of the US: two immensely complex wars (Iraq and Afghanistan), a terribly tarnished image (Guantanamo, Abu Ghraib), a highly charged Middle East, almost certainly a US recession and possibly a global recession and the looming perilous consequences of climate change.”

These are the words of Jean-Pierre Lehmann, Professor of International Political Economy at IMD.

Professor Lehmann, who is also the founder of the Evian Group at IMD, a coalition of top stakeholders committed to a strong multilateral regime and open world economy in our current age of global interdependence, notes that Obama will be torn between the forces of protectionism, which he seemed to support throughout the campaign and which could have a strong voice in a Democratic dominated Congress, and the forces of globalization.

“If the forces of protectionism prevail, the global economic situation could get dramatically worse. As Gordon Brown famously stated, ‘the world is facing global challenges, which require global solutions’. This includes trying to restart the WTO Doha Round talks, as well as other measures of global collaboration in all critical areas, including finance, but not excluding other important economic and environmental agendas. However, assuming global oriented policies may jeopardize Obama's national political position.”

On the campaign trail, Obama has indicated that his first priority is addressing the financial crisis. Professor Lehmann points out that this is a daunting challenge.

“The crisis that has been experienced in recent months is much more than ‘just’ a financial crisis,” he stated. “It is a systemic crisis that reflects the impact of major global economic power shifts, the weakness of global governance, the crisis of confidence in global financial institutions (the WTO, IMF, World Bank) and indeed the crisis of confidence in capitalism. There is a grave risk that the crisis will hit developing economies hard and that among the hundreds of millions who have been lifted out of poverty in the last couple of decades, many may be sinking back into poverty. This is a recipe for what could be very severe outbreaks of social unrest. This is all the more the case as the food crisis is still having its effects felt in the developing world, especially among the rising number of urban poor.”

However, Obama’s message, as well as the power of his image as the first Afro-American President, provides optimism.

“It will be difficult for Barack Obama to fulfill the lofty expectations placed on him,” Professor Lehmann concluded. “However, the immense difficulties the planet is facing notwithstanding, there can be no doubt that his election has kindled in the hearts of many around the world a spring of hope. It remains to be seen what the substance of an Obama presidency will be, but there can be no doubt that the symbolism is extremely powerful and encouraging - indeed, hopeful!”