Will the Global Economic System be Shaken by War, Rising Seas & Drought in 2024?

On Israel, Houthis and the El Niño weather phenomenon

It’s over: 2023 was Earth’s hottest year - USA TODAY

It has been some time since I posted. Much has happened in between - meaning SO much to write about.

And so much to inhibit writing.

How to think and write about the global economy and financial architecture when the world’s ecosystem, and and geopolitical systems are broken and threaten sudden breakdown ? How to think and write about the economy when one is daily reminded of a genocide taking place - not far away? The wonderful Julia Steinberger succinctly expressed feelings about this war that I share:

why this genocide is so overwhelming, paralysing my ability to make enough sense of the world to put my energy into helping stop it. Why?”

Similarly why in the face of climate breakdown have the scientific facts, and vested carbon interests, so paralysed society’s ability to put energy into stopping emissions?

Back in 1980- 2000 we could have acted to stop emissions rising. There was still time - and sufficient leeway in our finite carbon budget. We could have acted …but did not. The consequence? A relentless rise in global temperatures that every day requires ever more drastic action if we are to prevent or reverse a climate cataclysm. And still we sail blithely on… enduring weather extremes, carbon subsidies, vast oil company dividends and consumption peaks at Christmas. We, the global community,

have locked in emissions so that there are no radical futures left for children born today. We are fucked, fucked, fucked” to quote Fabian Dablander recently in this video.

All three global systems - climate, economic and geopolitical - are fuelled by imbalances causing first, a dangerous rise in earth’s temperatures and seas; and second, deflationary pressures, high levels of inequality and then the emergence of far-right, anti-democratic and bellicose politicians. Fascistic leaders like Donald Trump and Benjamin Netanyahu that can easily accommodate and integrate the rampant capitalism of this era into their world views… so evident on my recent visit to South Africa. (More on that in another post.)

What can usefully be said at this moment of likely disintegration? A moment the IMF calls “geoeconomic fragmentation”. This means, the institution argues

we are facing the specter of a new Cold War that could see the world fragment into rival economic blocs.

What of the Hot War being waged right now by a nuclear-armed state?

First there was the vicious terrorism of the 7th October Hamas attack on unarmed Israeli civilians. Then the wholesale impunity and barbarity of Israel’s destructive onslaught on an unarmed Palestinian population - and its children - caged into a narrow strip of land, without sufficient shelter, food, water and medicines. The horror of the sophisticated, targeted but also brutally crude bombing and killing of civilians, medical staff, journalists and UN workers; the horror of doctors conducting amputations without anaesthetics on children and adults; of starving women giving birth without water, healthcare and sanitation; of the stunned and stumbling elderly and vulnerable cast away from the safety of a home and family - all this is unbearable to witness.

It feels as if my - or our - collective impotence serves to foment Israel’s impunity and BIden’s disregard for the lives of Palestinians. Can they not see their brutal war expanding youthful recruitment to Hamas’s religious crusade? Can they not see young Israelis whose lives and careers are sacrificed to the theocratic and racist Zionist crusade ?

The South African intervention

Into the vortex of this ugly war and our collective impotence stepped the South African ANC government - with its powerful and legally sound appeal to the International Court of Justice: that Israel be charged with committing genocide in Gaza. The application accuses Israel of breaking international law, and of showing “genocidal intent” with attacks on Palestinian civilians- “a distinct national, racial and ethnical group”. The intervention will be heard on the 11th and 12th January, and SA is confident of success. Professor Francis Boyle, professor of international law at the University of Illinois College of Law, and who in May, 2006 successfully applied the Genocide Convention for Bosnia and won two requests for provisional protection from the ICJ against Yugoslavia, told ‘Democracy Now!’ that:

under Article I of the Genocide Convention, all contracting parties, 153 states, will then be obliged, quote, “to prevent,” unquote, the genocide by Israel against the Palestinians. Second, when the World Court gives this cease-and-desist order against Israel, the Biden administration will stand condemned under Article III, paragraph (e), of the Genocide Convention, that criminalizes complicity in genocide.

The case has generated real anxiety inside Prime Minister Netanyahu’s war cabinet if the Haaretz newspaper is to be believed. It’s as if only now are they seeing what the rest of the world can see: a war of deliberate, intentional, cold-blooded genocide of the Palestinian people.

Why experience this war as different?

After all, the war on Palestine shares many parallels with the horrors of the Vietnam war - ‘the most bombed place on earth’ - which also, at the time, kept me awake at night. But far from paralysing, that war triggered action and activism. Like Gaza, the American War (as the Vietnamese call it) was a wholly destructive onslaught on an unarmed civilian population, forced to resort to tunnel-building as defence against US carpet bombing of napalm, Agent Orange and other herbicides. Let us not forget that

American aircraft dropped over 5 million tons of bombs on Vietnam– the largest bombardment of any country in history– and more than twice as much tonnage as the U.S. Air Force dropped in all of World War II. Over 4 million tons fell on the mostly rural areas of the former South Vietnam, plus 400,000 tons of napalm and 19 million gallons of herbicides. This compares with approximately 2 million tons on Laos and half a million tons on Cambodia.

Yet, the mighty United States military was ultimately defeated in that war - by the guerilla tactics of the poorly resourced Viet Cong, backed and provisioned by Vietnamese civilians; and by public resistance on the home front.

This Israeli-Palestinian conflict feels different.

While Vietnam’s civilian population was viciously attacked and bombarded - the theatre of war was not as confined as that of Gaza - with all exits blocked and controlled by the occupying force.

Back then, the US had nuclear weapons but did not use them, even while its generals considered doing so. The Viet Cong did not have nuclear weapons and similarly Hamas is not nuclear-armed; but both the US and Israel have nuclear weapons. Given the stupid and reckless actions and words by Israel’s political leadership, we cannot be certain a nuclear weapon will not be fired.

The Viet Cong were communists, fighting a war of national liberation with the aim of uniting north and south Vietnam. The Palestinians are also fighting a war of national liberation, especially for refugees in camps; but are led by Hamas who, as Helen Thompson argues, are a “millenarian sect” and hold the religious conviction that

divine providence makes Jerusalem the place where this earthly world will end. This apocalyptic obsession was made manifest in Hamas naming its terror on 7 October after the Al-Aqsa mosque in Jerusalem’s Temple Mount.

Similarly in Israel, Zionists and a supporting cast of American Christian fundamentalists are propelled by a fanatical, religious belief in an ‘end-times war’. This article in a November edition of the Jerusalem Post considers the prophetic powers of Psalm 83 and the horrors outlined in Ezekiel 38 and 39 - and illuminates the fanatical beliefs firing up many pro-Israeli antagonists.

Journalists and the Gazan war.

There is another big difference with the war in Vietnam. It was the last war where photographers roamed independently and were not "embedded" with the dominant power’s troops.

Photographer Nick Ut’s original, uncropped version of “Napalm Girl” Phan Thi Kim Phuc with ARVN soldiers and several journalists.

Powerful war photography is unlikely to emerge today because foreign, independent journalists are banned by Israel, and local journalists, recorders and photographers are deliberately and calculatedly targeted and killed by the IDF.

What of the economic parallels and consequences?

The Vietnam war seriously upended the United States’s balance of payments. That led ultimately to the devaluation of the US dollar, and to President Nixon’s unilateral dismantling of the international financial architecture that was the Bretton Woods system.

So while the Vietnam war may have been contained, it had global economic consequences.

Will this conflict have similar global consequences? The actions of Houthi rebels and Somali pirates in blocking the vital trade route through the Red Sea poses a threat not just to shipowners - but to the global economy - only just recovering from the inflationary supply shocks associated with the COVID-19 pandemic. (A signal that inflation and interest rates could rise again, not fall?).

Time Magazine reports that :

Five of the largest shipping firms announced they would redirect their container ships away from the Bab al Mandab strait, the strategic waterway through which ships must pass on their way to the Suez Canal and which handles over 10% of global commerce.

Following the announcement, traffic through the Red Sea dropped by 35%. Commerce hasn’t been blocked completely, since most ships can opt for the longer but safer route around Africa, but the Houthis have increased the cost of shipping globally, imposing additional costs to commerce at a time when trouble at the Panama Canal has already made shipping more complicated and central banks worry about a new inflationary spike. If the Houthi “blockade” continues, the costs to consumers and the impact on local states will be considerable.

That threat to international trade is amplified by the El Niño weather phenomenon draining the Panama Canal of water - and hitting critical shipping routes there - leading to what the FT calls “Global trade shudders” .

Perhaps the paralysis I share with Julia Steinberger is down to the profoundly interlocked nature of these conflicts and crises.

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