Created on Thursday, 17 October 2013 Written by GREGORY KATZ, Associated Press
LONDON (AP) — The world's disbelief at the political impasse in the U.S. turned to relief Thursday as the country stepped back from the brink of default. But experts and foreign officials warned that Washington's credibility had been damaged — a point President Barack Obama echoed.
The deal may assure only a few months of financial order, and the prospect of another possible crisis early next year when the agreement lapses leaves many wondering about the stability of U.S. global leadership.
Nicholas Kitchen, a political scientist at the London School of Economics, said the shutdown had tarnished the reputation of the U.S.
"In showing itself to be unable to even run its own affairs competently the U.S. in some sense surrenders claims to global leadership," he said. "It's difficult to tell other people how to run their affairs when you can't keep your own house in order."
He said that when countries look successful, other countries look to follow their lead.
"The U.S. is not doing a very good job at the moment in showing itself to be a model of good governance," he said.
Still, he said the crisis isn't likely to have a long-term impact on U.S. influence, despite the embarrassment of Obama having to cancel a long-planned trip to Asia to deal with the impasse at home.
British Labour Party legislator Ann Clwyd said she and other members of the Foreign Affairs Select Committee were watching closely because of a planned official trip to Washington in two weeks' time — they wouldn't be traveling if the government remained shuttered.
She said her time in the European Parliament, where budget shutdowns have happened more than once, convinced her that a last-minute settlement was likely. But she feared that Obama's health care plan might be gutted as part of a deal with the Republicans.
"The fact that that didn't happen is very positive," she said. "I very much hoped that would survive."
Clwyd said the credibility of the U.S. was only slightly damaged by the prolonged shutdown, since it was resolved in time to avert financial disaster. But she said the U.S. has in recent months been failing to provide leadership on difficult Middle East issues, including Syria and the Arab-Israeli conflict.
There was also relief in Brussels at the heart of the European Union as the U.S. stepped back from the brink.
Simon O'Connor, spokesman for the EU's economic and monetary affairs commissioner Olli Rehn, said a "serious large shadow" that threatened both the global economy and the nascent recovery in Europe has been lifted with the resolution of the debt ceiling crisis.
"That's very good news which we strongly welcome," he said.
Many in Europe enjoyed poking fun at the apparently broken U.S. political system, but the pleasure of laughing at America's troubles seemed to fade as default neared.
The Tea Party movement got short shrift in many quarters, with the Sueddeutsche Zeitung newspaper in Munich, Germany suggesting that Obama was lucky to have such feeble adversaries.
"It is easy to remain the reasonable, serene statesman if you are dealing with concrete-headed , self-righteous nihilists like the Tea Party lawmakers," the influential newspaper said in a commentary. "It is easy to reject all negotiations if the other side acts like a crazy extortionist gang. Obama played the PR -game of guilt and innocence very cleverly. According to the polls, he wins hands down. But that is not the primary task of the president."
The newspaper said Obama had not handled his responsibility as president well despite his apparent victory over the Tea Party.
Xenia Dormandy, director of the Americas program at London's Chatham House, said the U.S. image had suffered a double blow, with both its economic and political credentials called into question
"There is a sense that the U.S. as a reliable ally is not necessarily the case anymore," she said, warning that both American allies and adversaries have reached this conclusion. But she, like others, said the damage is most likely short term.
Politics aside, there were individual signs of relief in many parts of the globe. In the South Korean capital, Seoul, 26-year-old college senior Lee Boo-gun said he thought the U.S. economy had been about to collapse — an event he believed would shortly be felt at his door.
"I thought it would affect Korea's economy," he said. "The U.S. would hit Europe and then it would affect Asia."
He expressed relief that reason had prevailed.
In Israel, a key American ally in the Middle East, commentators said the fight hurt America's overall image even though a deal had been reached before it was too late.
"There is no doubt that damage was done here to the image of American economic stability," Israel's economic envoy to Washington, Eli Groner, told Israel's Army Radio. "It's not good for the financial markets, not in the United States and not around the world."
In Brazil, a large holder of U.S. debt, there was certainly relief, but also concerns that it's just a temporary fix and more turbulence is ahead. Finance Minister Guido Mantega said the U.S. must come to a lasting answer to the "temporary solution" that was found. He added that as long as the threat of another shutdown exists, there will be "a sensation of insecurity, distrust and therefore damage to business in general."
Brazil's biggest newspapers carried headlines like O Globo's "Temporary Relief" and leading economic columnist Miriam Leitao summed up the mood in the daily.
"Nobody won. Everybody lost. The Obama government was held prisoner by blackmail. The Republican party allowed itself to be controlled by a radical minority and no longer represents the average American's way of thinking," Leitao wrote. "The government as a whole lost credibility and today there is more uncertainty surrounding the world economy."
AP Business Writers Joe McDonald in Beijing, Kelvin Chan in Hong Kong, Youkyung Lee in Seoul and Kay Johnson in Mumbai and AP Writers Robert Reid in Berlin, Peter Enav in Taipei, Tim Sullivan in New Delhi, Tia Goldenberg in Jerusalem, Bradley Brooks in Sao Paulo and Cassandra Vinograd and Sylvia Hui in London contributed to this report.