Geopolitics and economic stability

Last Updated on Thursday, 2 November, 2023 at 3:00 pm by Andre Camilleri

Today, it was not my intention to write about the humanitarian tragedy that is currently unfolding in the Middle East, specifically in Gaza, even though it warrants immediate media attention. Urban warfare in Gaza is leaving several injured and dead. True, Israel must defend itself. Nonetheless, defence is not about collective punishment. It is indeed shocking to learn that children are being brutally killed by the bombing of civilian buildings. Can’t we sit down and talk? Where is the EU’s diplomatic leverage? And where are all the diplomats that we have trained over the years?

Certainly, we are risking a regional conflict that might linger for months and I hasten to add another year. Obviously, it is in the interest of Benjamin Netanyahu to prolong this war. Apparently, Israel’s intention is to eliminate Hamas. However, to eliminate Hamas, Israel requires a complex military operation. But at what expense? International law dictates that those committing war crimes are to be held responsible. The Geneva Convention is clear. We cannot allow a situation where children and civilians are killed indiscriminately simply by bombing the proximity of civilian buildings, in the hope of sweeping and eradicating Hamas. Surely, it won’t happen. It did not happen elsewhere either when western countries carried out military operations on foreign soil. Sadly, it is utterly disturbing to follow what is happening in the Middle East.

Last week I wrote about the cracks in democracy. And it covered the behaviour, among others, of the President of the European Commission. Besides a humanitarian crisis, the conflict in the Middle East, might generate economic repercussions that would impinge on Europe’s economic security. Undoubtedly, other exogenous economic shocks are not suitable at the current political juncture. The way things are unfolding might drag other countries into the conflict, directly or indirectly, militarily, or not, thereby creating a regional proxy war. When I was posted in Brussels, it was already difficult to deal with Yemen, a conflict that lingered for years. The same happened with Syria and other countries in the region. I remember Mr Griffiths at the time, Special Envoy for Yemen, briefing us about the dire situation unfolding in the region. Today, Mr Griffiths is the UN’s Special Envoy for humanitarian affairs and emergency relief coordinator, who is also watching closely what is happening in Gaza. Furthermore, the war in Ukraine is exerting additional pressures, not just on the EU, but also on the public purse of several member states.

Undoubtedly, the current international political situation is reasonably fragile. Inflation and economic instability are creating social tensions on the ground. Surely, what we pay to the EU in terms of military assistance outside of the EU budget’s financial architecture – when families can barely make ends meet at the end of the month – is creating a social division, and evidently destabilising our democratically elected governments. Nevertheless, the Maltese government presented a generous budget for next year, focusing mostly on the lower income and middle-income earners. Undeniably, had the Maltese government opted to be selective on the energy and fuel subsidies, the middle-income earners would have struggled to sustain their routine. Besides, the agreement on the increase of the national minimum wage, which is separate from the COLA, provides additional stability to employers. Indeed, entrepreneurs, as well as workers, are able to plan budgets and invest accordingly, now that the figures are on the table. Also, other things being equal, inflation is foreseen to subside next year. However, I used the term “other things being equal” because we must preserve the stability of the EU and the surrounding regions to foster additional economic security and stability.

Let us be realistic. Non-western countries are watching. They are observing our economic numbers. Surely, they are betting on our economies, and which one of them will be the first to falter. They have the projections of what economic shocks would mean for the EU’s economy, the individual economies and their democratically elected heads of state and governments. It is obvious. Non-western countries know well, that launching additional economic shocks through the creation of supplementary geopolitical insecurities, creates domestic instability that often fractures a democratically elected government. Plainly, they are creating indirect political instability by pushing for additional economic shocks, primarily in the energy and fuel sectors. When the EU tried to wean itself off Russian gas to shift to cleaner and greener practices, largely by accelerating solar energy, and other renewable energy means, China imposed restrictions on the export of rare earths that are required for the production of solar panels and electric vehicles. In response, during the SOTU speech, President von der Leyen announced an investigation into Chinese subsidies for electric vehicles, apparently failing to keep member states on board.

Evidently, such rushed decisions show that politically, those leading the EU institutions, are inexperienced in geopolitics and fell for the game hook, line and sinker. The creation of additional economic shocks elsewhere around the globe, is common knowledge to non-western countries that it cannot be sustained in the long run. And this is the reason why last year I appealed to not go to a direction where diplomacy fails. It is illogical to impose counterproductive sanctions and then deal with boomerang economic shocks. The European economies, especially those within the eurozone, were still recovering from a global pandemic when sanctions on Russia were imposed. Surely, the geopolitical realities around us are damaging western economies. They are the result of bad political and economic decisions. Alas, when economies are doing bad, citizens generally choose populist governments. And this is the current political trajectory that non-western countries pushed western countries into. The negative economic effects are creating additional instabilities and social tensions on the ground, which might be reflected in the next MEP elections. Surely, we must do our utmost to promote dialogue and peace devoid of a divisive political narrative.

Lastly, we augur the Maltese government to keep on sustaining our families and businesses and enhance stability for the years to come. Meanwhile, we all hope for peace in the Middle East and elsewhere around the globe.

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