"Any way the wind blows" - Queen, Bohemian Rhapsody
The past few years have been quiet something. The war in Ukraine – the major event in Europe this year – but COVID 19, the ramifications of the 2008 financial crisis, and 9/11 and its consequences (most notably the war on terror). This all in the context of large-scale changes such as the rise of China (and along with it, much of the ‘global-South’), the increasing consciousness with regards to climate change, and the increasing of global inter-connectedness in many areas (i.e., ‘globalization’). The first few decades of the century have been noteworthy; but presumably that can be said of all periods. It made me think of the Martin Luther King Jr. quote, “We are not makers of history. We are made by history.”
In Europe and the US, the return of inflation has clearly marked 2022. The impact has varied – in the EU for example, in November 2022 according to Eurostat, annual inflation rates varied from 6.7% in Spain to 23.1% in Hungary. GDP growth – after a post-COVID 19 bump – has largely reduced to zero in both the EU and the US. The cause(s) of inflation have been much debated and thus there is no clear consensus on how to address this. Both the ECB and US Fed have aggressively increased their lending rates. However, there is no clear consensus on what fiscal policy should be and the role of central banks with regards to some of the less conventional measures (in the Eurozone). For Europe, it is clear that an important factor is the war in Ukraine and its impact on energy provision and energy prices. But this is also impacting the rest of the world and geopolitics.
The most evident impact has been on energy. In addition to the price increase (as mentioned – an important part of the inflationary pressures, at least in Europe), the cutting-off of / reduction of access to Russian energy (most notably gas) has pushed Europe in particular to access other sources and change its approaches. Another notable impact has been on food prices globally, both directly through the reduction in provision of specifics staples but also via the provision of fertilizers. The inflationary pressure has pushed both the US Fed and the ECB to increase interest rates and this is impacting economies around the globe who borrow in US dollars and / or Euro’s. Exiting the current low rates makes funding debt service harder for developing countries and emerging markets – some have not been able to return to the markets in 2022.https://findevlab.org/the-coming-debt-crisis/. The case of Ghana is illustrative. The war in Ukraine is also re-defining alliances and international relations. NATO (or ‘the West’) seems to have emerged as a more functional structure than many had expected. Russia has seemingly intensified its relations with Iran and North Korea, in particular with regards to weapons. Finally, China, India, and much of the rest of the world has in general tried to take a ‘neo-non-aligned’ position with regards to the war.
Where does all of this leave us for 2023? Some random thoughts: 1) The above, combined with the (relatively) low growth in China mean that development perspectives (in particular for non-energy economies) in developing countries are not good; and this good have political ramifications 2) The previous point + the direct tensions between the West and Russia over Ukraine mean that the perspectives for cooperation on global governance issues (e.g. climate change) are not good; 3) A particularly contentious US presidential elections in 2024 (with primaries to be announced between end 2022 and early 2023; conventions to take place summer 2024) means that the US is likely to be focused on internal affairs the 2nd half of 2023.
28.12.2022, Brussels, Belgium.
Online encampment of A. S. Barry. Disparate and not-so-disparate thoughts on international relations, development, writing, and life.