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U.S. risks losing "Arab Spring" opportunity: Clinton

Aug 16, 2011, 12:58 p.m.
U.S. Secretary of State Hillary Clinton takes part in a televised conversation at the National Defense University in Washington August 16, 2011. REUTERS/Kevin Lamarque

By Andrew Quinn and Phil Stewart

WASHINGTON (Reuters) - The United States may lose its chance to reshape the politics of the Middle East if budget pressures hobble U.S. support for democratic forces emerging in countries such as Egypt and Tunisia, Secretary of State Hillary Clinton said Tuesday.

Clinton and Defense Secretary Leon Panetta, appearing in a townhall-style meeting, argued strongly against further cuts to military, diplomatic and development spending as the United States struggles to slash its $1.4 trillion deficit.

"We have an opportunity right now in the Middle East and North Africa that I'm not sure we're going to be able to meet because we don't have the resources to invest," Clinton said, citing Egypt, Tunisia and Libya as badly in need of U.S. help.

"Budget documents are value statements: who we are as a people, what we stand for, what investments we're making in the future," Clinton said.

"Whether we will continue to be strong and be able to project American power is up for grabs, and we're going to make the best case we can that American power is a power for the good...we hope that it will find a ready audience in the Congress as these negotiations resume."

Clinton's remarks were her strongest to date warning that fiscal austerity at home, depending how it's implemented, could weaken the U.S. leadership role overseas.

Panetta renewed his warnings against a "devastating" second round of defense cuts, saying Congress should look elsewhere for additional savings.

Panetta, who took over the top Pentagon post last month, has said the initial $350 billion savings in security spending already signed into law was manageable -- but that further reductions could imperil the country.

"If they go beyond that ,.. (to) double the number of cuts that we're confronting, that would have devastating effects on our national defense," Panetta said, adding it would "terribly weaken our ability to respond to the threats in the world."

Under the deficit deal approved this month by the U.S. Congress, lawmakers and the Obama administration will weigh priorities as they seek to find at least $1.2 trillion in savings on top of the $917 billion already agreed.

Over the longer term, Washington must figure out a way to put the federal government on a more fiscally sustainable path and reverse the trend of huge annual budget deficits.

The Pentagon's base budget this year was $526 billion, excluding the cost of wars in Iraq and Afghanistan, and is one obvious target. But congressional appropriators are also looking at a bill that would cut State Department funding by $8.5 billion next year, 18 percent below fiscal 2011 levels and 22 percent below President Barack Obama's request.

BILLIONS NEEDED

The International Monetary Fund has estimated that the oil-importing countries of the Middle East and North Africa such as Egypt and Tunisia will need more than $160 billion over the next three years.

Obama has pledged to support democratic transitions in both countries, but to date has offered relatively limited assistance including a debt swap worth roughly $1 billion for Egypt and another $1 billion in loans and loan guarantees.

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