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eyes on the U.S.

Obama's Miraculous Escape From Economic Brink To Election Victory

Help from upstairs?
Help from upstairs?
Sylvie Kauffmann


Barack Obama's reelection to a second term in the White House is in spectacular contradiction to the trend in Western politics since the beginning of the current economic crisis. One after another, Western leaders have been dumped by voters who have made them pay for the effects of the crisis and the austerity measures imposed.

To see how harshly voters judge their leaders, you need only compare photos of the G20 summits in 2009 and 2012, three years apart. Only Angela Merkel, the German chancellor, is still there; and she must face voters in 2013. Voter rejection has been especially noticeable in Europe, but it has not spared Japan, Australia or New Zealand.

President Obama is therefore a major exception to the rule, even more remarkable because the crisis started in the United States, with the bankruptcy of Lehman Brothers in 2008. So how did he escape unscathed?

Of course, there were flaws in the campaign of his opponent Mitt Romney. In spite of the Republican Party’s furious will to win and its militants' determination to throw Obama out, Romney was not able to personify that resolve. The gaffes of ultra-conservative candidates, like Missouri Senate candidate Todd Akin's grotesque remarks about rape, pushed the female vote massively toward the Democrats.

There is the demographic evolution of the United States, with the growing weight of the Latino vote – a vote that favored Obama, a Democrat and the first black American president. Hurricane Sandy, too, may have played a role, drawing attention to the destructive power of climate change, which Mitt Romney had minimized, and on the usefulness of federal government services, much disparaged by the Republicans.

Not so disastrous

All these things, though, were not enough to eclipse the crisis, which has hit American households hard. Since Obama first came into office, many people have lost their homes in the sub-prime mortgage crisis, or have lost their jobs because of the recession. The economy was of course at the center of this campaign.

Obama has not come out of the crisis unscarred. Inevitably, the 2012 candidate had lost much of the 2008 candidate's magic. But for the American president, salvation arrived in part thanks to the unemployment figures for October, which showed a modest recovery. Analysts had predicted the creation of 125,000 jobs, but the figures were better, with 171,000 new jobs registered. The unemployment rate of 7.9%, although still high, did not again cross the 8% threshold that would have been disastrous for Obama's reelection.

Thanks to these figures, which confirmed a trend that has been noticeable since the beginning of the summer, Obama was able to boast about -- at least the beginnings of -- a recovery. We were a long way from the 800,000 jobs a month being lost at the beginning of his first term.

The Obama administration was also able to show that it had not remained passive in the crisis, organizing the successful rescue of the U.S. auto industry, and launching an energy revolution using shale gas, which had a clear impact on employment and the relocalization of industries. Also enacted under Obama's administration was the universal medical care plan, "Obamacare," which once in effect will allow 40 million of low- and middle-income people access to medical care.

The American economy, though, is by no means done with the crisis. In his victory speech, Obama emphasized the indispensable unity of the country, and the need for political leaders, both Republicans and Democrats, to work together, after a first term marked by gridlock and a profound political divide. This cooperation is imperative if the American economy is to avoid falling off the "fiscal cliff" that will gape, starting in January, if a compromise is not found on reducing the deficit.

During the campaign, Obama was unusually silent on curbing public spending and on financial reform, issues that certain European countries know well. He must now use his second term to deal with the problem seriously and immediately. "The road has been hard," he told his supporters, who had waited hours to hear him speak Tuesday night in Chicago. "We have picked ourselves up, we have fought our way back. The best is yet to come.” It is up to the president now to organize this. As he admitted himself, "You elected us to focus on your jobs, not ours."

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FOCUS: Russia-Ukraine War

How Russia's Wartime Manipulation Of Energy Prices Could Doom Its Economy

A complex compensation mechanism for fuel companies, currency devaluation, increased demand due to the war, logistics disruptions, and stuttering production growth have combined to trigger price rises and deepening shortages in the Russian energy market.

Photograph of Novatek's gravity-based structure platform for production of liquefied natural gas, floating on a body of water.

Russia, Murmansk Region - July 21, 2023: A view of Novatek's gravity-based structure platform for production of liquefied natural gas.

Ekaterina Mereminskaya

In Russia, reports of gasoline and diesel shortages have been making headlines in the country for several months, raising concerns about energy supply. The situation escalated in September when a major diesel shortage hit annexed Crimea. Even before that, farmers in the southern regions of Russia had raised concerns regarding fuel shortages for their combines.

“We’ll have to stop the harvest! It will be a total catastrophe!” agriculture minister Dmitry Patrushev had warned at the time. “We should temporarily halt the export of petroleum products now until we have stabilized the situation on the domestic market.”

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As the crisis deepens, experts are highlighting the unintended consequences of government intervention in fuel pricing and distribution.

The Russian government has long sought to control the prices of essential commodities, including gasoline and diesel. These commodities are considered "signalling products", according to Sergei Vakulenko, an oil and gas expert and fellow at the Carnegie Endowment. Entrepreneurs often interpret rising gasoline prices as a signal to adjust their pricing strategies, reasoning that if even gasoline, a staple, is becoming more expensive, they too should raise their prices.

The specter of the 2018 fuel crisis, where gasoline prices in Russia surged at twice the rate of other commodities, haunts the authorities. As a result, they implemented a mechanism to control these prices and ensure a steady supply. Known as the "fuel damper," this mechanism seeks to balance the profitability of selling fuel in both domestic and foreign markets.

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