- POSTED: 03 Oct 2013 20:12
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The current US government shutdown is an example of how America's domestic politics can impact its foreign policy, said Foreign Affairs Minister K Shanmugam.
SINGAPORE: The current US government shutdown is an example of how America's domestic politics can impact its foreign policy, and this could have follow-on effects for regional economies in which the US is heavily involved.
Singapore's Foreign Affairs Minister K Shanmugam made this point in an interview with Channel NewsAsia.
As the US government shutdown continues with no end in sight, there is growing concern on the impact of the stalemate on global economies.
President Barack Obama has already had to cancel planned stops in the Philippines and Malaysia in an upcoming trip to the region as a result of the shutdown.
Mr Shanmugam said this is an example of how America's domestic politics could impact the country's image overseas.
He said: "If the US domestic situation results in US -- say for example the president being unable to come -- in not being able to effectively implement its policy objectives, if it results in that, then of course the US leadership in the rest of the world, including Asia, will be questioned."
The impact on foreign policy could have a knock-on effect on economic policy, and this could affect US investments abroad.
Mr Shanmugam added: "Ultimately, (with) US companies in Singapore... it benefits Singapore because we also make a lot of money, our people get employed.
"But US companies use Singapore as a base to trade in the region, do business in the region, and they find it very profitable. US economic interests, and if there are doubts and questions about the US to lead, will ultimately impact on people within the US, on Americans.
"Politics is only one part of it. Economics in terms of the impact, if these political difficulties continue and... (the) shutdown continues, the longer-term economic consequences for the rest of the world can be pretty serious as well."
"Sometimes, on the domestic debates that take place within the US, whether it is Congress or other branches, people may think 'well what has this got to do with my constituents back home, in any particular Congressional district?'
"In the medium to longer term, it will have consequences. We are talking about the TPP (Trans-Pacific Partnership) -- if it is not able to be implemented, then ultimately it will impact on the domestic economy as well."
The minister said the US is able to cope with its current difficulties, thanks to its large population and resources.
But smaller states such as Singapore are unlikely to weather similar storms.
Mr Shanmugam said: "So as a result, even with the degree of difficulties in the political system, the United States is able to do well. I think other countries, particularly smaller countries will not be as fortunate.
"Most Singaporeans will accept that for a country to progress and to have prosperity for the people, the government has to be efficient and function well."
He continued: "A large country like the United States, (it hasn't)... passed the Budget for some time now. It's rich, it's got 300 million people, it's got vast resources, it still attracts the best people from all around the world, it is a very attractive country.
"The US dollar, for example, is effectively the reserve currency, even though there is a huge budget deficit. And even though there are all these political issues, the US dollar is still a safe haven. Other countries don't enjoy the same status."
President Obama has already warned markets that the ongoing crisis could trigger a catastrophic US debt default.