The debt ceiling fight and American diplomacy

Republican demands harm America's interests

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Negotiators probably only have a few days to reach a deal on raising the debt ceiling in order to avoid a catastrophic default by the United States. Frustratingly few leaks are escaping from the negotiations, which is at least a signal that both sides are taking it seriously rather than just trying to generate favorable media coverage. The chance of no deal still seems relatively high, and certainly much higher than it should be. Progressives and conservatives are starting to get nervous about what their leadership is giving away, and conservatives may have a procedural problem with being asked to vote on a massive bill they have no time to read, something Republican House leader Kevin McCarthy promised wouldn’t happen on his watch.

But at least some of the damage from this spectacle has already been done. Because of the debt limit negotiations, Biden has announced that he is cutting short a trip to Asia. He’ll now return to the United States after a G-7 meeting in Japan rather than going to Papua New Guinea, where he was supposed to have a series of meetings with Pacific island nations who are crucial swing voters in the struggle between Washington and Beijing. What was supposed to be a signal that the United States is committed to a region which has often felt ignored has turned into another example of that neglect.

America and the Pacific islands

To understand why, you need to understand the place of the Pacific islands in American history and contemporary strategy.

The U.S. has been a Pacific power for over a hundred years, at least since it seized control of Hawaii, Guam, the Philippines and American Samoa during the Spanish-American War of 1898. The Philippines became independent in 1946, but the U.S. has hung onto many of its other footholds in the region. Guam and American Samoa remain American territory under quasi-imperial arrangements, whereas other groups of islands such as Micronesia and the Marshall Islands are independent but in “free association” with the United States, meaning among other things that it controls their defense and foreign policy.

Washington has typically considered the Pacific islands a vital part of the infrastructure of bases and allies with which the United States projects its power around the world. During World War II, America and its allies expended enormous quantities of blood and treasure to eject the Japanese from the Pacific islands, and afterwards they set out to entrench themselves in the region as Asia became a key battleground in the Cold War. Guam became a key logistical hub and supply depot for the American military in Asia, and Hawaii became an American state in 1959, largely because American policymakers wanted the state to serve “as a bridge to Cold War Asia—and as a global showcase of American democracy and racial harmony”.

But the end of the Cold War inaugurated a period of American neglect towards the Pacific islands. The apparent disappearance of any serious naval competitor, plus the ongoing wars in the Middle East, pushed maritime affairs in the Pacific to the sidelines of American defense policy. So when China suddenly started making diplomatic and military inroads among Pacific island nations, Washington and its allies seemed caught by surprise.

They shouldn’t have been. The event which precipitated their panic - China entering into a security agreement with the Solomon Islands last April - had been years in the making. Biden’s now-canceled trip would have made him the first president to visit the region, but Xi Jinping has been there twice. In 2019, the Solomon Islands switched its diplomatic recognition from Taiwan to China, and China has lavished diplomatic attention and investment on other island nations. Meanwhile, the United States closed its embassy in the Solomon Islands in 1993 amid post-Cold War budget cuts (although it’s now reopened).

In response to these Chinese inroads, in September 2022 the United States announced its Pacific Partnership Strategy and held a summit with Pacific Island leaders at the White House. In order to fend off criticism that Washington only cares about the region because of China, the strategy scarcely mentions Beijing and instead focuses on matters that are important to Pacific islanders - particularly economic development and tackling climate change, which threatens devastating consequences to the region. The key to its success, experts said at the time, would be to follow through, and show that Washington really did care.

Then came Biden’s canceled summit.

The administration’s case

The canceled summit is a missed opportunity because the Biden administration is incredibly well-positioned to restart American engagement in the region.

Firstly, Biden has a personal connection to Papua New Guinea - two of his uncles fought there during World War II, and one of them died. It makes complete sense that he would be the first American president to visit there, and his personal history would make it easy for him to speak about the ties that bind the United States to the region. Secondly, the Biden administration has done more than any other in American history to address climate change, which allows it to credibly demonstrate to Pacific island nations that at least one American political party takes the main threat to their security and livelihoods seriously.

The Biden administration also takes multilateralism and alliances much more seriously than its predecessor. The Trump administration actually made some initial steps towards taking the region more seriously, but it was hampered by a lack of presidential leadership, as well as its refusal to take climate change seriously. Trump was mostly focused on his trade war with China and relatively unconcerned about security aspects of the U.S. presence in the region, or defending America’s allies. He also made it a priority to slash funding for American aid and diplomacy, making it harder to maintain a presence in the region and address the needs of Pacific islanders. Biden’s approach is different, and could really deliver results - if only he would follow through.

On the trip, Biden was also due to sign security agreements with Papua New Guinea and Micronesia. Some of the elements of these agreements were new forms of defense cooperation, but also included was a renegotiation of the Compact of Free Association whereby the United States gets military and intelligence basing rights in Micronesia. The renewal of the compact, which is due to expire in 2023, was supposed to provide momentum for similar renewals of compacts with the Marshall Islands and Papua New Guinea, which also expire soon. The renewal of the first of these compacts during a historic first-ever visit by a U.S. president would have been of great symbolic importance to the region - and canceling it is a huge negative.

Just the beginning

In general, I think hysteria about both the rise of China and American decline are best avoided. Much of the world has now priced a high amount of political dysfunction into their view of the United States, and so long as it gets there in the end and default is avoided, the damage from this sort of episode is noticeable but limited. Similarly, it’s important not to go too over the top in tying absolutely everything that happens in the United States back to China, because that risks the growth of a sort of ‘Red Scare’ mentality which can become dangerously intolerant of dissent.

But more broadly and in this specific case, the disruption done by the debt ceiling fight points to further problems for the United States in maintaining its alliances in the Pacific in the future. That’s because the very specific things that the Republicans are currently demanding be cut from the budget in exchange for doing the courtesy of allowing the United States to repay its debt are exactly the things that the United States needs to spend money on to improve its position with the Pacific islands.

One of the core Republican demands for the debt ceiling negotiations was that the Biden administration cut green-energy subsidies from the Inflation Reduction Act. These subsidies are probably the single biggest thing the federal government has ever done to fight climate change, and repealing them would make it enormously more difficult to appeal to nations threatened by climate change. Meanwhile, the bill that the Republican-controlled House passed could cut funding for the State Department and the U.S. Agency for International Development by up to 58% by 2033, eviscerating the diplomacy and aid which America needs to run its foreign policy, in the Pacific islands and elsewhere.

Whatever the outcome of this specific fight, Republican hostility to both tackling climate change and properly funding the apparatus of American foreign policy are not likely to change anytime soon. Add to that the dysfunction which you’re seeing right now - sure also to be repeated - and you have a long-term, strategic problem. Even though Biden will find time to reschedule his summit in the Pacific, America has emerged from this episode visibly weaker, if only because we can now see more starkly the weaknesses which should have been clear all along.