The 7 countries that are pissed at Obama (economics edition)

By Phil Levy

This week brought some rave reviews for the Obama administration’s foreign policy performance at the six month mark. My colleague Dan Drezner remarked upon a puff piece sympathetic analysis this week in The New Republic that described the White House’s diplomatic maneuvering as a work of genius. The Washington Post opened a lead editorial by stating that "…only one country has worse relations with the United States than it did in January: Israel."

The Post backed up this bold claim with survey data about America’s popularity in nations around the world. The data show that President Obama is distinctly more popular than President Bush. But is this the right measure of the state of bilateral relations?

It’s hardly the only thing one would find in a scenesetter cable on the eve of a high-level visit. Such an analysis would properly include factors like disputes, ongoing or resolved, and the willingness of the other government to cooperate with the United States on issues we deem important.

Public opinion is certainly relevant, but it can be misleading about the state of government relations. For example, a poll of Iranians fielded just before their recent election found a large majority favoring normal ties with the United States. That’s hardly conclusive evidence that all is well between the United States and Iran. Even The New Republic piece acknowledged U.S.-Iranian tensions as the one discomfiting blemish in an otherwise carefree diplomatic landscape.

What if we survey that landscape with a more critical eye and move beyond public goodwill toward our leader? In the interest of stoking some debate, let me offer my list of countries with which relations have deteriorated in the last six months. I’ll pocket the Post‘s Israel point and omit Iran, since relations with them are bad, but not necessarily worse. The list is necessarily subjective, but I’ll give my reasons for each. You can apply your own weights.

1. Canada. Relations were not particularly bad between the Bush and Harper administrations. It’s hard to think of an irritant as significant as the Buy American legislation that Obama signed into law with the stimulus bill. Though Canada was supposed to be exempted from that provision by an amendment recognizing U.S. obligations at the WTO and NAFTA, the Canadians are very upset about the way the measure has been implemented.

2. China. While the major issues between the United States and China are qualitatively unchanged, China is expressing substantially more concern about U.S. economic behavior than they did under the Bush administration. China is worried about the sustainability of U.S. deficit spending and what it will do to their trillions in dollar reserves. Of course, neither Bush nor Obama ever tabled a plan for a balanced budget, but the worst Bush deficit was 3.55 percent of GDP in 2004. According to the CBO, the best Obama-planned deficit in the next ten years will be 3.9 percent of GDP in 2013; the worst will be 13 percent in 2009.

3. Colombia. The Obama administration has done nothing to pass the Colombian Free Trade Agreement (FTA). The Colombians have been very explicit about how important the agreement is to them economically. All explanations for delay are based upon harsh criticism of the Uribe administration’s performance.

4. Honduras. Whatever the merits of the argument over President Zelaya’s ouster, in January we were getting along with them quite nicely.

5. Panama. Not only has the Obama administration teased the Panamanians with intimations of FTA passage that were later retracted, it has annoyed them with a never-ending series of requests to remove obstacles to the already-signed accord.

6. South Korea. While the Obama team has at least hinted that the Panama FTA may be passed soon, there have been no such suggestions about the FTA with Korea. The agreement was wildly controversial in Korea and the government ran serious risks by promoting it. They can hardly appreciate the way it has been placed in purgatory, particularly given the irony of the principal U.S. objection: Korean interference in its auto market. Nor has there been any notable security success with the North to offset the chill in economic relations.

7. The United Kingdom. This is a close call. On the one hand, the two countries have been enthusiastic partners in economic stimulus. On the other, a series of Obama nubs (the Churchill Bust bust, wrong-region DVDs, an iPod for Her Majesty) led some in the British press to ask how special the special relationship still was. The scales tip in favor of inclusion because the British have some of the same trade concerns as the Canadians.

The list clearly reflects my emphasis on the diplomatic importance of international economic relations. But a number of Washington ambassadors and foreign officials seem to share this view. Both at home and abroad, personal admiration for Obama has to be balanced against concerns about what his policies will do the pocketbook.