The U.S. Federal Government shutdown threatens a swift response to potential foreign policy challenges. This situation arose due to a lack of agreement in Congress, leaving about 750,000 federal employees without pay. Expert opinion from Alexander Kraev of the Foreign Policy Council “Ukrainian Prism” confirms that tension in economic sectors is only increasing.
Shutdown Details
The United States officially announced a shutdown for the first time since 2019, when funding could not be agreed upon again. According to Kraev, this situation resulted from lost time and a lack of agreement between Congress and the White House on key budget issues.
Kraev notes that the shutdown halts the work of the country’s key government bodies. Congress failed to pass both a new budget and an extension of the current fiscal year, creating significant problem areas. He emphasizes: “The U.S. faces enormous difficulties with funding, and for most of the year, they ‘lived’ on constant budget extensions. The situation is complicated by the fact that each time old laws had to be reviewed, including those concerning military appropriations and aid to foreign partners.”
Military Funding and Aid to Allies
According to him, the military budget is more stable since it is approved separately from the general federal budget. Similarly, support programs for countries like Ukraine and Taiwan exist in a separate context. However, now Democrats have refused to cut social programs, significantly exacerbating the conflict within the government.
Political Consequences
Approaches to funding have become the basis of confrontation between Democrats and Republicans. Kraev points to the Democratic side’s refusal to revise appropriations for healthcare and education, which led to the current situation. It should be understood that the U.S.’s response rate to international challenges may significantly decrease solely due to the weakness of domestic policy.
Kraev adds that “there is confidence that supported programs will continue, but active actions have become a question.” In his opinion, it is precisely concerns about domestic affairs that distract from foreign policy steps.
Economic Risks
The U.S. economy will also suffer. Since federal employees are temporarily not receiving salaries, this affects not only them but also many other sectors, particularly in culture and healthcare. Fluctuations in the stock market are already visible — the New York Stock Exchange shows negative trends. A drop in major indices is predicted at least to the level of the end of last year, which was a record since the beginning of the 21st century.
Impact on Foreign Policy
Kraev analyzes how the shutdown might affect aid to Ukraine. “The U.S. simply will not be as active as before,” he notes. Budget lines concerning social assistance and military appropriations are different components, but the response to international events becomes less flexible.
The expert adds that certain programs, such as support for Israel, Taiwan, and containing Russia, may now proceed more cautiously. Stagnation in domestic politics leads to stagnation in foreign policy. This creates a dangerous situation where the U.S. cannot respond quickly enough to global challenges and maintain its status.
Gold prices are already rising, indicating global financial uncertainty.