Washington's World: May 9th - May 15th, 2011

In our review of last week, we foreshadowed rising tensions with Pakistan. We did not anticipate the dramatic developments that would accentuate this trend. The killing of Osama bin-Laden has the potential to take these relations into uncharted waters. As an NSC oficial out it to us privately: "We look at the same events and arrive at diametrically opposed interpretations. One urgent task for us will be to avoid an anti-Pakistan overreaction in the US." The more immediate impact for President Obama, however, is domestic. The succesful operation has given his embattled Administration an impressive boost. A consitent charge levelled against him -- by friend and adversary alike -- was that he lacked the temperament to be commander-in-chief. Through this action and follow-up celebrations with the military, he is widely perceived to have laid these doubts aside -- at least for the time being. Commentators are divided on the long-term implications, but at first sight these may be as reviving for his Administration as was the Falklands War for British Prime Minister Margaret Thatcher.This is particularly the case as, among the declared Republican presidential candidates, foreign policy credentials are scant. Withiut doubt the euphoria will wear off and the ongoing battle over the federal budget will return Obama to earth, but for the moment he is riding high -- albeit not for the reason evisioned by the Nobel Peace Prize Committee. We do not anticipate, however, that the Administration will re-engage vigorously in the Middle East oeace process. An immediate debate is taking place on possible changes to Afghan policy, with familiar voices urging the Administration to seize the moment either to accelerate the drawdown or to push home the fight against the Taliban. From our conversations with senior US officials, our judgment is that efforts will quicken to find a political settlement that will allow a step-by-step US withdrawal. On a more down-to-earth note, the next round of the US-China Strategic and Economic Dialogue that takes place in Washington this week will see renewed arguments between the two sides on currency and military issues.