By Sanjeev Oak

In 2023, the world witnessed even a global superpower like the United States teeter on the brink of bankruptcy before pulling itself back. The looming government shutdown, threatening millions of jobs, was averted at the last minute. Meanwhile, the Israel-Hamas conflict exposed growing opposition from Arab nations against the U.S., and Ukraine found itself fighting its war largely alone. A series of such events revealed significant cracks in America’s reputation as a global superpower.

The U.S. Nears Bankruptcy
It was unimaginable for many that the United States, a symbol of economic might, would stand at the edge of bankruptcy. Yet, in June 2023, this nearly became reality. The U.S. narrowly avoided default by raising its $33 trillion debt ceiling at the eleventh hour. While it appeared sudden, the groundwork for this crisis was laid earlier. At the start of the year, the Federal Reserve predicted GDP growth of only 0.5%, with analysts sounding alarms of a potential recession. By year’s end, however, the economy grew by 2.6%, though not without turmoil.

Aggressive interest rate hikes by the Federal Reserve drained liquidity from regional banks. Within two months, four banks, including Silicon Valley Bank (SVB), collapsed. More than 180 banks remain at risk today. The SVB failure—rooted in rising interest rates—shook investor confidence, leaving over 1,500 startups struggling. The U.S. government’s decision not to save the bank surprised many, as subsequent bank failures followed. First Republic Bank collapsed within eight days, its stock plummeting before J.P. Morgan intervened.

Debt Ceiling Crisis
As banks faltered, the looming “credit default” became a global concern. President Joe Biden and House Speaker Kevin McCarthy struggled to strike a deal to raise the $31.4 trillion debt ceiling. Treasury Secretary Janet Yellen warned that the U.S. would default on June 1 without a resolution, sparking fears of widespread unemployment and market collapse. Analysts predicted that 1.5 million jobs could vanish overnight, borrowing costs would skyrocket, and unemployment would surge.

A default would have rippled across the global economy. Fortunately, disaster was averted, but the episode exposed the deep political gridlock and fragility in even the world’s largest economy.

The Shadow of a Shutdown
Even after resolving the debt ceiling crisis, the threat of a government shutdown loomed. By October, concerns intensified as a shutdown could have paralyzed the federal government, halting services like passport issuance, closing national parks, and leaving nonessential employees furloughed without pay. Since 1976, the U.S. has faced 22 government shutdowns, the longest lasting 35 days in 2018-2019.

House Speaker Kevin McCarthy, by cooperating with Biden to avert the shutdown, lost his position—a stark reflection of the political turmoil within Washington.

Israel-Hamas Conflict and America’s Waning Influence
On October 7, Hamas launched its deadliest attack on Israel, prompting the U.S. to back Israel unequivocally. As Israel continued its military operations in Gaza, ignoring U.N. calls for a humanitarian ceasefire, over 20,000 Palestinians have been killed, including civilians. Israel claims it has eliminated over 7,000 Hamas militants.

While the U.S. provided weapons and deployed warships to support Israel, Ukraine suffered the consequences. American aid to Ukraine dwindled as global focus shifted to the Middle East. Ukraine now fights its war largely alone, with dwindling military resources.

America’s unwavering support for Israel eroded its trust among Arab nations. Countries in the Gulf have distanced themselves, casting doubt on the future of Middle East peace processes. The Israel-Hamas conflict has not only destabilized the region but also weakened America’s influence in the Gulf.

A Superpower in Crisis
The events of 2023—economic instability, political dysfunction, and shifting alliances—exposed vulnerabilities in America’s global standing. As Ukraine fights a lonely battle and Arab nations turn away, America’s reputation as a stable and reliable superpower has taken a significant hit. The year highlighted cracks in its economic and geopolitical leadership, forcing the world to reconsider the U.S.’s role in an increasingly multipolar world.