Fran O'Sullivan: Obama misses opportunity to step into Apec breach

Barack Obama has some major fence-mending ahead of him when he blows into Singapore late this evening.

Obamamania is the name of the game on the sultry Singapore streets. But inside the cool confines of five-star hotels, powerful Asian figures are asking why the leader of the world's most indebted nation has kept his nation's creditors on the hook.

It would be deeply ironic if a politician who swept to power on the back of pledges to curtail the international arrogance the United States was perceived to exert under the Bush Administration, ends up being tarnished - even if ever so slightly - by the same brush.

At issue is Obama's decision to curtail his Singaporean visit to less than 24 hours. Other political leaders, including Prime Minister John Key, will miss out on valuable face-time with the US President. It might suit Obama not to hear first-hand the tough message from hand-picked Apec business leaders that the US needs to step up to the plate on international trade. CEOs who had signed up to hear his high-profile speech at their adjoining summit have also been disappointed.

Obama made changes to his schedule so that he could pay tribute at the Fort Hood memorial service to the 13 slaughtered servicemen and women. But some question why he did not simply truncate his prior visit to Japan.

The Singaporeans are too well-mannered to say upfront what they really feel over Obama's virtual no-show at this 20th anniversary meeting of the Asia-Pacific Economic Cooperation (Apec). But behind the scenes there have been sharp words.

A case in point: the CEO summit organisers debated whether they should allow US Trade Representative Ron Kirk to substitute for his boss. Other political leaders also face pressing domestic issues back home. But Obama is the only no-show.

The dynamic has markedly changed within Apec.

Ten years ago when New Zealand hosted leaders from the 21 nations that then comprised Apec, the US called the shots. The powerful American delegation who accompanied Bill Clinton to Auckland were vocal in their outrage at the "crony capitalism" they believed was the root cause of the East Asian crisis which knocked the Asian "tiger" economies sideways.

But now the boot is firmly fixed on other feet.

It is the Asian leaders who now want evidence that the US President is determined to put the world's biggest consumer economy back on the road to a firm recovery - and importantly, do something to underpin the value of the languishing greenback which is wreaking havoc among small exporting nations like New Zealand.

Obama is not without friends in Apec.

US Treasury Secretary Tim Geithner was deputed to meet Key on Thursday night and brief him on the United States' evolving position on trade. Obama and Kirk are expected to tease out where the US sits on issues like the proposed regional free trade agreement which would bring New Zealand into a seven-way deal which would initially include the US and other nations like Singapore, Brunei, Chile, Australia and Peru. Obama is also considering overtures to the 10-strong group of Southeast Asian nations. But this is medium-term stuff.

The big takeout so far from Singapore is the fragility of the global economic recovery.

A poll of 350 business leaders found only 25 per cent believe unemployment levels will revert to pre-crisis levels next year.

The International Monetary Fund and the World Bank both say the recovery could come unstuck because of a premature exit from accommodative monetary and fiscal policies. The boss of the World Trade Organisation fears protectionism will rise as unemployment persists well into 2010 and beyond.

The brutal truth is the United States may not be able to play the role of the world's growth motor next year.

"You're going to have problems with delinquencies of credit card loans, consumer loans, people won't be able to pay their mortgages," World Bank chief Robert Zoellick explains. "Some banks are going to continue to be troubled by bad loans."

"If you've got large scale unemployment, if you've got consumers rebuilding savings and deleveraging, I don't think the consumer is going to play that role ... What's the other source of demand?"

Instead of filling the power void at this year's Apec, Obama blew his shot.