By Lesley Wroughton
WASHINGTON (Reuters) - America's top diplomat warned on Thursday that the United States could suffer more lasting damage to its influence abroad if the next round of budget talks in a few months lead to another breakdown.
Secretary of State John Kerry said the recent 16-day shutdown had raised questions among key allies about whether Washington can be counted on to lead - whether it is in talks with Iran, Middle East peace negotiations or completing an Asia-Pacific trade deal.
"What we do in Washington matters deeply to them, and that is why a self-inflicted wound like the shutdown that we just endured can never happen again," Kerry told the Center of American Progress policy think tank.
"The simple fact is that the shutdown created temporary but real consequences in our ability to work with our partners and pursue our interests abroad," Kerry added.
Kerry's warning about future U.S. credibility was more forceful at home than abroad.
In Asia recently where he stood in for President Barack Obama at summits in Indonesia, Brunei and Malaysia, Kerry dismissed the protracted budget negotiation in Washington as a "moment in politics" and assured countries it would not hurt U.S. commitments to the region.
But back in Washington on Thursday after several weeks of non-stop travel in Asia and Europe, Kerry said the shutdown had affected confidence in the United States abroad.
"This political moment was far more than just symbolism, far more than just a local fight. It matters deeply to our power and to our example," he said. "While this chapter is temporarily over, we've got another date looming, and the experience has to serve as a stern warning to all."
"Make no mistake, the greatest danger to America doesn't come from a rising rival," Kerry said, "It comes from the damage that we're capable of doing by our own dysfunction and the risks that will arise in a world that may see restrained or limited American leadership as a result."
U.S. lawmakers reached a last-minute deal earlier in October to break the fiscal impasse and avert a crippling debt default, but it promises another budget battle in a few months. Under the deal, a House-Senate negotiating committing will be formed to examine a broader budget agreement, with a deadline of December 13.
The deal funds the government until January 15 and raises the debt ceiling to February 7.
Kerry said America's allies were watching the budgets talks closely.
He said that while news headlines in the United States focused on political party wrangling, fresh opinion polls and the impasse's consequences for the 2016 presidential race, foreign leaders were more interested in the U.S. ability to lead.
"I personally have every confidence we can and that we are, but others are going to need to see us steer a steady course in order to rebuild their confidence," Kerry said, "In the days to come, if we let domestic differences overwhelm diplomacy, those differences will undermine our shared values and most importantly our shares interests."
"The question no longer is whether our politics stops at the waters edge, but whether our politics stops us from providing the leadership that the world needs," he added.
(Editing by Philip Barbara)