Category Archives: Politics

Economic, Financial Markets, Government, Politics, Society

The global economy and the threats it faces…

FLASHPOINTS AND THE GLOBAL ECONOMY

Never has the world been subject to a constant flux of shifting alliances as it is in modern times. The world is once again in turmoil, from Iraq to the West Bank and from the Ukraine to the South China Sea. The geographical stakes and risks are extraordinarily high leading some strategic thinkers to compare the global landscape to that which preceded the First World War a century ago.

When the International Monetary Fund (IMF) produced its April 2014 forecast of 3.6 per cent global output for the current year it added an important caveat. It warned that geopolitical factors, at the time mainly thought to be the turmoil in Ukraine, posed a potential threat to its projections.

There are, however, five major geopolitical flashpoints which currently pose a threat to economic stability:

  • The ISIS advance in Iraq

That a small ragtag of some 30,000 jihadists born out of Syria’s civil war could be a threat to Iraq, with its American trained forces and weaponry, would have seemed inconceivable just a few weeks ago.

But ISIS is well funded, as a result of wealth created from kidnappings on the Turkish border, secret donations from Sunni Gulf states and the seizure of bank deposits in Mozul. It is also battle hardened from Syria.

Its seizure of refineries in Northern Iraq threatens the country’s oil production of 3.4m barrels a day or 11 per cent of the world’s current supply.

Brent Crude has exceeded, once again, $113 a barrel. So far the valuable fields of Baghdad, including those operated by BP, remain in operation. But that cannot be guaranteed even with any form of US-led intervention.

  • Middle East peace process

The recent unification deal between Hamas and the Palestinian Authority led by Mahmoud Abbas led to deadlock with Israel over future negotiations. Then came the kidnapping of three Israel youths from a bus stop on the West Bank; murdered in haste after being wrongly identified as Israeli soldiers. Tit-for-tat followed which has ultimately led to high level tensions in the Middle East with the Government of Binyamin Netanyahu amassing 40,000 troops who appear ready for a land invasion and incursion into the Gaza Strip.

The risk now is of Israel escalating the current difficulties into a much wider conflict with the threat, for example, to Middle Eastern oil lanes and production.

  • Iran nuclear talks

The July 20 deadline set for Iran to relinquish its nuclear ambitions fast approaches.

Despite some rather conciliatory language from President Rouhani of Iran, intelligence suggests little ground has been given on vital issues such as reducing the numbers of centrifuges and ending experiments with intercontinental ballistic missiles.

The US tilt at diplomacy with Iran has been met with heavy resistance in Congress. President Obama has been finding it hard to persuade Capitol Hill to ease the financial and economic sanctions that brought Tehran to the bargaining table in Geneva.

Western oil and banking interests are champing at the bit for an end to sanctions that could re-open Iran as a lucrative market.

  • Ukraine-Russia

Flashpoints continue on the borderlands of Western Europe. President Putin shows no signs of backing down from his efforts to infiltrate and recolonize Russian speaking enclaves in Eastern Ukraine.

The so-called ‘Putin doctrine’ – the idea that Moscow is planning to retake areas of vital Russian interest reaching into the Baltics – is almost certainly a myth because that would mean directly confronting NATO.

But the threat to gas supplies following cut-offs to Ukraine is a clear and present danger that will become worse as time moves on.

The crisis already has led to a Russian pivot towards Asia in the shape of the Chinese natural gas deal in which London-based Glencore is involved in financing.

Creating a secure environment in Ukraine, in which Western assistance is co-ordinated by the IMF (where monies can be released), is proving extraordinarily difficult to enact.

  • South and West China Seas

Many strategic experts see this as the theatre for the next great strategic rivalry with China and the US – that has moved much of its navy into Pacific waters – eventually clashing.

At present the dispute is manifesting itself in proxy stand-offs between Japan and China and Vietnam and China.

There are overlapping claims to islands such as Senkaku in the Okinawa Sea that are claimed by both China and Japan.

Similarly, South Korea and Japan have clashed following large scale Korean naval operations in the region.

There are fears that a collision of war ships, an attempt to run blockades or guns fired in error could provoke an all-out war.

The tensions, serious as they are, could be unexpectedly good news for BAE Systems and other defence firms as surplus Asian nations rebuild their rundown defences.

Nevertheless, a conflict in the region – the locomotive of manufacturing output – could be devastating for Western economies.

General Western Outlook

The immediate highest risks for Western economic output come from an interruption of oil supplies in the Middle East and gas supplies from Russia via the Ukraine.

However, America’s increased oil and gas fracking activities together with new gas finds – such as those off the coast of Israel – make the world a little less vulnerable than it was after the Yom Kippur war in 1973 and the first Iraq war of 1990-91.

More serious long-term threats come from the China seas where a battle for hegemony, not dissimilar to that which caused two world wars, looks to be underway.

Globalisation has produced rich rewards in terms of fast economic development, industrialisation and prosperity.

But it has also brought with it profound new strategic concerns that could damage confidence and crush output at a time when the West is still recovering from the financial and Eurozone crisis.

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Britain, European Union, Iraq, Middle East, Politics, Society, United Nations, United States

Former diplomats lead calls for Tony Blair to be axed as Middle East Peace Envoy…

TONY BLAIR

Intro: An open letter led by ex-diplomats, and signed by thousands more, calls for the former British Prime Minister who went to war on a lie and based on a false prospectus to be axed as Middle East peace envoy

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THREE former UK ambassadors to the Middle East have joined a new demand and are campaigning for Tony Blair to be removed from his role as Middle East ‘peace’ envoy.

Signatories to an open letter, led by Mr Blair’s former ambassador to Iran Sir Richard Dalton, describes his achievements in the region as ‘negligible’, criticising his money-making activities and accuse him of trying to ‘absolve himself’ of responsibility for the crisis in Iraq.

Other former diplomats lending their weight to the letter are Sir Oliver Miles, Britain’s ambassador to Libya when relations were severed after the death of WPC Yvonne Fletcher, and Christopher Long, ambassador to Egypt between 1992 and 1995. Joining more than 4,000 signatories are human rights barrister Michael Mansfield QC, former London mayor Ken Livingstone and former Conservative prisons minister Crispin Blunt.

The letter has been organised by the makers of Respect MP George Galloway’s film The Killing of Tony Blair. It has been deliberately timed for this week’s seventh anniversary of Mr Blair’s appointment as envoy on the Middle East for the ‘quartet’ of the UN, the EU, Russia and the US, and is addressed to John Kerry, the US Secretary of State, Sergei Lavrov, the Russian foreign minister, Ban Ki-moon, the UN secretary general, and to the EU’s ‘foreign minister’.

It argues that Mr Blair’s 2003 invasion of Iraq is to blame for the rise of “fundamentalist terrorism in a land where none existed previously” and that he should be removed from his position.

The letter says: “We are appalled by Iraq’s descent into a sectarian conflict that threatens its existence as a nation, as well as the security of its neighbours. We are also dismayed at Tony Blair’s attempts to absolve himself of any responsibility for the current crisis by isolating it from the legacy of the Iraq war.”

It is alleged that Mr Blair ‘misled the British people’ by suggesting Saddam Hussein had links to Al-Qaeda. It adds: ‘It is a cruel irony for the people of Iraq that perhaps the invasion’s most enduring legacy has been the rise of fundamentalist terrorism in a land where none existed previously.

‘We believe Mr Blair, as a vociferous advocate of the invasion, must accept a degree of responsibility for its consequences.’

Criticising the former prime minister’s business interests, the letter alleges that his ‘conduct in his private pursuits also calls into question his suitability for the role’, and accuses him of ‘blurring the lines between his public position as envoy and his private roles at Tony Blair Associates and the investment bank JPMorgan Chase’.

The letter adds to growing calls for Mr Blair to stand down. In the last few days the former foreign secretary Lord Owen criticised Mr Blair for his claims that the 2003 invasion was not a factor in the current unrest in Iraq. “Tony Blair should no longer be allowed to speak for the EU on the Middle East, and someone else found for helping Palestine without his past record and crusading messianic fervour,” he said.

A spokesman for Mr Blair said: ‘These are all people viscerally opposed to Tony Blair with absolutely no credibility in relation to him whatsoever. Their attack is neither surprising nor newsworthy… They include the alliance of hard Right and hard Left views which he has thought against all his political life. Of course he completely disagrees with them over the Middle East.’

People are being urged to support the call for Mr Blair to be removed by signing the petition at www.change.org.

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Britain, Foreign Affairs, Iraq, Middle East, Politics, Society, Syria, United States

The dismal choices faced in Iraq: averting the worst scenario must be viewed as a priority…

IRAQ

Intro: Iraq is in a quagmire. The options are dismal, but the West cannot reverse the course of events in Iraq by intervening

The West will take some comfort, as well as to most Iraqis that Iraq’s ramshackle armed forces appear to have stalled the advances towards the capital by Sunni jihadists. The fall of Baghdad to the fighters of ISIS would undoubtedly lead to the termination and dissolution of Iraq as a formal state, as well as providing the jihadists and their putative caliphate with a real capital – forcing millions of Iraqi Shia to flee from their homes. It is inconceivable to believe or imagine the Middle East absorbing the shock.

Such an apocalypse has been averted, for now at least, and the Middle East and the wider world will gasp deep breaths of relief. However, even if the makeshift Iraqi forces succeed in containing the ISIS fighters (some 60 miles north of Baghdad) the long term prognosis for the country and for the region remains desperately worrying.

ISIS is in control of much of north and north-west Iraq. Whilst the insurgents may possibly cede the odd frontline town back to Iraqi forces, it will still be in possession of a de facto state composed of large, continuous chunks of Iraq and Syria. The boundaries that the British and French imposed on the Middle East following the end of the First World War seem soon to vanish, with the dismal fate that both will become failed states, much in the same way that Somalia became on the Horn of Africa. The emergence of such vacuums on the map of the world will be hugely destabilising – drawing in and expelling a range of volatile forces and consequences that will be very difficult to deal with.

The frontiers of Iraq and Syria were drawn arbitrarily to reflect the temporary interests of British and French colonists. It is quite possible, of course, with events unfolding as they are that both countries were only ever going to be viable under despotic rulers, in which case nothing can be done to prevent them from dissolving in the long term, or stop their embittered and hopelessly alienated Sunnis from creating their own entity out of the debris.

One major and worrying problem is that these countries are unravelling in a completely uncontrolled fashion. Another concern is that the heavily armed insurgents of ISIS have no intention of confining themselves to a medium-sized state based in north-west Iraq and the north-eastern parts of Syria. These extremists are religious imperialists, and their hardened and fierce ideology teaches them that they must expand or die. They will soon turn elsewhere if they are forced to consolidate control over their existing territories. The ethnically and politically fractured kingdom of Jordon surfaces as an obvious candidate for their malevolent attention.

The West, starting with the United States, cannot even hope to reverse the course of events in Iraq by intervening on the ground. President Barack Obama was right to rule out any ground incursion by US troops going back into the country.

That doesn’t mean, however, that the US takes up an observer’s seat as the region descends into ever greater chaos and disorder. Washington should encourage the tentative rapprochement between Saudi Arabia (Sunni) and Iran (Shia), both of which are starting to see just how dangerous the Sunni-Shia power struggle is becoming to each of them. The sectarian divisions and widening conflagration could easily have a tendency to draw in others by default if no attempt is made to harness relations between other countries in the region.

Western countries could also afford to be more generous in helping to address the humanitarian aspects of the latest crisis. The UK, for example, has offered an additional £3m to help tens of thousands of fleeing refugees that have been displaced as a direct result of the advances made by ISIS. Most of these refugees are now camping in Kurdish-controlled areas of northern Iraq. Such a meagre sum, given the plight of many desperate people, is hardly an adequate gesture.

A fortuitous outlook might suggest that the Sunnis in Syria and Iraq turn against their self-styled deliverers at some future point. If that is the hope, then it is vital that the Shia-dominated regime in Baghdad is persuaded to keep the door open to talks about some kind of federal option for the Sunnis, and for the Kurds. True, it may be late in the day for Iraq to even try the federalist option, but just possibly that might be the only option remaining in salvaging some kind of gossamer-thin state from the current mess. The options available are far and few between, none of which look particularly good. Despair cannot be allowed to prevail and is not the answer.

 

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