America's dangerous debt dance

By threatening debt default and government shutdown, Congressional Republicans are risking disaster.

The world turns, seasons come and go, the sun rises and falls, and the American government collapses into chaos at the mere mention of the possibility of passing a budget. Such is the way of things; and this week's crisis has given us just more of the dreary same, except that every time the cycle comes around again, the apocalyptic language gets dialled up a notch. Every time the band strikes up for the annual dance of President and Congress with shut-down and debt default, the music is that little bit louder, the tempo that little bit faster.

The Republican leadership in Congress - who already have a reputation for stubbornness that would make a mule blush and who sometimes act as if they really think this is all just a political dance, and not the actions of a government whose decisions affect people - truly rose to the occasion this time. They rolled out a preposterous set of demands from a long-list of Fox News talking points, including defunding Obamacare; dropping greenhouse gas and oil drilling restrictions, and the building of an expensive and controversial new oil pipeline, among others.

In the Senate, there were some fireworks: first-term Texas Republican Senator Ted Cruz tried to capture the drama of a filibuster in a silly but entertaining 21-hour speaking session which saw him, among other things,
reading Green Eggs and Ham to the Senate chamber.

Majority Leader Harry Reid ended the shenanigans by calling a vote in which the Senate overwhelmingly chose (79-19 - a super-majority, above the point at which hard-line Republicans like Cruz could filibuster) to cut off debate on the legislation. Then, the Senate voted along party lines to strip Republican policy demands from the bill, and passed what amounted to a stopgap that would fund the government until the middle of November. This has now been batted back to the House of Representatives, with Reid making it clear his Senate would not vote on any budget bill with Republican demands bolted on again.

Meanwhile on Wednesday, US Treasury Secretary Jack Lew sent a warning to the House of Representatives that the point at which the United States would be unable to pay its obligations - meaning a potentially catastrophic US default on debt - would be reached on October 17 if the debt ceiling, the self-imposed limit on US government borrowing, isn't raised. (The borrowing limit was actually reached in May, but the problem was put off by the imposition of the package of emergency measures known as the Sequester.)

The row over a bill to raise the debt ceiling has mirrored the row over the budget, with Republicans again demanding ideological bolt-ons; but the debt ceiling issue is the more important of the two: a government shutdown would be embarrassing and inconvenient, and might have economic implications if it went on for a while; but a US default on debt could potentially be an international financial disaster.

Why do we keep coming back here time after time? Congress have set ceiling limits to America's national debt since 1917, and have raised it without issue seventy-nine times since 1940, according to CNN's money blog. But now, partly due to a tribalisation of American politics in which the hard-line Republicans have to win points against the Democrats no matter what, and with an obstructionist Republican party in charge of the House, the debt ceiling has become a hostage with which to endlessly extract demands. Republicans counter with the argument that US debt is dangerously high. As of yesterday it stands at $16,738,443,175,473 and 97 cents, which is an impressive figure, though as a proportion of GDP it is by no means the highest among developed economies; many countries, including the UK, are higher, and Japan's is more than double that of the US.

But the Republican party is in a state of internal warfare. One one side are the moderates, who would like a conservative budget but are willing to work with Democrats on a compromise; and on the other are extremists whose loathing for the Obama administration is so great that they would risk a complete government shut-down and a US debt default to score points.

President Obama, for whom this is the fourth year that congressional Republicans have nearly forced the government into crisis, has clearly had enough. He giving a blistering speech in Washington yesterday:
 
“No Congress before this one has ever, ever, in history been irresponsible enough to threaten default, to threaten an economic shut-down, to suggest America not pay its bills, just to try to blackmail a President into giving them some concessions on issues that have nothing to do with a budget.”
 
Boehner, who is in thrall to his caucus, now has to choose between bringing the temporary measure passed by the Senate to a vote in the House, where it would probably pass with a combination of moderate Republican and Democrat votes but which would seriously undermine his position as speaker, or return Republican demands to the bill, which means continuing to face down the possibility of shutting off funding for the government, as well as ignoring the dangerous debt ceiling problem.
 
One ray of hope is that it is starting to look like Republican resolve is fading. “I don't want to be undercutting Boehner, but put it this way: I will not let the government shut down,” one Republican congressman, Peter King, told the New York Times. One possible alternative outcome is an even shorter-term solution than the Senate bill, one that would keep the government open just until the end of the week; keeping the music playing for just that little bit longer.
 
In the end, it seems that the price you pay for a governmental system composed of checks and balances is the risk of total gridlock. What America really needs is a reform of how this entire process occurs, but this is an impossible pipedream.
 
In the meantime, the world just has to hope that Congress can get this dance done and dusted and find a workable solution. Because at some point, the music is going to stop. And the silence will be deafening.
Senator Ted Cruz speaks to reporters after he spoke on the Senate floor for more than 21 hours. Photo:Getty.

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.

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Qatar is determined to stand up to its Gulf neighbours – but at what price?

The tensions date back to the maverick rule of Hamad bin Khalifa al-Thani.

For much of the two decades plus since Hamad bin Khalifa al-Thani deposed his father to become emir of Qatar, the tiny gas-rich emirate’s foreign policy has been built around two guiding principles: differentiating itself from its Gulf neighbours, particularly the regional Arab hegemon Saudi Arabia, and insulating itself from Saudi influence. Over the past two months, Hamad’s strategy has been put to the test. From a Qatari perspective it has paid off. But at what cost?

When Hamad became emir in 1995, he instantly ruffled feathers. He walked out of a meeting of the Gulf Cooperation Council (GCC) because, he believed, Saudi Arabia had jumped the queue to take on the council’s rotating presidency. Hamad also spurned the offer of mediation from the then-President of the United Arab Emirates (UAE) Sheikh Zayed bin Sultan al-Nahyan. This further angered his neighbours, who began making public overtures towards Khalifa, the deposed emir, who was soon in Abu Dhabi and promising a swift return to power in Doha. In 1996, Hamad accused Saudi Arabia, Bahrain and the UAE of sponsoring a coup attempt against Hamad, bringing GCC relations to a then-all-time low.

Read more: How to end the stand off in the Gulf

The spat was ultimately resolved, as were a series of border and territory disputes between Qatar, Bahrain and Saudi Arabia, but mistrust of Hamad - and vice versa - has lingered ever since. As crown prince, Hamad and his key ally Hamad bin Jassim al-Thani had pushed for Qatar to throw off what they saw as the yoke of Saudi dominance in the Gulf, in part by developing the country’s huge gas reserves and exporting liquefied gas on ships, rather than through pipelines that ran through neighbouring states. Doing so freed Qatar from the influence of the Organisation of Petroleum Exporting Countries, the Saudi-dominated oil cartel which sets oil output levels and tries to set oil market prices, but does not have a say on gas production. It also helped the country avoid entering into a mooted GCC-wide gas network that would have seen its neighbours control transport links or dictate the – likely low - price for its main natural resource.

Qatar has since become the richest per-capita country in the world. Hamad invested the windfall in soft power, building the Al Jazeera media network and spending freely in developing and conflict-afflicted countries. By developing its gas resources in joint venture with Western firms including the US’s Exxon Mobil and France’s Total, it has created important relationships with senior officials in those countries. Its decision to house a major US military base – the Al Udeid facility is the largest American base in the Middle East, and is crucial to US military efforts in Iraq, Syria and Afghanistan – Qatar has made itself an important partner to a major Western power. Turkey, a regional ally, has also built a military base in Qatar.

Hamad and Hamad bin Jassem also worked to place themselves as mediators in a range of conflicts in Sudan, Somalia and Yemen and beyond, and as a base for exiled dissidents. They sold Qatar as a promoter of dialogue and tolerance, although there is an open question as to whether this attitude extends to Qatar itself. The country, much like its neighbours, is still an absolute monarchy in which there is little in the way of real free speech or space for dissent. Qatar’s critics, meanwhile, argue that its claims to promote human rights and free speech really boil down to an attempt to empower the Muslim Brotherhood. Doha funded Muslim Brotherhood-linked groups during and after the Arab Spring uprisings of 2011, while Al Jazeera cheerleaded protest movements, much to the chagrin of Qatar's neighbours. They see the group as a powerful threat to their dynastic rule and argue that the Brotherhood is a “gateway drug” to jihadism. In 2013,  after Western allies became concerned that Qatar had inadvertently funded jihadist groups in Libya and Syria, Hamad was forced to step down in favour of his son Tamim. Soon, Tamim came under pressure from Qatar’s neighbours to rein in his father’s maverick policies.

Today, Qatar has a high degree of economic independence from its neighbours and powerful friends abroad. Officials in Doha reckon that this should be enough to stave off the advances of the “Quad” of countries – Bahrain, Egypt, Saudi Arabia and the UAE - that have been trying to isolate the emirate since June. They have been doing this by cutting off diplomatic and trade ties, and labelling Qatar a state sponsor of terror groups. For the Quad, the aim is to end what it sees as Qatar’s disruptive presence in the region. For officials in Doha, it is an attempt to impinge on the country’s sovereignty and turn Qatar into a vassal state. So far, the strategies put in place by Hamad to insure Qatar from regional pressure have paid off. But how long can this last?

Qatar’s Western allies are also Saudi Arabia and the UAE’s. Thus far, they have been paralysed by indecision over the standoff, and after failed mediation attempts have decided to leave the task of resolving what they see as a “family affair” to the Emir of Kuwait, Sabah al-Sabah. As long as the Quad limits itself to economic and diplomatic attacks, they are unlikely to pick a side. It is by no means clear they would side with Doha in a pinch (President Trump, in defiance of the US foreign policy establishment, has made his feelings clear on the issue). Although accusations that Qatar sponsors extremists are no more true than similar charges made against Saudi Arabia or Kuwait – sympathetic local populations and lax banking regulations tend to be the major issue – few Western politicians want to be seen backing an ally, that in turn many diplomats see as backing multiple horses.

Meanwhile, although Qatar is a rich country, the standoff is hurting its economy. Reuters reports that there are concerns that the country’s massive $300bn in foreign assets might not be as liquid as many assume. This means that although it has plenty of money abroad, it could face a cash crunch if the crisis rolls on.

Qatar might not like its neighbours, but it can’t simply cut itself off from the Gulf and float on to a new location. At some point, there will need to be a resolution. But with the Quad seemingly happy with the current status quo, and Hamad’s insurance policies paying off, a solution looks some way off.