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If Obama Loses, It Won't Be Because "It's the Economy, Stupid"

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President Barack Obama's failure to ever get around to pivoting to the economy last year was one of the major reasons why Democrats didn't do well in the mid-term elections. But if he loses next year, and I expect him to win, it probably won't be because of the domestic economy. It will be because of what he's spent so much of time on that is not the domestic economy, namely geopolitics.

Not that the domestic economy is going great guns, which it's clearly not, but that it will be good enough for Obama to muddle through on against unimpressive Republican opposition tied to the policies which nearly got us into Great Depression II in the first place. Late last week, meeting with high tech industry leaders over dinner in Silicon Valley, Obama showed that he might be able to add some forward-leaning vision, and counter the Republican spin that he's anti-business, to the policies that have us moving away from the abyss he inherited from the Bush/Cheney Administration.


President Barack Obama, reacting very cautiously to the crisis in Libya, is dispatching Secretary of State to Geneva for an international conference on Monday.

But even as he was meeting with a dozen tech titans at the home of one of the biggest greentech venture capitalists in the world, Obama's already complicated geopolitical situation became more complicated, illustrating the dichotomy he faces.

Bahrain's royal family ignored the entreaties from his secretary of state and secretary of defense and again cracked down violently against peaceful protesters in the capital city Manama, not far from where the U.S. Navy's 5th Fleet is headquartered.

Protests continued against the pro-U.S. leader of Yemen, who was actually somewhat more measured in his response. But it's unclear if he can survive in this country which has become a haven for jihadists.

Hundreds of thousands, greeted by smiling troops, gathered both in Cairo and Alexandria to celebrate the fall of Hosni Mubarak. But after the demonstrations, Egypt's new military government said it doesn't want any more strikes in a country reeling from poverty and economic inequality.

Then there was the intractable Israeli-Palestinian situation. With revolt sweeping the Arab Street, this is probably the worst time for it to be reminded that the U.S., which has historically been on the side of the autocracies, is also on the side of Israel. But Obama's great friend Palestinian Authority President Mahmoud Abbas insisted on pushing forward a UN Security Council resolution denouncing Israel for its continued settlements in the disputed West Bank and East Jerusalem.

Of course, it's also not a great time for Israel to be pursuing its settlement policies, which Obama opposes. But if Israel's government really cared what the rest of the world thinks of it, it wouldn't have Avigdor Lieberman as its foreign minister.

So the U.S. ended up on the wrong end of a 14 to 1 UN Security Council resolution, with even Britain's Conservative governement joining the international chorus of criticism of Israel. The American veto officially blocked the resolution, in a classic example of a pyrrhic victory.


The Libyan crisis caused crude oil prices to jump by one-sixth in a week.

Since the end of last week, Obama has had a success in Bahrain. The royal regime there ignored entreaties from Secretary of State Hillary Clinton, who was just there in December praising the supposed reforms and reportedly rigged election which had just taken place. So Obama himself called the king, who agreed to have his security forces back off and initiate dialogue.

This week, the regime released 300 political prisoners. But it's impossible to say what will happen in Bahrain, where a Shiite majority has long been under the thumb of a Sunni monarchy with close ties to Saudi Arabia, the ultimate jackpot state in all this, just 15 miles away over the King Fahd Causeway.

Saudi King Abdullah finally returned to Riyadh this week after three months away in New York and Morocco for back surgery and recuperation. The 87-year-old monarch returned to a world of Arab revolt, and immediately decreed the disbursement of tens of billions from the kingdom's vast petro-dollar result to students and the poor. Will that be enough to buy peace in a country which won't even allow municipal elections?

If it doesn't, we may see some real chaos dwarfing the deep shivers going through global markets this week from the turmoil in Libya. Oil has shot up by one-sixth in the past week with the emergence of the Libyan crisis. One or two more such upsets and the global economic recovery is under real threat.


After days of bloody crackdown last week in Bahrain, headquarters of the U.S. Navy's 5th Fleet, Obama persuaded the regime to withdraw security forces and enter into dialogue with the protesters and opposition leaders.

The crisis in Libya, first major oil producing nation hit by the Arab revolt, continues with longtime dictator Col. Gaddafi holding on to power in the capital Tripoli and other parts of the country while much of it has apparently fallen to protesters and defecting government forces.

The response by the Obama Administration and European leaders, while somewhat harsh rhetorically -- U.S. officials still haven't condemned Gaddafi by name -- has been muted. Probably for two reasons.

First, it's proved hard to get people out of Libya. For example, U.S. charter flights have been barred by Libyan authorities, and a ferry chartered to evacuate US citizens has been held up by high seas.

Second, a major source of oil is under threat. While Libya accounts for less than 1% of U.S. oil consumption, it's a big supplier to Europe. And oil prices are global, not regional, in nature.


Obama had a lengthy dinner last week in Silicon Valley with a dozen famous high tech industry leaders to gain their support for his economic poliicies. Obama speaks to Mark Zuckerberg while Genentech chairman Art Levinson and greentech venture capitalist and former California state Controller Steve Westly look on, with Google chairman Eric Schmidt out of focus on the right.

Secretary of State Hillary Clinton will join other foreign ministers on Monday in Geneva to discuss options on the Libyan crisis. By then, of course, they hope they've got their citizens out. And perhaps Gaddafi will be gone, or on his last legs and amenable to a retirement package.

Crises continue elsewhere, of course, including in places that many may imagine are under control.

Egypt, which just allowed Iranian warships through the Suez Canal for the first time since Islamic fundamentalists took power in the Iranian Revolution, hasn't moved much closer to democracy even after the great drama of Mubarak's fall. But it is providing scapegoats to give the public the illusion of more reform.

A dozen ranking Mubarak regime figures, including a former Egyptian prime minister, have been charged with corruption this week. But, conveniently, none of them are major recent major power figures.

Then, putting aside the question of whether Iraq will stay stable as we withdraw this year, we have our old crisis standbys in Afghanistan and Pakistan.

Afghanistan is a familiar topic. We're wildly over-extended there as a result of the Obama escalation, and it's not going well. Pakistan, the only Islamic nation with nuclear weapons, and a major jihadist movement, isn't going well, either.

We now have a tense high-level stand-off there over the status of Raymond Davis, a seemingly junior level US consular staffer who shot two Pakistanis dead in Lahore. Hillary Clinton and other top U.S. officials have been demanding his release on grounds of diplomatic immunity. Pakistan has refused, even after Senator John Kerry ventured there last week as Obama's emisssary. And an important AfPak summit in Washington set for this week was canceled.

Not surprisingly, it turns out that Davis is really a CIA contract agent. And that, following a lengthy stint as a Green Beret, he worked for a time for Blackwater, the notorious security firm which is particularly anathema in Pakistan.

There are many things that can wrong for Obama, and right now only a few of them are going right. And events such as his dinner last week in California with some of the biggest figures in the technology business are probably looking very much few and far between right now.

Last Thursday night, at a two hour-plus private dinner at the home of John and Ann Doerr in Woodside south of San Francisco, Obama met with a dozen famous tech execs to discuss building a 21st century economy. Over a meal which reportedly included a nice white fish and salad with shrimp, the president engaged in a free-flowing discussion of how to build the innovation economy, sustain and reform education, grow jobs in the process, and out-compete emerging powers such as China.

The event was not a fundraiser. At a fundraising dinner, the big ticket folks generally get about 10 minutes of the president at their table before he moves on to the next. This was one table, two hours of the president.

As you can tell from the list below, all boldface names, as the saying goes, there were some major egos and brilliant personalities involved. I have a feeling that Obama held his own.

Here's who participated: John Doerr, Partner of Kleiner Perkins Caufield & Byers; Carol Bartz, President and CEO of Yahoo; John Chambers, CEO and Chairman of Cisco Systems; Dick Costolo, CEO of Twitter; Larry Ellison, Co-Founder and CEO of Oracle; Reed Hastings, CEO of Netflix; John Hennessy, President of Stanford University; Steve Jobs, Chairman, Co-Founder, and CEO of Apple; Art Levinson, Chairman of Genentech; Eric Schmidt, Chairman and CEO of Google; Steve Westly, Managing Partner of The Westly Group and former State Controller of California; and Mark Zuckerberg, Co-Founder and CEO of Facebook. The president sat between Mark Zuckerberg and Steve Jobs.


Russian President Dmitry Medvedev warns that the Middle East "may shatter into pieces."

In many respects, this is a golden opportunity for Democrats to align themselves permanently with an already emerged yet still emerging sector of the economy that can be even more important in the future.

For Obama, the innovation economy can come to be seen as both emerging and already very much real, something that blends greenery, in both senses of the word, with an economic vision that promises substantially lessened dependency on hostile sources of energy.

Obama's drive for greentech is very timely with all the geopolitical bombs going off now tied to our fateful dependence on oil. And the support of top business figures can grant it a mainstream legitimacy -- not only with establishment institutions but also with independent voters -- which it won't get from association with only the usual suspects of the left.

Now all Obama has to do is get through one of the biggest geopolitical obstacle courses in decades in order to have his message heard.

You can check things during the day on my site, New West Notes.