Pity the winner of Tuesday's US elections. When these boys began campaigning, oh about four years ago, it looked like they would be presiding over a nation of possibility. The question for them would be how to take the expanding wealth of the world's most powerful nation and use it to arrest growing inequity, disparities of income and to assure a smooth transition from a world in which America was the world's sole superpower to one in which it could share power with an expanding number of increasingly prosperous nations whose own middle classes were developing their own democratic aspirations. It was a Bennetton vision of the future, one that played to Obama's strengths.
Now the victor faces a much dourer job description: how to protect America from extreme economic hardship and maintain equity and fair play at a time when no one will feel generous. Abroad, they must protect America's interests in an increasingly mercantilist world. Social mobility at home, and the atmosphere of mutually beneficial trade, have been upset by the financial crisis. Here in the Gulf, it does appear that, barring some unseen financial iceberg in our path a la Kuwait's Gulf Bank, we will avoid the worst of the financial crisis. As recent days have shown, increasing transparency only helps to reduce fear and uncertainty. The disclosures that have enabled analysts to take a complete look at the financial seaworthiness of the UAE have resulted in a sober appraisal of the nation's overall health. The diagnosis: invulnerable, no, but healthy and certainly no apparent malignancies of the kind that had begun to prey on investors' minds. Continued and increasing openness and dialogue between the government and its stakeholders can only help avoid future problems and increase confidence going forward.
But the zany days of the boom are behind us (sigh of relief), and the task ahead is to manage the slowdown in a way that stresses continued reform, privatisation of the economy and meaningful skill and job creation. We need to avoid the temptation to roll back the changes that have already come, to play to government's paternalistic impulses and the global mood to increase government's role in the economy, particularly as an employer. The US government will be struggling now with to what extent it needs to take over responsibility for providing jobs and wages. But that should not be the impulse here. Government infrastructure spending will help tide us over and insulate the region from the most painful aspects of the recession, but there will be less oil revenue to splash around.
It is also time to look more sharply abroad, at the toll the crisis is taking on our nearest neighbours. Regional political stability is crucial to our economic stability here. We cannot afford to ignore the potential consequences of economic hardship in the rest of the region or the world. warnold@thenational.ae
