Current Challenges Highlight U.S. Foreign Policy Weakness: The Kiplinger Letter

To help you understand what is going on in politics and in U.S. foreign policy, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

After years of focusing primarily on China, U.S. foreign policy will be more complicated in the final year of President Biden’s current term. Every move Biden makes, and every criticism of it, will be made with an eye on the elections in November. 

One region requiring immediate attention is the Middle East, where the U.S. is involved in at least two interlocked and escalating crises. First up: The Israel-Palestine conflict, which is now threatening to turn into a wider war between Israel and other Iran-backed militants, most notably Hezbollah in neighboring Lebanon. Then, terrorist attacks in the Red Sea, perpetrated by Houthi militants who say they are retaliating against countries that back Israel. The attacks have scrambled global shipping patterns and forced the U.S. to step in to preserve freedom of navigation in this vital waterway. Before the attacks, the Red Sea handled up to 15% of global trade. 

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The White House wants limited involvement and limited conflict, addressing individual problems before they result in a regionwide conflagration. That is becoming more difficult, especially after a recent drone attack that killed three U.S. troops, putting additional pressure on Biden to retaliate and potentially ratchet up tensions with Iran, believed to be behind the attack. Note that additional military aid for Israel is now tied up in Congress. So, too, is further assistance for Ukraine, which has reached a turning point in its ongoing efforts to resist Russia’s invasion. Without additional military aid, Kyiv may no longer be able to hold Moscow back. The EU is also ponying up more aid for Ukraine, but the country’s forces will struggle without more help from the U.S. The situation has European military planners thinking the once unthinkable: What if Russia were to invade a NATO country? Germany’s defense minister fears Moscow could try to crack the transatlantic military alliance in the next decade, perhaps sooner, unless member states beef up their defenses to better deter Russia. 

The U.S. is similarly worried about a possible Chinese invasion of Taiwan, a once-distant prospect that could now possibly occur before the end of the decade. One factor working in China’s favor: America’s military is overextended, and the U.S. remains the country of first resort when major problems crop up, as evidenced by its role in the Red Sea crisis, where few allies are equipped to help. 

Short-term challenges highlight a long-term worry of U.S. foreign policy: The U.S. will eventually have to choose which commitments it can afford to keep, or the current global order will crumble on its watch. Biden started this process — for good or ill — by withdrawing from Afghanistan in 2021. The final outcome is unclear.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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