More bailouts, social programmes and renewed diplomacy, says Exclusive Analysis

President Barack Obama’s new administration in America is likely to support more bailouts of labour intensive industries in order to prevent a leap in unemployment, according to analysts.

The analysts predicted that the US steel industry would most likely receive a bailout because of concern over further job losses and because Pennsylvania, a major steel manufacturer, was an important election state.

The bailouts, however, would have strict caveats on how the money should be used, said Exclusive Analysis.

According to the forecast troubled industries that are not labour intensive are unlikely to receive bailouts.

The analysts also suggested that negotiation of new free trade agreements could be slow because of the global financial crisis.

Obama’s efforts to stimulate job creation through public spending on infrastructure projects started on January 15 with the $825bn economic stimulus package.

“Troubled industries that are not labour intensive are unlikely to receive bailouts.

The new President has also earmarked funds for environmental programmes and a middle class tax cut in an effort to kick start the economy. Obama's expressed intention to increase funding for renewable energy and desire to tackle climate change appear to mark a sharp change with the previous administration.

On the foreign front Exclusive Analysis said that although Obama is expected to pursue diplomacy as a principal policy tool his administration is likely to become more hawkish over time.

One of the President’s first moves was to close the controversial Guantanamo Bay prison camp, set up under the Bush administration to hold suspected terrorists, and outlaw controversial policies like torture and rendition.

Demilitarisation in Iraq will accelerate under Obama but a complete troop withdrawal is unlikely to be completed before 2010, said the forecasters.

Obama's target is to remove most US troops from Iraq within sixteen months of becoming president. He thinks that the Iraq war has forced the US to take its eye off Afghanistan and is in part to blame for the setbacks in that war. He will almost certainly increase the US military presence there. However, according to the analysts, this is unlikely to have the same effect as the troop surge in Iraq.

Through economic and diplomatic aid, the US under Obama could seek Pakistan’s support to assist its efforts in Afghanistan. Such packages could include pressure on India over Kashmir.