The World Next Week: The Debt Ceiling Looms, Obama Attends APEC and ASEAN Summits (Maybe)

The World Next Week podcast is up. Bob McMahon and I discussed the ongoing government shutdown and the approaching deadline for the debt ceiling, the APEC Summit in Bali, and the ASEAN summit in Brunei.

[audio: http://www.cfr.org/content/publications/media/editorial/2013/20131003_T…]

The highlights:

• Congress continues to bicker over legislation that would end the U.S. government shutdown that began on Tuesday. Those negotiations are now being complicated by the need also to craft agreement on raising the national debt ceiling. If Congress fails to reach an agreement by October 17 to raise the debt ceiling, the U.S. government will be at risk of defaulting on the national debt. That would be disastrous for the U.S. economy and the international financial system, potentially surpassing the damage done by the financial crash of 2008-2009. So far the financial markets have taken the political wrangling over the debt ceiling in stride. The markets seem to be calculating that past debt ceiling stand-offs were resolved at the last moment and that this one will be as well. But if the conventional wisdom turns out to be wrong—and sometimes it does—the market correction will be quick and severe. And no one will like the result.

• The government shutdown is already having consequences on the diplomatic front. President Obama has canceled planned visits next week to Malaysia and the Philippines, arguing that he needs to be back in Washington searching for a resolution of the shutdown and debt ceiling debates, and that he can go to Kuala Lumpur and Manila sometime in the future. For now, Obama is sticking with his plans to travel to Bali, Indonesia for the Asia Pacific Economic Cooperation Summit. The annual APEC meeting is intended to provide a forum for leaders from countries around the Pacific Rim to discuss pressing economic issues in the region. One topic that will be on the minds of many of the leaders at the meeting is the Trans-Pacific Partnership (TPP), which seeks to create the largest free-trade agreement in the Asia-Pacific region. TPP is a core part of President Obama’s rebalance to Asia, but even if he makes the trip to Bali it is unlikely that he will achieve his goal of having a new trade agreement by the end of the year. [Update: Shortly after this post and the podcast went live, Obama canceled his Asia trip entirely.]

• Once the APEC Summit wraps up many of the heads of state will depart Bali and fly 900 miles due north to Brunei, where the 23^rd annual ASEAN Summit and the 8^th East Asia Summit will be held. President Obama is one the leaders set to summit hop, assuming of course he doesn’t cancel his Asia trip entirely. Free trade and maritime disputes will top the discussion agenda in Brunei, and Obama’s absence would hurt U.S. efforts to play a more prominent role in Asia. Even if the president makes the trip, many Asian leaders may doubt whether he can deliver on any promises he makes given the political dysfunction back in Washington. Chinese officials, meanwhile, have been aggressively pushing their agenda and influence in the region.

• Bob’s Figure of the Week is 28,500. My Figure of the Week is John Boehner. Our audience-nominated Figure of the Week comes from TWNW listener @rbd1962 who picked the nonessential employee. As always, you’ll have to listen to the podcast to find out why.

For more on the topics we discussed in the podcast check out:

Government Shutdown and Debt Ceiling: Richard Haass explains how the shutdown weakens U.S. foreign policy. Robert Kahn predicts how the government shutdown may end. Edward Alden argues that Democrats will suffer more from the shutdown than Republicans. Slate’s Moneybox describes why the debt limit is scarier than the shutdown. Forbes explains why the United States isn’t worthy of a AAA credit rating.

APEC Summit: APEC announces the organization’s economic goals. Joshua Kurlantzick argues that Obama shouldn’t cancel his Asia trip completely. Politico reports that it would be politically difficult for Obama to leave Washington during a shutdown. Foreign Policy asks if Obama has given up on the Asia pivot.

ASEAN Summit: The Japan Daily Post writes that a trilateral meeting between Japan, China, and South Korea could happen on the sidelines of the ASEAN summit. Bloomberg reports that China hopes to improve ties with ASEAN countries. Elizabeth C. Economy reviews China’s place in in Southeast Asia. The Wall Street Journal reports that China has steered ASEAN away from territorial disputes.  CFR has an infoguide on China’s maritime disputes.