WASHINGTON – The economic slump roaring across the world's geopolitical map poses weighty challenges, as well as some unexpected opportunities, for President-elect Barack Obama.
Japan and major European countries have joined the United States in falling into recession. China has seen its remarkable three-decades-long export-fueled rise slowed. Oil-based economies on Washington's worry list such as Iran, Russia and Venezuela, are reeling, too.
The U.S. led the rest of the world into the economic crisis, and many global players hope Washington can lead the world out. International investments pouring into low-interest U.S. Treasury securities in recent weeks show that, even if the U.S. has lost prestige internationally in recent years, it's still deemed one of the safest places to park money.
The financial crisis drives home to other nations that "without an America that is successful financially, economically and therefore also politically, they're not going to be successful," said Zbigniew Brzezinski, who was national security adviser to President Jimmy Carter. "If we don't function well, no one functions well."
Brzezinski said he believes "we have the chance again to establish our legitimacy internationally."
China had been on track to surpass Germany as the world's largest economy after the U.S. and Japan. But last week Beijing said its November exports took their biggest plunge in seven years in the face of weakening demand from the U.S. and other wealthy countries.
While China does not yet appear to be in recession, many factories have closed, raising the threat of heavy job losses that could fuel political unrest.
Analysts say the downturn has led Chinese leaders to put their top emphasis on protecting the domestic economy, including establishing a $586 billion plan to create public works jobs.
"In the long term, the economic crisis could decrease their investment in terms of defense, which had been rising very sharply. On the down side, it kind of reverses the U.S. approach to try to engage them more globally as China turns more inwardly," said Steven Schrage, a former Bush administration trade official now with the Center for Strategic and International Studies.
Also, U.S. multinational companies need an economically healthy China as a market for their own goods.
The effect of the dive in world oil prices — to under $50 a barrel from a high of $147 a barrel in early July — can work to the advantage and disadvantage of the U.S., analysts suggest.
In Venezuela, it could help reduce the funds available for policies that threaten U.S. interests. That could include President Hugo Chavez's aid program for left-leaning Latin American governments.
In Iran, already isolated economically through international penalties, falling oil prices have dealt a hard beating to the country, helping further erode the popularity of Iran's hard-line president, Mahmoud Ahmadinejad, ahead of a tough re-election battle next year.
Ahmadinejad, already under sharp criticism for his unpopular economic policies, said this month that the oil-price plunge will force the government of the world's fourth-largest oil exporter to make painful spending cuts.
His political rivals and other critics accuse Ahmadinejad of squandering the opportunity presented by soaring oil prices over the past three years and failing to use the higher income to insulate Iran for tougher times.
Secretary of State Condoleezza Rice says she hopes the economic shock from falling oil prices "will lead Iran to take a more reasonable course" in its standoff with the U.S. and other international powers over the country's nuclear program.
Across the broader Middle East, tumbling oil prices also have left their mark.
The economic slowdown may cut into the ability of militant groups based in the region from financing terrorism operations elsewhere. But plunging oil prices will make it harder for Iraq to finance needed renovations to their oil fields and could effect the ability of states friendly to the U.S. to bankroll anti-terrorism programs.
"Some states that have been good at keeping dissent in their countries tamped down with all kinds of subsidies — and Saudi Arabia is one — will have fewer resources to do that with," said Dan Benjamin, a former Middle East specialist with the National Security Council in the Clinton administration. "Saudi Arabia does run on oil and this is not be fun for them," said Benjamin, now a scholar at the Brookings Institution.
Russia is confronting its worst economic crisis in a decade. The need to focus on righting its domestic economy could lead Moscow to moderate aggressive foreign policies.
Still, the crisis has allowed the Kremlin to take greater control over oil companies and other industries that Vladimir Putin, the former president and current prime minister, contends should never have been privatized in the 1990s after the fall of the Soviet Union.
The jury is still out on whether the global economic crisis will increase terrorist attacks, as some analysts suggest. But, clearly, Al Qaeda and its affiliates are prepared to take credit for the downturn. Some note that the horrific attacks this month in Mumbai, India, were in the heart of an important economic hub.
"For the last several years, Usama bin Laden has spoken again and again to his followers about the need to go after economic targets, that economic targets should be at the top of the list," said Bruce Riedel a senior national security adviser to three presidents. "Al Qaeda believes that it's winning that war, that the global economic meltdown is a sign of its victory in the war,"
Bin Laden put out a video statement one year ago in which he talked about the home mortgage bubble in the United States and the impending crisis on Wall Street.
Either way, Obama inherits a full plate of issues in which economic and foreign-policy concerns are intertwined.
Going for him, suggests former U.N. Ambassador Thomas Pickering, is what appears to be a huge pool of international good will.
But, Pickering warns, this reservoir may not last long. "Every priority he selects will make someone happy and every priority he fails to select will disappoint somebody, so he's now at the zenith of his political popularity internationally unless he can figure a new way around this."
Pickering suggests Obama address various international issues at some length early in his presidency "so people around the world will know how in fact he fits the world together." It also might help if Obama can demonstrate that the United States under his leadership "can walk and chew gum" at the same time, Pickering said.