• Cover Story
• Table of
  Contents
• Contents By
  Topic
• Columns
  • Brownstein
  • Cook
  • Crook
  • Powers
  • Rauch
  • Stokes
  • Schneider
  • Taylor Jr.
• Regular
  Features
  • Hotline Extra
  • Inside Washington
  • Insiders Poll
  • K Street Corridor
  • People
  • The Week on the Hill

When Barack Obama and John McCain finally square off for their first televised debate on national security and foreign policy, they will confront a world transformed. The most profound economic disruption since the Great Depression now threatens the global financial system. The Bush administration's proposed $1.3 trillion bailout has, in just weeks, put at risk twice the national treasure spent during five years of war and nation-building in Iraq. Growing instability and economic turmoil are approaching a scale that could realign global power. Game changed.

Last September, National Journal reported that the potential for such a strategic sucker punch landing this political season was deemed high enough inside the White House that officials had given the phenomenon a name: "game-changer." Especially in an election year, such surprises have the power to shatter carefully crafted political narratives and game plans, and to turn Washington's conventional wisdom on its head. So it shall be with the escalating financial crisis. What is extraordinary about 2008, however, is the number of storms still brewing around the world, any one of which global economic tensions could exacerbate.

"The economy has rightly displaced foreign policy and national security as the No. 1 issue in the presidential campaign for the obvious reason that unless we straighten out our economic issues, we won't have a great deal of diplomatic or military power left -- our economy is the basis of our international power," said Leslie Gelb, president emeritus of the Council on Foreign Relations, speaking to reporters recently. "At the same time, the international agenda that the next president will confront has never been more complex or worrisome. You have stalled international trade talks. In the wake of the failure of the Kyoto Protocol we have to do something about climate change. We need energy alternatives. We're already engaged in two wars, with more wars threatening. So, in my judgment, foreign policy has never been more important in a presidential election than this time around."

Though it is far too soon to gauge the full impact of the global financial crisis, it seems certain to greatly constrain the foreign-policy options of the next president. Perhaps most obviously, at a time when their own livelihoods and wealth are fundamentally threatened, Americans are likely to look skeptically at foreign aid in general, and specifically at expensive nation-building operations in places such as Afghanistan and Iraq that to date have cost more than $1 trillion.

As secretary of State in the Clinton administration, Madeleine Albright learned firsthand the difficulty of championing foreign aid even in good times, let alone when Americans are hurting at home. "I call it the 'Katrina Effect,' because when I later went down to New Orleans after the hurricane, people there kept asking, 'Why are we spending all this money in countries we can't even locate on a map when we need help right here?' " said Albright, speaking at a recent symposium hosted by CNN and George Washington University. "It will be the job of the next president to explain how what happens in these countries affects us on a daily basis, and that will be very hard."

After the stock market crash of 1929, the United States and many other countries responded with trade barriers and protectionist policies such as the Smoot-Hawley Tariff Act, which only deepened the global crisis and helped bring on the Great Depression. Experts see worrisome parallels in growing protectionist sentiment and the recent rejection of various trade agreements. For instance, Barack Obama has called for a renegotiation of the North American Free Trade Agreement, the Democratic-led Congress has rejected a free-trade agreement with Colombia, and the Bush administration has failed to successfully complete the Doha Round of global trade negotiations.

"For 60 years the United States has pushed the idea of democracy, liberalized trade, and free markets, and in the last 10 years that consensus has evaporated," said James Baker, former secretary of the Treasury and State in the Reagan and Bush 41 administrations, speaking at George Washington University. "We're now facing the prospect of a failed Doha Round, we have no free-trade agreement for the Americas, and the Left and Right of our respective political parties no longer support liberalized trade. Yet, nothing will do more to resolve the imbalance in our economy than free-trade agreements, and moving them will be a major responsibility of the new president."

Even if the next chief executive can sustain free-trade policies, however, the U.S. economy may see the decline of its historical role as the engine of global economic growth. That mantle could shift to China and Asia, and with it significant power.

"So much of American strength derives from having the world's largest economy, and it is still the most successful, accounting for 25 percent of gross domestic product around the world," Baker said. "But this financial crisis is a real serious problem. I don't think we've seen anything like it in the last 100 years, and perhaps never in our history."

At the very least, the financial crisis will force the government to rein in what many economists have warned is an unsustainable binge of U.S. borrowing from nations such as China and Russia and their sovereign wealth funds to finance deficit spending at home. The bailout and additional national debt have already raised serious concerns about inflation. The crisis has also exposed for all to see the strategic vulnerability of a United States leveraged to authoritarian regimes with very different international agendas. John McCain has responded to Russia's recent invasion of Georgia by threatening to kick it out of the Group of Eight major industrial countries, but his freedom as president to antagonize such a major creditor might prove limited.

"When you have foreign governments holding so much of America's assets, you have to worry that they might make a political decision to stop buying our debt, in which case the dollar would crash, U.S. interest rates would go way up, and you'd have a similar crisis as that prompted by subprime mortgages, only inflicted by a foreign government," said Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations. The turmoil on Wall Street, he said, already has foreign governments recalculating their investments in U.S. bonds. "Consider the fact that Russia voted against the United States in the United Nations on the Iraq war, for instance, but continued to finance that war by buying U.S. bonds. Now ask yourself whether that willingness on the part of Moscow will continue. That should be a wake-up call to U.S. policy makers."

Any attempt by the next president to corral deficit spending is bound to force painful trade-offs between domestic and foreign policy. Both Obama and McCain have proposed expensive tax cuts and health care reforms, for example, and one of them will have to confront the spiraling costs of entitlement programs. Yet each candidate has also called for recapitalizing a war-weary U.S. military that already costs more than the militaries of all other industrialized countries combined. Many experts will watch the debate for signs of where the candidates' true priorities lie.

"So far, the campaigns have talked about defense issues at the level of technical minutia, such as how many months until the last combat brigade leaves Iraq, or how much money can you save by reducing cost overruns on defense programs," said Stephen Biddle, senior fellow for defense policy at the Council on Foreign Relations. "The debate I'd like to see would be about the basic value decisions that will underlie the candidates' choices in a time of war. Are we at war with terrorism, or some subset of terrorism, or not? If so, what scale of effort are you willing to undertake to reduce the risk to the American homeland? If not, has the scale of the terrorist threat been exaggerated? What are our aims in the two wars we are waging, and what level of sacrifice will you support to achieve those goals? If we elevated the debate to that level, then the election could serve as a public referendum on these weighty issues. I doubt that will happen, however, because they are entirely too easy to demagogue."

When McCain and Obama eventually take the debate podium, the nation will have to weigh their responses to a world of troubles. Each crisis they will be asked about is linked to others: Falling markets. Rising energy costs. Global warming. Failed states. Nuclear proliferation. Terrorism. Listen carefully as the nominees make the connections, because to one of them will fall the task of avoiding the ultimate "game-changer" -- a rapidly accelerating chain reaction reaches critical mass, overwhelming the United States and creating a power vacuum and chaos where the established order once stood.