Yellen Could Be Questioned About U.S. Dysfunction During Morocco Visit

On Oct 9, 2023

TL/DR –

U.S. Treasury Secretary Janet Yellen is in Morocco for meetings with international counterparts, which could be impacted by ongoing U.S. political instability. Recent developments such as a near-debt default, threats of a government shutdown, and the removal of Kevin McCarthy as House speaker are harming the U.S.’s credibility. The discussions come in the context of wider uncertainties, including weekend attacks by Hamas on Israel that could escalate into a regional conflict, exacerbating challenges for economic policy makers such as rising oil prices, disrupted trade flows, and inflamed international tensions.

Treasury Secretary Janet L. Yellen’s Moroccan Visit Amid Domestic Chaos

Treasury Secretary Janet L. Yellen arrives in Morocco this week to meet international counterparts amidst US’s struggle with political dysfunction. The nation, leading post-pandemic economic recovery, recently faced debt default and a government shutdown threat due to disagreements on federal spending levels and aid to Ukraine.

Yellen’s Agenda at International Monetary Fund and World Bank Meetings

These issues strain US’s credibility at the annual meetings of the International Monetary Fund (IMF) and the World Bank in Marrakesh. Yellen aims to urge European governments to increase funding for Ukraine and push creditors like China to relieve poor nations’ debt. The meetings occur amid increased global uncertainty due to the recentHamas attacks on Israel.

Yellen Stands with Israel Amid Hamas Attacks and Reassures Support for Allies

On her trip, Yellen affirmed US’s support for Israel and condemned the Hamas attacks. She acknowledged international concerns over US’s political gridlock but remained optimistic about continued support from allies for Biden administration’s efforts, including protecting Ukraine and addressing climate change.

Impact of US Domestic Politics on Its Global Role

Despite Yellen’s optimism, the US’s role as an economic bulwark against Russia’s war in Ukraine is hampered by domestic politics, including Republican resistance to more aid for Ukraine. Additionally, the US’s massive debt and the lack of a sustainable fiscal path undermine its economic credibility.

Yellen’s Challenge at the Global Economic Front

The global economy is at a delicate juncture. Though a recession seems unlikely, inflation challenges and tepid output persist. China’s economic weakness and Russia’s Ukraine war pose considerable hurdles. Central bank’s higher borrowing costs to curb inflation make debt management harder globally, including in the US.

Advocating for Continued Aid to Ukraine Amidst Economic Challenges

Yellen’s most significant challenge will be to persuade nations to continue robust economic aid to Ukraine amidst its ongoing war with Russia. With Europe facing economic stagnation and Congress in disarray, it’s unclear how the US will continue to support Ukraine’s economy. Despite these issues, Yellen asserts that supporting Ukraine remains a top priority and calls on Congress for more funding.