In the summer of 2024, we are on a fulcrum point, namely, the key balancing point of a vital situation, and if we were to make the wrong decision now, we could all be in a very precarious economic position.
We are seeing a rare alignment of global risks all occurring at the same time. This is not, however, a doom-laden forecast, but rather a warning that our leaders of all political colors need to tread carefully – and wisely. Sadly, when I look around the world and its various leaders, the word “wise” would not be the first to come to mind.
There is one word that ensures that our economies run successfully – confidence. Confidence is the fuel for an economy and the lack of confidence risks the chance of an economic seizure. If we don’t have enough confidence we slow our spending, investing and growing.
So, some perspective here. The global economy is still growing and some of our leaders have helped to steer us away from some serious issues.
However, what has been both comforting and impressive is to recall what we have recently been through and avoided some of the potential catastrophes:
🔴 the largest ever banking and financial crisis.
🔴 a global pandemic of a new strain of lethal virus
🔴 quite dramatic trade tariffs being introduced
🔴 proliferation of both political and geographic wars
For me, the current geo-political position is of the most immediate concern. This year the fear of greater military outbursts could be far more of a threat than anything else we faced since WW2, even greater than the 1962 Cuban missile crisis, which is often cited as our closest brush with a frightening nuclear exchange.
Now, however, we are facing a far more threatening challenge to global security, growth and development. The political alignments have changed not just because of the fall of the communist “super-power” of the old USSR, but with the rise of China. It is not just the world’s second largest economy, but its greater political influence is increasing. Russia can no longer hold its previous title of superpower, but rather is just a dangerous military power run by a thoroughly untrustworthy narcissist. Its economy is in a desperate position as it funds an increasingly demanding war with Ukraine and has had to turn to other worrying regimes such as North Korea for military support in exchange for discounted oil and gas deals.
As for the USA, there is the potential (although not yet a certainty) that another dangerous narcissist could return to the White House, and it could easily find itself returning to the old “Munroe Doctrine” of President Munroe in 1823. The basic elements of this were to separate interference by European powers in the Americas and vice versa. Of course, alliances such as NATO run completely against this form of U.S. isolationism, as the defense needs of much of Europe are very dependent on U.S. participation and financial support via its military power. Nearly all U.S. presidents since WW2 have moaned about the lack of financial responsibility of the European nations, which find it far easier (and far cheaper) to relax under the U.S. armed umbrella.
The horrors of Ukraine are bringing this to the fore as Western nations are supplying arms to the country, but again are being led by the USA. If, as seems very possible, the U.S. starts to withdraw its expenditure, just how willing and able will the European nations be to cover the gap themselves? Of course, this would be more than just a chink in the Alliance’s armor, and certainly one that would delight President Putin.
China now is the crucial player in this real-life game of Diplomacy. Despite their bickering, both China and the USA need each other and are in a symbiotic relationship with each other. China is one of the largest investors in U.S. Treasury bonds, and the US is China’s leading trading partner.
So, what should we as Europeans be doing – and nothing is not the answer. Of course, across our continent we are having differing views even on such issues as Ukraine. Here is the moment when we need to find our effective political leaders who can at least inspire confidence across the population. The first issue must be to recognize what Europe has already achieved, whether through the EU or not. A lot has been developed and improved and we must remind ourselves of those successes.
The next issue will be to identify our areas of weakness and clearly tell the population that there are times when financing populist projects must give way to those of safety and security – even if it is for a set period of time.
Through good diplomacy and political acumen, we need to persuade our global partners that they have more to gain from working with us and not against us. Sometimes this may mean that we may have to hold our nose when dealing with some of the more controversial issues.
The Americans may well turn inward, the Chinese will push outward, especially after their century of humiliation. We may not understand it, but they certainly are reminded of it by their leaders. As for Russians, they have been badly led and bled by oligarchs and a narcissistic dictator dressed in faux legality of popular and fraudulent votes. We need to be able to tell the Russians that they are needed and respected – and would be welcomed back by the free economies and respected for it. We must not damage their pride, that will only hurt more.
So, there is no easy answer or magic spell that can be cast, but there is the vital action needed by us all, especially in the diverse and dynamic economies of Europe, to grow our economies for the benefit of all through fair trade, the rule of law and the strength of democracy – which we know is not perfect, but far better than the dangerous alternatives.
Europe, with all its history of failings and recoveries, can show that despite those political and economic fears, we can carefully chart our way through these troubled waters.
