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By Knight Kiplinger

The Kiplinger Washington Editors

July 2, 2009

By year-end or so, Congress will give the nod to a major rewriting of the nation's financial regulatory system. This week’s Kiplinger Letter explores whether the package will do more harm than good and what lawmakers are likely to include.

ALSO IN THIS ISSUE: The Economy, Business Costs, Taxes, Supreme Court, Energy, Workplace Regulations, Climate Change, Health Care Legislation and Foreign Policy

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-- fender

What Obama Faces Abroad

To keep promises on Iraq and the financial crisis, Obama may need help from Iran and from Europe. Will he get it?

Worth Reading: The Quick Take from Kiplinger

November 2008

George Friedman

CEO, Stratfor

George Friedman, a recognized expert and author on national security and intelligence issues, is the CEO of Stratfor (short for Strategic Forecasting Inc.), the world’s leading private intelligence company. Founded in 1996, Stratfor delivers to its clients real-time intelligence, analysis and forecasts on geopolitical, economic, security and public policy issues.

A war in Iraq with Iran waiting to fill a power vacuum. Another war, going badly, in Afghanistan. A restless Russia keeps making aggressive moves. Not to mention the global financial crisis. And the European allies that Barack Obama expects support and help from are ready to pitch in and cooperate -- but of course, it can't cost too much and must be done largely on their terms.

That's pretty much the picture abroad that Obama faces. In some ways, it's even worse. George Friedman, the founder and head of the private intelligence firm Stratfor, explains that promises Obama made during the presidential campaign could force him to work with some unsavory allies or depend heavily upon friendly allies who are politically restricted in how much they can do.

Friedman points out the huge conundrum facing Obama when he tries to make good on his pledge to withdraw troops from Iraq as quickly as possible. "If he simply withdraws from Iraq without a solid understanding with Iran, the entire American coalition in the region will come apart. ... He therefore will talk to the Iranians. But what can Obama offer the Iranians that would induce them to forego their primary national security interest?" he asks.

When it comes to bolstering troops in Afghanistan or in staring down Russia, Obama is counting on considerable help -- both materially and politically -- from Europe. Friedman says Obama is not going to get what he wants. The European public won't tolerate large-scale engagement in Afghanistan and EU nations don't have the military ability to carry it out. And when it comes to Russia, Germany and other European allies are not going to make much noise about a country they depend upon so heavily for energy supplies.

"Obama must deal with extraordinarily difficult foreign policy issues in the context of an alliance failing not because of rough behavior among friends but because the allies' interests have diverged," Friedman warns. "He must deal with this in the context of foreign policy positions difficult to sustain and reconcile, all against the backdrop of almost half an electorate that voted against him versus supporters who have enormous hopes vested in him."

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