Oh, what a year!

Last Updated on Thursday, 15 December, 2022 at 12:37 pm by Clint Flores

Now that we are approaching the end of the year, I am taking this opportunity to write about two major events that happened in 2022, and how 2023 might look like from and economic and diplomatic point of view.

Undoubtedly, the war in Ukraine and the energy crises have dominated most of 2022 media coverage. When I returned to Malta in December 2021, little I knew that I would be in the media covering information and writing about foreign affairs and the war in Ukraine.

Certainly, my former role at the heart of the European Union gave me better insight and therefore, I had a competitive advantage over others to understand the international political powers at play. From the outset, I reiterated that this is going to be a long war irrespective of the aid, military or financial, allocated to Ukraine, and the reason for this relates to the ability of Ukrainians to push Russians out of their territory rather than resisting the arms aggression.

Needless to say, almost ten months have passed since the invasion of Ukraine. Disturbingly but true, in 1932 it was the Holodomor that brought mass starvation and genocide in Ukraine, murdering millions of people. Those familiar with history might understand where l am coming from, and the reason why I am mentioning this atrocious occurrence in history. At times, as human beings, we tend to omit major historical events either because we forget or perhaps we are not cognisant of the facts. Unless we analyse history, we cannot understand our political and cultural differences and the ensuing political tactics, especially those deployed during a war.

Obviously, Ukrainians are resilient, but I truly hope that the plummeting temperatures this winter are not fatal for Ukraine’s destiny. In the past two months, Russia targeted civilian critical infrastructure with cheap military drones allegedly supplied by Iran, placing their energy infrastructure in a dire state. Hospitals and elderly homes are barley coping caring and tending to their patients, and this is just in mid-December. January 2023 is going to be tough for Ukrainians and I hasten to add that for Europeans it’s not going to be any easier from an economic point of view. Hopefully, the international community will keep assisting Ukrainians to cushion the impact of cold temperatures.

In 2022, the EU managed to purchase gas and stock its energy storage facilities in time for winter. However, I do not foresee that it is going to be that easy in 2023, and we need to assess how things will unfold in view of Russia’s response to the G7’s proposed oil price cap and the ensuing price shocks, both in the short and long run since the main source of energy in Europe is gas.

Certainly, the EU must continue promoting its green agenda and make credit available for businesses and households to transit to cleaner energy systems as soon as possible. It is very important to keep investment high and promote the notion of private investments to primarily create a positive economic multiplier and leverage capital, especially after the Christmas recess. The stimulation of private investments is also important in times when sentiment is negative, primarily attributed to the grim economic prospects emanating mostly from the economic effects of the war in Ukraine. The energy crisis will certainly dominate 2023, and inflation, even if plateauing, will certainly remain high relative to normal times. Europe is risking losing its competitiveness due to these high inflationary pressures.

Undeniably, we need a diplomatic channel. Unless the EU finds a way to unblock the dire diplomatic situation and brings the relevant parties to the negotiating table, at least to agree on a ceasefire to find a peace agreement, we are going to have a tough 2023. In their official encounter, President Biden and President Macron surely spoke about the global economic difficulties attributed to the Ukrainian war, and the green transition. The media reported President Biden saying that he is ready to talk to President Putin, but he will not ring him. Diplomatically, President Biden sent a message to the other part to resume negotiations and stop the war in Ukraine.

How the war will unfold after Christmas is still to unfold. Certainly, military stock levels are depleting on both sides of the Atlantic irrespective of the voted budgets. The Pentagon explained the situation in detail a few weeks ago and Europeans are also making their assessments, as they cannot risk depleting their stocks, otherwise they would be at risk in the eventuality of a security threat to Europe.

Needless to say, the most prominent figures in Europe next year will be the President of the European Commission and President Zelensky. The former’s response to the Ukrainian war dominated 2022, especially her narrative and its diplomatic handling. Surely, 2023 is going to be no different given the response to the energy crisis and the response to the gas price mechanism.

By the time of the publication of this opinion piece, I would have returned to Malta as I am currently abroad. Indeed, I met some of my former colleagues where we discussed the situation in Ukraine at length. Nevertheless, the current European Commission’s term is already more than halfway through and the preparations for the European Parliament elections in 2024 and the negotiations on who might replace who are already underway. The invisible hand is already pulling the strings and certainly a figure that promotes and is associated with diplomacy is being explored.

What I can promise you in 2023 is that I will carry on writing and giving my opinion, even if at times it might be different from the mainstream opinions. Controversies are at times needed to give some commentators and those taking decisions a reality check, and I am not shying away from such a narrative in 2023.

Given that this is the last opinion piece for this year, I take this opportunity to express my sincere appreciation towards the directors and management of the Malta Business Weekly for their collaboration and the space offered in the past months to bring to my readers an opinion piece that blends economics, diplomacy, and politics.

Lastly, I wish you all a blessed Christmas, spent with your loved ones and a prosperous New Year filled with love, joy and good health.

Meanwhile, I will be resuming with my weekly opinion piece in January 2023.

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