Small-time to sweat Joe Biden’s Quad no-show amid critical US debt default threat
Quad summit Chicken Littles have completely misinterpreted what matters most for Australia.
US President Joe Biden’s decision to postpone his visit to Australia for the Quad summit is disappointing, but little more than that.
The suggestions by some commentators in Australia that it amounts to a snub, and hands a gift to Beijing, are entirely overblown and wide of the mark.
Institutionalising the Quad – a regional grouping of the United States, India, Japan and Australia that was elevated to a regular leaders-level summit during Scott Morrison’s term as prime minister – is in the Australian national interest.
The Quad provides a regular forum for leaders and ministers to co-ordinate policy and support the open, liberal and rules-based regional order.
It also provides a platform to push back against China’s attempts to undermine this order, and provides the structural basis of a balancing coalition in the Indo-Pacific to defend shared values and norms.
Making the Quad part of the regional furniture must remain an Australian priority. But the postponement of one meeting is an inconvenience, nothing more.
To claim, as former foreign minister and NSW premier Bob Carr has done, that Biden’s postponed visit creates “serious uncertainty about projected American behaviour”, is fanciful.
The meeting will be rescheduled. Biden and Japanese Prime Minister Kishida can visit Australia at another time. Indian Prime Minister Modi is still visiting. The Quad is not going anywhere.
In contrast, it is the prospect of the US undergoing a sovereign default – the reason for Biden cancelling his trip – that should be focusing minds in Australia.
Although we may have limited influence on the outcome, ensuring that the US does not undergo a sovereign default is resoundingly in Australia’s national interest.
The regularity of the unedifying spectacle of a Republican-controlled Congress refusing to raise the US debt ceiling until the eleventh hour when the Democrats hold the presidency may have inured us to its seriousness. After all, we have seen this movie before, under both the Clinton and Obama presidencies.
But just because those episodes ended without catastrophe is no reason for presuming this one will similarly conclude.
The Republicans in the House of Representatives are a more strident bunch this time around.
And US Speaker Kevin McCarthy is a weaker leader: witness the 15 rounds of voting it took before he was elected Speaker, due to a revolt on his own side.
A default by the US government is still a low probability outcome. But its consequences would be so severe that it merits the full attention of Biden.
US Treasuries are the world’s safest and most liquid assets. A default would create turmoil in capital markets, and likely lead to broader economic tumult.
More enduringly, it would do immense damage to the credibility of the US and the US-led global order.
It would play into the global narrative promoted by China that the US has a dysfunctional and broken political system and can no longer be entrusted with the privilege of global leadership.
America’s credentials as the leading liberal power in the world, the moral example of its democratic system of government, and its reliability as an ally, would all be undermined.
If the US government defaults, we will be feeling the repercussions for a long time.
The only way the US avoids a default is if the debt ceiling is raised in agreement with Congress, and in particular with the Republican-controlled House of Representatives.
Obviously, Biden remaining in Washington and leading the negotiations himself improves the prospects of a deal.
And his absence overseas at such a critical time would make negotiations harder, and provide fodder for his political critics.
Some overblown commentary in Australia has suggested that China’s President Xi Jinping will be jubilant with news that the Quad summit in Sydney has been postponed.
Perhaps a wry smile has passed his lips. But it is as nothing compared to the side-splitting laughter that will grip the Politburo Standing Committee if the US commits an act of grievous self-harm and defaults.
Rather than bellyaching about Biden’s cancelled trip, which reflects a parochial mindset not befitting a confident nation, we should be figuring out what we can do to help.
Domestic politics in the US is driving this debate.
But steadfast and important allies such as Australia can make our views known to senior Republicans about just how damaging a US default would be to American global leadership.
That, rather than wallowing in self-pity, is the task for Australian diplomacy.
Dave Sharma is the former Liberal member for the Sydney seat of Wentworth.
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