Obama cancels Asia tour over shutdown; raises questions on U.S. pivot

By Steve Holland and James Pomfret

WASHINGTON/NUSA DUA, Indonesia (Reuters) - President Barack Obama called off plans to visit Asia and attend two summits because of the U.S. government shutdown, raising questions about the strategic "pivot" to the region that he announced just two years ago.

Obama had planned to depart on Saturday for a four-nation, week-long trip. He cancelled visits to Malaysia and the Philippines earlier this week because of his budget struggle in the U.S. Congress and said late on Thursday he would not attend the regional summits in Indonesia and Brunei.

The political standoff over the U.S. budget has shut down non-essential government services and appeared likely to drag on for another week or longer. Another crisis looms in two weeks when lawmakers must decide whether to increase the U.S. government's $16.7 trillion debt borrowing limit.

"The president made this decision based on the difficulty in moving forward with foreign travel in the face of a shutdown, and his determination to continue pressing his case that Republicans should immediately allow a vote to reopen the government," the White House said.

Obama was scheduled to meet Russian President Vladimir Putin, Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe, among other leaders, at the summits.

Two of his main aims would have been to discuss the Syria crisis with Putin and to hold talks on a maritime code of conduct for disputed territories in the oil- and gas-rich South China Sea.

"We are disappointed," said Indonesian Information Minister Tifatul Sembiring on the island of Bali, host of the Asia-Pacific Economic Cooperation (APEC) summit from Sunday.

"I think the summit will go on, there is a long-term plan. (But) without Obama, you can imagine how disappointed we are. We could hardly imagine he wouldn't come."

Obama was also scheduled to attend the East Asia Summit, organised by the Association of Southeast Asian Nations (ASEAN), in Brunei next week.

Xi, who was on a visit to Malaysia on Friday, did not comment on Obama's decision. But analysts said the no-show by the U.S. president would work to China's advantage.

"While his decision is perfectly understandable, it projects a poor image of America as a country that is politically dysfunctional and on the verge of another economic crisis," said Ian Storey, senior fellow at Singapore's Institute of Southeast Asian Studies.

"Meanwhile, cash-rich and self-confident China will have the floor to itself."

Obama twice postponed visits to Indonesia and Australia in 2010, because of a health reform bill and then because of the Gulf of Mexico oil spill. He was absent from the APEC meeting last year in Vladivostok, Russia because of a Democratic Party convention.

SEVERE DILEMMA

In Tokyo, Japan's top government spokesman, Yoshihide Suga, said Abe would attend the summits as planned.

"This is a domestic problem of the United States," he said. "We hope the (Obama) administration and Congress negotiate earnestly to solve the problem as early as possible, so that the problem won't be affecting various issues."

Storey said the latest domestic crisis was posing a severe dilemma for Obama, since it clashed with a cherished foreign policy objective. At the APEC and East Asia Summits two years ago, Obama announced the U.S. strategic pivot, or rebalancing, toward Asia, which was seen as a reaction to the growing clout of China.

"On the one hand he needs to be in Asia to demonstrate America's commitment to the region and especially to the ASEAN-led regional security architecture that has been one of the central planks of his administration's Asia policy," said Storey.

"But with government employees on unpaid leave, Obama cannot afford to leave Washington and be seen hob-nobbing with world leaders on a tropical island."

The Washington stalemate has idled hundreds of thousands of federal government workers and comes two weeks before Washington faces an even more crucial deadline - raising the U.S. debt limit so the United States can pay its bills. A bitter debate rages over that issue as well and if left unresolved could result in a U.S. debt default.

Denis Blair, the former commander of U.S. forces in the Pacific region, said not too much should be read into Obama's decision to call off the tour.

"I would read nothing more into the postponement of President Obama's trip than that he has to stay on and take care of this (crisis)," he told reporters in Manila.

"I'm very confident that he will reschedule and frankly it will be a better visit if he's not on the phone having to call back home to get reports on the latest development there."

Secretary of State John Kerry will lead delegations to both summits in place of Obama. Kerry will also go to Malaysia and the Philippines.

Obama phoned both President Susilo Bambang Yudhoyono and the Sultan of Brunei to inform them of his decision, the White House said.

Obama looks forward to working with Asian allies and returning to the region at a later date, the White House said.

(Additional reporting by Manuel Mogato in MANILA and Kiyoshi Takenaka in TOKYO: Writing by Raju Gopalakrishnan: Editing by Neil Fullick)

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