Barack Obama has inspired America and the world because of who he is. As the first black president of the United States, he embodies the American dream of equality and opportunity. With Hussein as his middle name, a father from Kenya and a childhood spent partly in Indonesia, he also exemplifies the cultural and racial diversity that characterises America today. However, as the 44th president, Mr Obama will be judged by what he does. The challenges that confront him are as great and difficult as those that any US president has had to face in at least a generation. Not since Franklin D. Roosevelt has a president had to deal simultaneously with a fully fledged recession and a nation at war. And in many ways, the problems Mr Obama faces are even more complex than those of his great predecessor. Whatever policy choices he pursues will have an enormous impact on the rest of the world. This is why his election has captivated not only Americans but people everywhere. There are great hopes for his presidency. He must now show that he has the wisdom, intellect and temperament to meet the challenges ahead. His mettle will be tested from Iraq and Iran to Afghanistan and Pakistan. He has promised to resolve the long-standing Palestinian-Israeli conflict. He must contend with a resurgent Russia and a possibly nuclear-armed North Korea. And he needs to manage rising powers such as China, India and Brazil. He will have to make good on his campaign promise to abandon the arrogant unilateralism of the George W. Bush years to build new alliances, repair old ones and strengthen multilateral institutions. He must repair America's moral standing by example, not by threats or military muscle. HOPE OVER FEAR Despite the daunting tasks he faces, Mr Obama has advantages over his immediate predecessor. After the 9/11 attacks, Mr Bush built his presidency on warnings about terrorism and the fear it inspired among Americans. He began with a record federal budget surplus and presided over one of the great bubble-induced economic booms of modern times. He left office with an economy in tatters, an unprecedented budget deficit, a failed war in Iraq and America's global standing at new lows. By contrast, Mr Obama based his election campaign on messages of hope and renewal. People in America and around the world responded enthusiastically. Their high and often unrealistic expectations will not all be realised. But Mr Obama will benefit from the strong desire to move on from the troubled era of Mr Bush. He will make progress on many fronts as long as he maintains his popularity at home and abroad. The economy has to be Mr Obama's top priority. The US must make every effort to pull itself out of a deep recession after the excesses of Wall Street brought not only the country, but the world economy, to its knees. Many once mighty US banks are still in danger of collapse and insolvency. As long as the American financial sector remains in trouble, the nation's economy cannot hope to recover - nor can the world economy. Mr Obama must, therefore, decide quickly how to use the rest of the bailout money already authorised by the US Congress to recapitalise solvent banks, buy their toxic assets and take over insolvent banks if necessary. He must also persuade the Democratic Party-dominated Congress to authorise quickly the US$825 billion stimulus package to revive the US economy. GLOBAL CRISIS In the age of globalisation, no economy is an island. Sino-US economic relations have often been described as one of the few policy areas in which Mr Bush could claim some success. Yet, they were built on an economic marriage of convenience. China has been recycling the huge trade surpluses it earned through exporting to the west, particularly the US. This has been done through the purchase of American treasury bills. China has thus become one of the biggest creditor nations of the US, helping to underwrite the growing American budget deficit. It now has a major stake in the health of the American economy. The relationship between the two nations must be managed in a way which is conducive to restoring the health of the American economy as well as protecting the value of US dollar denominated assets held by China. Despite the global economic crisis, the liberal trade order that has pulled millions out of poverty, especially in Asia, must not be allowed to fail. Mr Obama must not cave in to rising protectionism at home. Meanwhile, the stumbling block to reaching a successor treaty to replace the Kyoto Protocol on climate change has been the intransigent stance taken by rich nations on one side and emerging ones on the other. Mr Obama has promised to break the deadlock by financing and helping countries such as India and China to develop clean technology and alternative energy while voluntarily cutting US greenhouse emissions. He must now make good on his pledge. The failures of the Bush presidency have been interpreted as signs of America's imperial decline. But the US remains the world's sole superpower. The world may not have witnessed America's decline, but rather a failure of leadership. Mr Obama must work to restore America's proper place in the world.