Budget battle hobbles Clinton as clock ticks down

WASHINGTON Wed Oct 12, 2011 3:32pm EDT

Secretary of State Hillary Clinton responds to questions during an interview with Reuters correspondents at the State Department in Washington DC October 11, 2011. REUTERS/Mike Theiler

Secretary of State Hillary Clinton responds to questions during an interview with Reuters correspondents at the State Department in Washington DC October 11, 2011.

Credit: Reuters/Mike Theiler

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WASHINGTON (Reuters) - Time and money are running short for Hillary Clinton.

After surprising the world in 2009 when she signed up as secretary of state for her Democratic rival President Barack Obama, Clinton has repeatedly said she will stand aside after Obama's term ends in January 2013, leaving her just 15 months to cement her legacy as America's top diplomat.

But as the clock winds down, Clinton also faces one of the biggest domestic battles of her life: ensuring that U.S. spending on diplomacy and foreign aid survives the whirlwind of budget cuts swirling through Congress.

"We are engaged in a very challenging budget discussion with the Congress which will to some extent determine where our priorities are and what we do," Clinton told Reuters in an interview on Tuesday.

"There are so many emerging actors who can influence events in ways that either advantage or disadvantage us nationally, or promote or undermine the values that we stand for. So we really have to have a broad comprehensive global presence at the very time when we're having the money cut," she said.

The sweeping view from Clinton's suite of meeting rooms atop the gray-walled State Department complex includes enduring symbols of American power and prestige anchored by the spire of the Washington Monument.

But like that monument -- closed to visitors after a rare earthquake in August -- American power in the latter half of Clinton's State Department tenure is looking shaky.

Budget hawks in Congress, empowered both by Republican electoral gains and grim news about the U.S. deficit, cut some $8 billion off Obama's request for the State Department and U.S. foreign aid for last year and propose to whack another $8.6 billion from their combined budget in fiscal 2012.

Lawmakers are looking for another $1.2-$1.5 trillion in deficit reduction measures across the government over the next decade and State and aid budgets, which got about $49 billion for the current fiscal year.

The crunch comes as Clinton's State Department grapples with a fast-expanding docket of problems ranging from the U.S.-led war in Afghanistan and managing relations with Pakistan and China to the flagging Middle East peace process and fallout from Arab uprisings across the Middle East and North Africa.

For Clinton, who came into office vowing to promote U.S. "smart power" by ramping up both U.S. aid and civilian engagement around the world, the threatened downscaling of U.S. involvement is both dangerous and disappointing.

"I do believe that our leadership is critical to our economic revival and to our security and safety in the world," Clinton said. "So it's something that I'm going to try to explain and connect to what people are going through right now."

'COBBLING TOGETHER'

But there is only so much a cash-starved secretary of state can do -- even if polls repeatedly show her as one of the most popular political figures in the country.

Clinton has used a series of speeches to advocate for international spending even at a time of rising domestic economic fears.

"As we debate the choices ahead, we must resist the temptation to turn inward and undercut our leadership by slashing investments in diplomacy and development, which account for only 1 percent of the federal budget," Clinton said in one such address on Wednesday at a Washington think-tank.

But the results of the U.S. pullback are already coming into focus.

In Tunisia, which the Obama administration frequently cites as an Arab country on the right track after a popular revolt toppled its longtime president in January, the United States has been able to contribute only around $40 million in aid.

"We're cobbling together what we can to help them ... and you multiply that many times over (for) Libya, Egypt, Jordan, Yemen, the other Gulf countries. We have to be a lot more creative with the dollars that we have in order to get the impact that we're seeking," she said.

Clinton's colorful political history and undeniable star-power have helped to raise the profile of the State Department, aided by an unflagging work ethic which has seen her log more than 600,000 miles in air travel -- more than twice the distance from the Earth to the Moon.

But while she is certain to draw headlines, Clinton says her remaining time at the State Department will also be devoted to studying "trendlines" -- the long, slow changes taking place around the world that promise to rewrite the U.S. strategic calculus over time.

These, Clinton said, include issues close to her heart such as women's empowerment as well as U.S. energy security and nuclear non-proliferation, and stepping up engagement with increasingly powerful regional actors such as Nigeria, India and Brazil.

Clinton said she aggressively promotes the Obama administration's vision of global U.S. engagement, underscoring that the United States must take the lead in managing global problems to secure both economic prosperity and national security at home.

"Leadership has to be earned. It has to be earned over and over again," Clinton said.

"I hope that people will understand that, while we have to fix our problems at home, we cannot abdicate our leadership without it eventually boomeranging on us."

(Editing by Mary Milliken and Jackie Frank)

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