The UNECE region, in particular Europe and North America, has become the epicenter of the COVID-19 pandemic. In addition to the devastating impact on lives and health, countries in the region are suffering heavy socio-economic consequences. The Gross Domestic Product (GDP) is projected to fall by 6-7 per cent in the region in 2020 as a result of the crisis. Unemployment will rise significantly. Trade, transport and mobility across borders are severely hampered.
Countries in the Eastern part of the region – Eastern Europe, the Balkans, Caucasus, Central Asia – are hit particularly hard by the economic and social impacts and often have less capabilities to respond to the crisis. While there is a diversity of situations in the countries, declining remittances from labour migrants, massive capital outflows from emerging markets, plunging oil prices and worsening conditions for external financing are generally taking a heavy toll on economies and societies in these subregions.
Governments across the entire region are tackling the crisis with decisive measures aiming at providing fiscal and financial stimulus and supporting employment to soften the downturn.
The UN system in Europe and Central Asia, whose joint activities are co-led by UNECE and the UNDP Regional Bureau for Europe and the Commonwealth of Independent States (CIS), is actively supporting the immediate socio-economic response with a focus on the particularly affected programme countries in the Eastern part of the region. The support responds to the most pressing needs that are regularly discussed with Resident Coordinators in the countries. Activities are closely coordinated among Regional Directors of UN entities and rooted in the UN’s overall socio-economic response framework.
Expertise, guidance and tools to deal with the crisis are mainly provided through the regional UN Issue-based Coalitions (IBCs), for example:
- The IBC on Gender Equality issued a Guidance Note on Gender and COVID-19 for the Europe and Central Asia Region, which includes key messages, advocacy points and recommendations for Resident Coordinators and UN Country Teams;
- A policy brief on COVID-19 and social protection by the IBC on Social Protection is forthcoming. In addition, a tool to assess the impact of COVID-19 on labour markets, developed by ILO, is channeled through the IBC;
- A new IBC on Sustainable Food Systems has been established and will provide, inter alia, joint analysis and guidance around the COVID crisis impact on food systems in the region.
UNECE’s immediate focus has been to uphold connectivity, e.g. by offering an observatory with updates on cross-border limitations worldwide, and to provide COVID-related guidance in a number of policy areas, such as statistics, trade facilitation, infrastructure and urban development.
Beyond the immediate response, the regional UN system will support governments in embarking on a sustainable recovery that is closely connected with the Sustainable Development Goals (SDGs) and the needs of a green transformation.
Is America in decline?
“America is battling political polarisation and social division at home as well as facing an unfolding national climate crisis. With China growing in strength, many have begun to ask: is America in decline?” – British ‘The Economist’ has put the question sometimes ago. The war in Ukraine and the struggle for national liberation in Africa are signs of American economic decline and cracks in the global capitalist system, answers the Spanish ‘Rebelion’.
Since the end of World War II, the United States has been an economic and military superpower, but in recent decades it has experienced economic decline and a decline in its global influence. Part of the weakening of the United States is due to growing competition from other powers such as China and Russia, as well as the formation of powerful alternative power blocs such as BRICS.
It is also driven by internal problems such as inequality, economic crises and political polarization. The US economy is affected by rising inflation, which is a consequence of economic sanctions against Russia imposed by the Biden administration.
The conflict in Ukraine began as a struggle for control of the country between pro-Russian and pro-Western forces, but behind this struggle we can detect deeper economic and political interests. Donbass is the epicenter of the conflict, it has valuable natural resources and is an important industrial center.
The war hit the Ukrainian economy hard and further weakened the US position in the region. This situation is an example of America’s economic decline and its inability to maintain its influence on the world stage. India and China will become new competitors on the international stage, and economic power and wealth will gradually shift towards Asia.
One must keep in mind the fact that global power is always relative, and that countries with economic, political and military power require voting rights and decision-making powers. Power is determined by the relationships between the parties involved. That is, power is not something that an actor has in isolation, but is constructed in relation to other actors. For example, a country may have economic power, but this power is only significant in comparison to other countries that have less economic power.
Moreover, power is not something fixed, it can change over time and depending on the relationships between actors. In this sense, the center of economic and political power is shifting towards Asia, where great powers are consolidating, which will definitely have to be taken into account in the future. Another important point is the strengthening of BRICS as a group of great continental powers that argue and compete for new spaces.
The past few decades have geopolitically represented the rise of China as a great power. This implies the distribution of power at the international level. China is emerging as a great power to be reckoned with in the future. Its ability to build consensus and propose solutions to old conflicts is especially important. China has also grown its economy to the same size as that of the United States.
China promotes the project of multipolarity, which is perceived as necessary for the balance of the world. In short, the rise of China is changing the distribution of power at the international level.
Despite everything, the military-political force continues to remain a real force in the international arena. At the same time, the United States each time approves a record amount of military budget, which demonstrates the importance of its foreign policy. The United States has more than 730 military bases deployed around the world and 200,000 soldiers at these bases.
An important issue is tensions over Taiwan, which is the benchmark for North American military policy to reduce China’s influence. In addition, the AUKUS (Australia-UK-United States) countries are helping to rearm Taiwan, train its armed forces, and build relationships with other militaries such as the Japanese and the Philippine.
Under current conditions, the United States is carrying out powerful militarization in the Asia-Pacific region, promoting large-scale rearmament and increasing the nuclear threat in this region. That is why total and global war does not seem to be a distant prospect. Tensions over Taiwan are a prime example of how rivalry between superpowers can spark conflicts on an unimaginable scale that threaten to destroy all of humanity.
The struggle for national liberation in Africa reflects the growing desire of African peoples to control their natural resources and build their own economies. For decades, colonial and neo-colonial powers have exploited African resources for their own purposes, pushing local populations into poverty. These conflicts represent a movement of resistance to exploitation, a call for self-determination and economic and social justice.
The struggle for African liberation is a reminder that the global capitalist system is not invulnerable and that marginalized peoples must come together to build a more socially just world.
The war in Ukraine and the liberation struggle in Africa are symptoms of US economic decline and tensions in the global capitalist system. These conflicts are a call to action and a reminder that we can shape a more just and humane future, ‘Rebelion’ stresses.
U.S. companies are barreling towards a $1.8 trillion corporate debt
US firms are barreling towards a giant wall of corporate debt that’s about to mature over the next few years, Goldman Sachs strategists said in a note.
There’s $1.8 trillion of corporate debt maturing over the next two years, Goldman Sachs estimated. Firms could be slammed with higher debt servicing costs as interest rates stay elevated. That could eat into corporate revenue and weigh on the US job market.
The investment bank estimated that $790 billion of corporate debt was set to mature in 2024, followed by $1.07 trillion of debt maturing in 2025. That amounts to $1.8 trillion of debt reaching maturity within the next two years, in addition to another $230 billion that will reach maturity by the end of this year, Goldman strategists said.
The wave of debt that will need to be refinanced could spell trouble for companies, as interest rates have been raised aggressively by the Fed over the last year. The Fed funds rate is now targeted between 5.25%-5.5%, the highest range since 2001.
For every extra dollar spent to service their debt, firms will likely pull back on capital expenditures spending by 10 cents and labor spending by 20 cents, the strategists estimated, a reduction that could weigh down the job market by 5,000 payrolls a month in 2024 and 10,000 payrolls a month in 2025.
Experts have warned of trouble for US corporations as credit conditions tighten. Already, the tally of corporate debt defaults in 2023 has surpassed the total number of defaults recorded last year. As much of $1 trillion in corporate debt could be at risk for default if the US faces a full-blown recession, Bank of America warned, though strategists at the bank no longer see a downturn as likely in 2023.
Russian response to sanctions: billions in dollar terms are stuck in Russia
“Tens of billions in dollar terms are stuck in Russia,” the chief executive of one large company domiciled in a country told ‘The Financial Times’. “And there is no way to get them out.”
Western companies that have continued to operate in Russia since Moscow’s invasion of Ukraine have generated billions of dollars in profits, but the Kremlin has blocked them from accessing the cash in an effort to turn the screw on “unfriendly” nations.
Groups from such countries accounted for $18 billion (€16.8 billion) of the $20 billion in Russian profits that overseas companies reported for 2022 alone, and $199 billion of their $217 billion in Russian gross revenue.
Many foreign businesses have been trying to sell their Russian subsidiaries but any deal requires Moscow’s approval and is subject to steep price discounts. In recent days British American Tobacco and Swedish truck maker Volvo have announced agreements to transfer their assets in the country to local owners.
Local earnings of companies from BP to Citigroup have been locked in Russia since the imposition last year of a dividend payout ban on businesses from “unfriendly” countries including the US, UK and all EU members. While such transactions can be approved under exceptional circumstances, few withdrawal permits have been issued.
US groups Philip Morris and PepsiCo earned $775 million and $718 million, respectively. Swedish truck maker Scania’s $621 million Russian profit in 2022 made it the top earner among companies that have since withdrawn from the country. Philip Morris declined to comment. PepsiCo and Scania did not respond to requests for comment.
Among companies of “unfriendly” origin that remain active in Russia, Austrian bank Raiffeisen reported the biggest 2022 earnings in the country at $2 billion, according to the KSE data.
US-based businesses generated the largest total profit of $4.9 billion, the KSE numbers show, followed by German, Austrian and Swiss companies with $2.4 billion, $1.9 billion and $1 billion, respectively.
‘The Financial Times’ reported last month that European companies had reported writedowns and losses worth at least €100 billion from their operations in Russia since last year’s full-scale invasion.
German energy group Wintershall, which this year recorded a €7 billion non-cash impairment after the Kremlin expropriated its Russian business, has “about €2 billion in working interest cash… locked in due to dividend restrictions”, investors were told on a conference.
“The vast majority of the cash that was generated within our Russian joint ventures since 2022 has dissipated,” Wintershall said last month, adding that no dividends had been paid from Russia for 2022.
Russian officials are yet to outline “a clear strategy for dealing with frozen assets”, said Aleksandra Prokopenko, a non-resident scholar at the Carnegie Russia Eurasia Centre. “However, considering the strong desire of foreign entities to regain their dividends, they are likely to explore using them as leverage – for example to urge western authorities to unfreeze Russian assets.”
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