May 18 (UPI) — President Joe Biden begins his shortened visit to the G7 summit Friday as the threat of U.S. default looms over his efforts to tackle climate change and tension in the Indo-Pacific region as the world leaders gather in Japan.
Biden will be the second sitting U.S. president to visit Hiroshima when he attends the summit but will bypass the opportunity to be the first U.S. president to visit Papua New Guinea as he cuts short his travel plans to return to the negotiating table as the U.S. debt ceiling deadline approaches.
He is expected to return to the United States in time to hold a press conference on Sunday as Treasury Secretary Janet Yellen has warned the nation could default on its debts as early as June 1 if a deal is not reached.
Peter Ireland, an economics professor at Boston College, told UPI default would create chaos that would spill over on a global scale. Even if the default lasts only for a day before the United States finds a resolution, significant damage will be done, he said.
The damage could be wide-ranging.
For example, faith in U.S. political systems and its leaders would be negatively affected at home and abroad. More directly, though, the nation’s credit score likely would be lowered, weakening its borrowing power. If the default persists for weeks or months, international trade will be significantly disrupted, echoing the supply chain issues that surfaced following the COVID-19 pandemic.
“It would be so crazy, yet we’ve seen so many crazy things happen,” Ireland told UPI. “Ordinarily, you would say a default would never happen. There’s going to be some kind of compromise. Given what we’ve seen in the last three years, nothing can be ruled out.”
G7 finance ministers and central bank governors met in Niigata, Japan, last week to discuss international priorities, and the U.S. debt ceiling was not among the top concerns discussed.
Support for Ukraine in its war with Russia, bolstering the resilience of the global economy and a continued push to implement impactful climate change mitigation policies remain top priorities among summit members.
“Energy insecurity caused by Russia’s war of aggression has reinforced our determination to further accelerate our climate action and promote an orderly and just transition to achieve our emission reduction targets,” the panel of finance ministers and Central Bank governors said in their report.
While U.S. default was not plainly discussed, building a more resilient global economy reflects that international agencies are preparing for yet another unprecedented event that could shake financial systems around the world in a worst-case scenario should the United States default on its debt.
With the threat of default looming, Biden will still seek to work with U.S. partners in Japan and Southeast Asia that face increasing aggression from China, which has created a sense of unease throughout the region.
Relations between the United States and China have been strained by U.S. support for Taiwan in its crawl toward independence, and the tightening bond between Chinese President Xi Jinping and Russian President Vladimir Putin. Meanwhile, this year’s Chinese spy balloon incidents have driven tensions even higher.
The United States and Japan, meanwhile, have drawn closer as allies, along with South Korea, demonstrating a willingness to flex military muscle.
In 2021, Biden said the future of the world depends on a “free and open Indo-Pacific enduring and flourishing in the decades ahead.” The Biden administration has continued to double down on increasing security support in the region, emphasizing trade and vowing to stand with U.S. allies.
Earlier this month, Biden met with Philippines President Ferdinand R. Marcos Jr. at the White House. The pair discussed U.S. defense commitments in Southeast Asia in the face of China’s increasing aggression toward Taiwan, which it considers part of its territory.
Xi has vowed to take steps toward “reunification” with Taiwan during his third term, which started in March.
Biden also is likely to address U.S. efforts to combat climate change and support developing nations that have suffered its effects.
During a major economies forum on energy and climate last month, Biden reiterated his goal of achieving net-zero carbon emissions by 2050 by decarbonizing energy.
Biden touted the mitigating effects of Bipartisan Infrastructure Law projects and the CHIPS and Science Act throughout his “Investing in America” tour this spring. At COP27 last fall, Biden said the United States would be a leader on tackling climate change, urging other nations to follow its lead.
More recently, the president received backlash from environmental advocates after approving a new drilling project on Alaska’s North Slope. The Sierra Club environmental advocacy group said the project stands to “entirely undo the clean energy progress we’ve made, lock us into fossil fuel drilling for another 30 years and threaten the communities and wildlife who rely on these Alaskan landscapes.”