Europe awoke yesterday morning to a US electoral result that it had anticipated and which most on this side of the pond had hoped for - a second four-year term for US President Barack Obama.  President Obama yesterday won a major battle but many more will mark his second, and final, term in office – not least of which will be the reaching across the aisle and the bitter partisan divide looming over the US Congress.

When he swept into power as the first black president in 2008, Mr Obama had been greeted with open arms by most of the world, Europe included, after the previous eight years of what many considered as George W. Bush’s misguided decisions and their dire repercussions on the rest of the world.

This time around, the jubilation was not quite the same as it had been four years ago, but nevertheless, Obama’s ‘rock star’ popularity made him an easy favourite in the world outside the United States.

Yesterday, after combined Democrat-Republican 17-month campaign expenditure of over US$2 billion, President Obama emerged as the clear winner. Although the popular vote was very close (50% for Obama and 49% for his challenger Republican Mitt Romney), President Obama by the time of writing had taken 303 of the state-by-state electoral vote compared to Romney’s 206 in what was a very comfortable victory.

The US president is chosen in a state-by-state tally of electors, not according to the nationwide popular vote, making such ‘battleground’ states that vote neither Republican nor Democrat on a consistent basis particularly important.  Obama won Ohio, Wisconsin, Virginia, Iowa, New Hampshire, Colorado and Nevada, seven of the nine battleground states where the campaigns poured nearly US$1 billion into television adverts. Romney took only North Carolina while the final swing state, Florida, remained too close to call at the time of writing yesterday afternoon.

The US election boiled down in essence to a basic choice between two very different visions of government: Obama's vision of government as a major, front-row player in Americans’ lives, or Romney’s vision of government as a less-obtrusive facilitator for private enterprise and entrepreneurship.

President Obama ran a campaign of tactical brilliance, patching together the support from the young, the poor and the non-Caucasian - a coalition more about identity than policy. He painted Romney into a corner with his own wealth, and Romney helped him do it, and portrayed himself as the defender of the middle class.  Republicans had a still struggling economy on their side but couldn't ultimately convince voters they would do any better than a second-term Obama.

But once the dust settles on the electoral victory, and free from the cautions of an electoral campaign, the second Obama administration will have to face up to a troubling crisis in Syria, deepening tensions with Israel over how to cope with Iran, a difficult military drawback from Afghanistan, and ever more daunting economic challenges.

President Obama will also be tested almost immediately with a so called ‘fiscal cliff’ of expiring tax cuts and budget cuts looming on 1 January. 

But while the 2008 election had rested on how Mr Obama had pledged to end the wars the US had embroiled itself in, this time around it was almost all about the war against the recession and the global economic meltdown that had marked his first four years in office, and opinions have been divided on how he tackled the mess he inherited. 

Here, the electorate was split along partisan lines over a question that has driven much of the campaign debate: whether it was Obama or his predecessor, George W. Bush, who bore the most responsibility for the nation’s economic challenges. Surveys showed that roughly half of independent voters said that Bush should be held responsible.

Opinions are similarly divided over his controversial reform of the health care system, Wall Street regulation and the car industry bailout.

President Obama will also continue to pressure Europe to solve its eurozone crisis which also hurts the US economy – something European Council President Herman Van Rompuy and Commission President Jose Manuel Barroso seized on in congratulating Obama on his re-election yesterday.

‘Creation of growth and jobs remains a priority for both the US and the EU and we will continue to work with President Obama to unlock the unparalleled potential of the transatlantic market,’ the EU leaders said in a joint statement.

‘We are also ready to continue our intense cooperation in foreign policy issues and in the promotion of our common values. We look forward to meeting President Obama at an early date in order to reconfirm our priorities and provide renewed impetus to our joint action.’

Underlying such words is the fact that a transatlantic free-trade agreement has been the subject of quiet discussions between the Obama administration and the European Commission – discussions that neither Europe nor the US would liked to have sees fall by the wayside if a Romney administration were to have taken over in January.

And while Obama may still continue to clash with German Chancellor Angela Merkel’s approach to  eurozone crisis management while at the same time receiving praise from Paris, Rome, Madrid and the European Central Bank, President Obama seems poised to offer renewed commitment to transatlantic trade as a counterweight to his eurozone crisis criticism.

The joint High-Level Working Group on Jobs and Growth, set up by EU and US leaders at the EU-US summit in November 2011, is expected to release a final report on the feasibility of the ambitious trade agreement by the end of this year – prospects that may very well could have been snubbed by a Romney administration.

Companies on both sides of the Atlantic have urged EU and US policymakers to negotiate a trade and investment agreement that not only benefits their economies, but serves as a model for the rest of the world.

President Obama will also face the start of a second term with a familiar divide in Congress: a Republican-controlled House and a Democrat majority in the Senate as he tries to strike a massive fiscal deficit-cutting deal with Congress in the coming months and then move on to an immigration overhaul and tax reform.

Yesterday he made a call for reconciliation but also made it clear that he intended to pursue the goals that eluded him during his first term amid fierce Republican opposition: changes in the tax code, immigration and tackling climate change.

As such, in order to avoid the same gridlock of the past two years, President Obama will have to work towards compromises.  In his victory speech yesterday, he said he would be meeting with the vanquished Romney to plot a way forward for the country, and that he would seek to reach across the aisle of Congress to implement the reforms he envisages – perhaps a more difficult feat than winning the presidency for a second term.