Improved connectivity, especially through transport links, is an essential condition for economic growth. Transport links not only provide physical access to resources, but also enable producers to take advantage of opportunities in domestic and foreign markets, leading to economies of scale and specialization.
In the conditions of a market economy, the need to improve the quality of transport services using advanced transportation technologies and the provision of fundamentally new competitive transport services comes to the fore. This is primarily due to the presence of real competition between different modes of transport.
Transportation logistics between Far East and Western Europe is vital for world’s economic development, but today we do not have reliable technologies and transport lines. Due to this it is necessary to think on few aspects, which may determine the development of environmentally friendly economies in future:
- reliable transportation (safe and environmentally friendly) ;
- cheapest modes and transhipment lines;
- fastest modes of transportation
The cheapest mode of transportation is by the sea, but it also has some pros and cons.
Currently about 98% of mutual Far East – West Europe deliveries are made by maritime transport, with aviation transport and railway transport accounting for 1.5 – 2% and 0.5 – 1%, respectively. Approximately 80% of Far East – West Europe cargoes are carried in containers, including about 90% of cargoes brought to West Europe from the Far East (imports) and 70 – 75% of cargoes carried from the West Europe to the Far East (exports).
This data shows that investment in rail infrastructure is leading to rail being a viable alternative to both sea and air for trade between the Far East and Europe.
On a global scale, sea transport delivers over 80% of all world cargo. In fact, sea transportation plays a major role in world trade. In addition, from an economic point of view, this is the most efficient and inexpensive way to transport cargos.
Maritime routes are corridors of a few kilometres in width connecting economic regions and overcoming land transport discontinuities. International maritime shipping routes are forced to pass through specific locations corresponding to passages, capes, and straits. These routes are generally located between major markets such as Western Europe, North America, and East Asia, where an active system of commercial trade is in place.
To date, there are several maritime transhipment routes that create a global transport logistics chain:
- The busiest North Atlantic route connects the ports of the Atlantic coast of America with the ports of Western Europe
- The second busiest route passes through the Suez Canal.
- The third busiest route is through the Panama Canal.
- West African routesconnect the Atlantic ports of Europe, North and South America via the Cape of Good Hope with the West and South – East coast of Africa. Super tankers with oil from the Middle East to Europe follow the same route.
- South American routes through the Strait of Magellanconnect Europe and the Atlantic coast with Brazil, Uruguay, and Argentina.
- Routes in the North Pacific Oceanconnect the Pacific coast of the USA and Canada with Japan and China.
- Routes through Honolulu, Samoa, and the Fiji Islands, and through Tahiti and the Society Islandsconnect the Pacific coast of the USA with New Zealand and Australia.
- The Northern Sea Route
This unique transport artery is the shortest shipping route between Europe and Asia.
The mentioned maritime transhipment routes create for global freight circulation and in part because of the economic activities and resources they grant more efficient access to.
Thus, the warm waters (red) shipping line from Far East to the port of Rotterdam in Netherlands for the delivery of goods to the Balkan Peninsula, which lies at the intersection of transit communications in Europe, Asia, and Africa, today has great logistics prospects. Currently, 80% of cargo from Far East to Europe goes through the Atlantic ocean to the ports of Northern Europe. The warm waters shipping line through the Arabian sea and the Suez canal to the Balkans reduces the transport time by 7 – 10 days: this is so far the shortest sea route from Far East to Europe (however, to do this, CEE needs to build transport infrastructure, which the region has a huge need for. This is especially true for the Balkan Peninsula, which has entered a period of stable development after riots and wars that caused serious damage to infrastructure). Thus, the cheapest in the cost, this transshipment line is not beneficial in terms of second criteria – timeframe (See Figure 1).
Presenting great opportunities for global shipment, the Southern Seas create vital shortcuts via highly congested chokepoints (See Figure 3), namely:
- The Straits of Malacca and Singapore – the shortest route between the Pacific and Indian Oceans;
- The Phillips Channel in the Singapore Strait;
- the South China Sea – crucial shipping lane and a region subject to contention since oil and natural gas resources are present;
- The Cook Strait is located between the two main islands that comprise New Zealand;
- The Strait of Bab-El-Mandeb – the shortest trade route between the Mediterranean region, the Indian Ocean, and the rest of East Asia;
- The Strait of Hormuz links the Persian Gulf with the Arabian Sea and the Gulf of Oman;
- The Suez Canal (Including Gubal Strait) ) provides the shortest route between the Atlantic and Indian oceans;
- The Cape Good Hope represents the extreme tip of Africa separating the Atlantic and Indian oceans;
- the Strait of Gibraltar connects the Atlantic Ocean and the Mediterranean Sea;
- The Bosporus and Dardanelles Straits separate the Sea of Marmara from the Aegean and Black Seas;
- The Strait of Dover connects the Baltic and North Seas;
- The Oresund Strait is a passage of 115 km between Denmark and Sweden connecting the North Sea and the Baltic;
- The Danish Straits are a system of straits between the Scandinavian and Jutland Peninsulas;
- The Panama Canal is the main crossing point between the Atlantic Ocean and the Pacific Ocean;
- The Strait of Magellan is used to be the only way to get from the Atlantic Ocean to the Pacific Ocean;
- The Strait of Florida isserving as the main connection between the United States and all points to the south and west;
- The St. Lawrence River is a major waterway in North America, flowing through the United States and Canada and connecting the Great Lakes with the Atlantic Ocean.
Apart from being vital for global trade, disruption of trade flows through any of these chokepoints could have a significant impact on the world economy. Many of the bottlenecks are located next to politically unstable countries, increasing the risk of compromising their access and use, such as through piracy. Closures are a rare instance that have only taken place in war situations as one proponent prevented another from accessing and using the chokepoint (e.g., Gibraltar and Suez during World War II). Closure of a maritime chokepoint in the current global economy, even if temporary, would have important economic consequences with the disruption of trade flows and even the interruption of some supply chains (e.g., oil). These potential risks and impacts are commonly used to justify using military naval assets to protect sea lanes, even if such benefits are difficult to demonstrate.
Global warming is causing vast perennial ice sheets to melt, resulting not only in an environmental threat but also in the opening of economic opportunities.
Thus, another waters shipping line (cold waters – blue line), which emerged as a result of the rapid melting of the North polar icecap, opens the prospects of shortened transport waterways in the ice-free areas. There are basically three possible routes, each of significance:
- The Northwest Passage, connecting the American Continent and Far East Asia;
- The Northern Sea Route, offering a shorter way from West Europe to Far East along the Russian Arctic coastline ; and
- The Arctic Bridge, connecting Canada and Russia (See Figure 2).
Geographically the position of the North waterways is very beneficial. The Northwest Passage connects the Atlantic and Pacific along the northern coast of North America through the Arctic waters from the Davis straits and Baffin Bay all the way to the Bering Sea shortens the distance between Far East Asia and the American East coast (via Panama) by approximately 7,000 kilometers.
The North East Passage, which connects the Atlantic coast of Western and Northern Europe with the Pacific coast of Northeast Asia via the Russian Arctic coastline, is cutting the distance between the edges of two continents, making it shorter by about 40% in comparison to the traditional, warm seas transport routes via the Suez or Panama Canal.
The Arctic Bridge is a seasonal route which shortens the connection between the North American and European continents via the Arctic Ocean. Nevertheless, the observation shows that the transshipment route between the North Atlantic and the Pacific Ocean straight over the Central Arctic Ocean (the so-called Arctic Bridge) might be in reach earlier than expected due to climate change.
Thus, in terms of logistics, the cold waters shipping line (blue) will allow to deliver cargo to West Europe by sea faster than the 48 days (that it takes on average) to travel from the Northern ports of Far East to Rotterdam via the Suez canal, considering that the passage of a cargo ship along the North sea route is 2.8 thousand miles shorter than the route through Suez canal (See Figure 1).
The criteria of reliability also plays a positive role. Analyzing and estimating of the CO2 emissions directly resulting from transport between Far East and the West Europe by air, sea and rail, it has been assumed that carrying a TEU by container ship results in emissions of around 0.5 tonnes of CO2. These emissions might fall in future, if the average value of goods sent by sea, fell, and if this resulted in ships sailing at lower and more efficient speeds.
Among the advantage of Northern Seas transhipment lines, one should consider a significantly lower risks of physical loss of cargo (due to the peculiarities of the climate of the Indian Ocean, through which the southern route passes). Tropical storms of the Indian Ocean, which cause significant destruction, and sometimes sinking of cargo, lead to significant financial losses, and sometimes to the loss of a deal with the buyer. Such tropical cyclones occur during the typhoon season and last for more than six months: from May to November. The climatic features of the southern route suspend the navigation of the canal for as long as 6 months, creating unsafe and in some cases unprofitable conditions for transport companies. There are no storms in the sea expanses of the Northern Sea Route almost all year round, this is facilitated by the ice cover, which restrains water fluctuations. Thus. the stormy conditions of transportation of the northern seas are incomparable with the destructive storms of the South.
Another advantage, which play into the hands of the blue transhipment routes is the decrease of using of harmful to the environment material – cement. Building new land infrastructure (especially roads) requires cement, a material that contributes more than 6% of global carbon emissions. Shifting the transportation mode to the sea, therefore, will reduce the amount of roads constructions on the land.
It is estimated that cargo, currently carried by maritime and air (white shipping line) modes between Europe and the Far East, will in future shift to rail as a result of improved services attributed to the transhipment routes. It is indicated that around 2.5 million TEUs could transfer to rail from maritime transport, and 0.5 million from air transport, by 2040, which is equivalent to 50 to 60 additional trains daily, or 2 to 3 trains per hour, in each direction. In regards with the environmental issue, this means that, if maritime services lose their most time-sensitive cargo to rail, they might in practice sail their ships slower, extending transit times but reducing fuel costs and hence prices, and decreasing greenhouse gas emissions.
In addition to the time-frame criteria, a cold-water shipping line is beneficial in terms of capacity. It is usually characterized as the shortest sea route between West Europe and Far East, the safest (e.g., the problem of Somali pirates) and has no restrictions on the size of the ship, unlike the route through the Suez Canal. Current data makes it clear that the cold-water transhipment line will allow to deliver cargo to Europe faster by sea, reducing the route by 20 – 30%, and hence being more environmentally friendly (by using less fuel and decreasing CO2 emission) and saving human resources. Nevertheless, to capitalize on that opportunity requires much work in terms of improved navigation procedure and installation of safety-related infrastructure.
But in order to use the energy potential of the Arctic, the countries of the region are making additional efforts to develop the main transhipment routes of the North, and one of them – the Northern Sea Route – has great prospects.
The Northern Sea Route is the shortest sea route between the European part of Russia and the Far East; it passes through the seas of the Arctic Ocean (Barents, Kara, Laptev, East Siberian, Chukchi) and partly the Pacific Ocean (Bering) (See Figure 4).
The length of the route from St. Petersburg to Vladivostok via the NSR is only 14.000 km, while on the more popular route through the Suez Canal it is more than 23.000 km. Also, this route is advantageous in terms of delivery time and route length for many countries of the East Asian region to the countries of Western and Northern Europe. For example, the distance from the port of Rotterdam in Europe to the port of Yokohama in Japan via the Suez Canal exceeds 11.100 nautical miles, while the length of the route along the Northern Sea Route is only 7.000 nautical miles, that is, more than 37% shorter. The Northern Sea Route is also beneficial to other ports, for example, the route from Hong Kong, Shanghai, and Busan (South Korea) to Rotterdam is shorter by 11%, 24% and 29%, respectively (See Figure 5).
Though conditions are better along the NSR than elsewhere in the Arctic, major improvements are still needed in support of navigation as well as better communication considering increasing trans-Arctic traffic on the NSR. Thus, the NSR will be most effectively used together with a network of high-speed railways connecting the east and west of the country and providing access to the deep regions of Russia to the ports of the Arctic and Pacific Oceans (See Figure 5). The NSR and the supporting frame of railways are also important for strengthening the transport connectivity of the continents.
Already in 2020, the Russian authorities were intended to increase the volume of cargo transportation along the NSR to 40 – 43 million tons of cargo. According to the decree of President V. Putin, in 2024, the level of transportation should reach 80 million tons. Under favourable circumstances, by 2030 the size should exceed 100 million and amount to about 120 million tons. The growth is planned to be ensured by the beginning of the supply of Taimyr coal to India. After 2030, there are several plans to significantly increase the volume of international transit traffic through the Northern Sea Route.
In the American part of the Arctic region, the construction of the northern components of fixed transportation link in Alaska and Canada opens up development programs with massive international implications, linking the United States with East Asia in the creation of a high-technology, fusion- and fission-powered backbone for a new world economy.
The proposed Alaska – Alberta (A2A) rail corridor will connect the US state of Alaska with Alberta, Canada. The route will link the deep-water ports and the existing railway network of Alaska to the Canadian railway system
Apart from this, considering the current development of logistics routes in Eurasia, the issue of building the Eurasia – America transport corridor via the Bering Strait, which is the missing link in the global transport system, is of crucial importance for the further development of the world economy in the context of globalization.
Thus, the development of a new logistics hub of the world’s transcontinental routes will contribute to a significant increase in the economic well-being of the regions of the Far East, Eurasia, and North America, which will receive additional infrastructure and economic development (See Figure 6). In addition, with the help of the new road network, the development and trade of minerals from the Far East to other regions of the world will be simplified.
Equally important are the initiatives of the countries of Northern Europe and China in the development of transport logistics of the North, which ultimately aims to link the railway network of Eurasia (Russia, Chinese BRI and European TEN-T) with the maritime transport artery of the Northern Seas.
While there is a stable fixed ling between Sweden and Denmark (the 16-kilometer-long Øresund Link between Malmo, Sweden (right), and Copenhagen, Denmark (left), was completed and opened to traffic in 2000),the stable transportation connection across the entire Scandinavia is not fully developed (especially in the Gulf of Bothnia and Baltic Sea), creating a gap between the countries of North Sea and Baltic states.To fulfil this missing part of the logistic chain, North European countries are considering the creation of new transportation fixed links in the region:
- the “HH Tunnel” between Denmark and Sweden;
- The Arctic railway line with the “Arctic Link” to China via NSR to the Northern Europe;
- The Artic Railway to boost railway connectivity North Europe;
- The Pol-Corridor fixed link;
- The International North – South Transport Corridor (hereinafter INSTC) from Finland to Norway and further South;
- The Helsinki – Tallinn undersea tunnel between Finland and Estonia;
- The Nordic Logistic Corridor (NLC);
- Baltic Sea Bridge within Kvarken Multimodal Linkbetween Sweden and Finland;
- The Rail Baltica railway project to enhance railway links between the Baltic States and Central Europe;
Today, China is investing a lot of money in the development of Greenland. In 2017, Shanghai-based Shenghe Resources bought a 12.5% stake in Greenland Minerals and Energy A/S, becoming its largest shareholder and getting the right to increase its stake in the flagship project of the Greenland uranium mining company in Kwanefjeld to 60%.
Another Arctic country, Iceland, enjoys special attention from China as well. Iceland’s central location in the northern hemisphere makes it an ideal northern entrance to Europe from East Asia, similar to the prosperity of the port of Piraeus in Greece, which in a few years should handle up to 6.2 million TEU per year, which will make it one of the five largest ports in Europe. Over time, Iceland may become the same transhipment hub in the Atlantic Arctic, expanding the infrastructure according to needs, as the international shipping network expands through Arctic routes.
China is also actively exploring the transhipment possibilities in the Arctic Ocean basin. Thus, the climatic motivating factor for China in the development of the Arctic using the Trans-Arctic Sea route (hereinafter TSR) is mentioned by many experts, linking it with economic benefits. The Northern Sea Route is a gold mine, with access to which China will be able to increase its exports not only to already established partner countries, but also will have the opportunity to discover new trade chains.
Apart from “Arctic powers”, climate change also opens up additional prospects for the development of the NSR. Thus, if global warming is happening and will continue in the coming years, then the amount and thickness of ice cover in the seas of the Arctic Ocean should decrease. According to the forecasts of Norwegian scientists, by 2080 there may be no ice left in the Arctic seas at all.
Thus, it can be seen that for now the most beneficially in terms of the time-fame is the land (green) shipping line, due to the fact that current Maritime (warm waters – red) transport delivery speeds remain rather low (including those of modern container ships). (Vessels travelling along the Far East – West Europe route run at 20 – 25 knots, while average total travel time, including the Suez Canal passage and port calls, is 35 – 45 days. Besides, there always remains the risk of delays for natural and other reasons (such as waiting for loading at the port of departure)). This gives certain advantages to the cold waters (blue) transhipment line in terms of time-frame, regularity and precision of delivery (See Figure 1), which will dramatically reduce the time between Far East and Europe consumer markets. But to reach consensus in timing, price and environmentally friendly standards the growing push to decarbonize economies, implement the green construction methods should be done. Unfortunately, this approach may take decades to be adopted, which our planet may not have. And understanding of this fact should underlie the development to all the countries of the Globe without exceptions. It is vital to understand, that thinking on global warming issue we should consider all the possible ways of decreasing greenhouse gas emissions and overcome this challenge. We can no longer continue to live in denial of climate change and its impact on our lives the future of our generations.
The Theatrics of the US Debt Ceiling: Fiscal Austerity or Political Brinkmanship?
It amazes me sometimes how pointless some discussions are to begin with, yet the hype they garner is just outrageous compared to relatively pressing issues in the mainstream spotlight. I am no Democrat supporter or even a backer of Mr. Biden – as my columns would effectively relay. But I am also no fan of idiocy when I see it (also apparent in my writings). And the ongoing tensions lacing the US polity, unfortunately, qualify that criterion by a long shot. While the debate around the debt limit is neither novel nor unprecedented, the preachy statements posited in the US Congress to justify the GOP posturing are downright ridiculous. But even if we don ignorance and accept their premise as is, I fail to see any alternative path toward economic balance and prosperity – assuming that is actually the end goal of the Republican lawmakers.
Before even delving into the nitty-gritty of the debt ceiling saga, let’s get some ambiguities clear and out of the way. The debt limit is a statutory cap on the total amount of money the US federal government is authorized to borrow. Currently, that amount stands at $31.4 trillion – already reached about two weeks ago. However, breaching that limit is well-nigh avertable: All the US Congress needs to do is raise that limit higher, and the chaos would disappear overnight. No risking the smooth functioning of the money markets, no pressure on the Treasury and the Federal Reserve, and no uncertainty while the world grapples with demons on geopolitical and economic fronts. But what about fiscal responsibility? Since 2001, the United States has consistently rolled around with budget deficits year after year and filled the gap with excessive borrowing to meet its financial obligations. In that period, the US has accreted about $20 trillion in national debt; debt held by the public as a percentage of Gross Domestic Product (GDP) has roughly tripled from 32% to 94%. Even for an economy as omnipotent as the United States, that’s prohibitive. But we need a thorough comparison to realize the underlying trends – both on the macroeconomic and political scale.
The US last enjoyed a fiscal surplus during the presidency of a Republican. Mr. George W. Bush. But you rarely witness a vociferous detour around that nook of history by any GOP members. It is perhaps because he squandered that surplus on tax cuts for the wealthy. Or on the invasion of Iraq. While one led to more inequity in an already lopsided social demography, the latter ushered those resources to decimate a foreign land on bogus pretenses. Another manifestation of the ‘Trickle-Down’ economic principle (apparently notorious for the Conservative fractions on both sides of the Atlantic) was during the Trump tenure. Mr. Donald Trump ran through another profligate tax-cutting regime to do good for the US economy. But ironically, the debt ceiling got raised three times during his own term, sans the drama we witness whenever the Republican Party holds either of the chambers of the US Congress but not the presidency. At this point, some people won’t need any more evidence to gauge the true intentions of the right-wing bloc baying for fiscal austerity. But let us sieve through the Democratic rule for a non-partisan outlook.
During the past two decades, only two episodes stand out apropos of record debt as a function of the US economy: the Great Recession 2007-09 and the Covid-19 pandemic. While I admit Mr. Biden’s nearly $2 trillion worth of American Rescue Plan helped (in large part) fuel the current inflation, it also helped avoid a devastating recession and jumpstart a speedy recovery. It kept businesses running, people employed, and spending buoyed. Notwithstanding that the unemployment rate in America is still at a multi-decade low, the economy could very well trip into another recession as the Fed moves aggressively to blunt the pain of price increases. But insofar as projections go, it appears that the American economy would brush past a prolonged recession and manage a relatively softer landing. According to recent estimates, annualized inflation has slowed consistently for the past six months, dipping to 6.5% from a summer peak of 9%. While the Republicans tried effortlessly to channel their narrative around the economy, their embarrassing rout during the Midterm elections was a testament to the facetious nature of their claims.
Then there was the infamous standoff in 2011. We all know how the markets got rattled; borrowing costs spiked; and why the S&P downgraded the credit rating of US debt, even though we didn’t actually breach the limit. But we rarely ask: Why did the Obama administration end up with a debt of such mammoth magnitude? The answer is obvious. The Great Recession dried up tax receipts as the economy plunged into turmoil; the social safety net programs swelled, especially as spending on unemployment benefits soared. In 2008, the federal budget deficit stood at $458.6 billion, which staggered to $1.4 trillion in the subsequent year. Despite that, it took roughly eight years for unemployment to return to normality. Had the government raised taxes or cut spending drastically, the US would have witnessed something like Great Britain.
In the aftermath of the financial crisis, while America sustained spending to bolster the economy via borrowing, the Tory-led British government embarked on an austerity drive: Annual expenditure, as a percentage of GDP, was cut from 46% to 36%; spending on health infrastructure dragged down by half over the last decade. In hindsight, the difference is remarkable. While American wages have just stagnated over the course of the past 15 years, real wages in Britain have declined over the same period. While the US still contends with a rousing China for global economic superiority, Britain got recently supplanted by India (its former colony) as the fifth-largest economy in the world. The story couldn’t be any more lucid.
Ultimately, the GOP political mumble of “adding guardrails” and “fiscal reforms” to bend the debt curve might be politically splendid, but to an economic mind, it is frankly garbage! And I have no doubt that regardless of cogent reasoning, the hardline Republicans would hold the government paralyzed – as was evident when they scrapped concessions from Mr. McCarthy in barter for his post as the House speaker. Nonetheless, the bottom line is that regardless of your disposition – Democrat or Republican, pro-spending or pro-austerity – the debt ceiling is, as aptly verbalized by Senator Ron Wyden, “not about adding new spending,” but “it’s about paying debts that the government [already] owes – debts that were incurred under presidents of both parties.”
The Prolongation of BRICS: Impact on International World Order and Global Economy
BRIC, coined by an economist Jim O’Neil in 2001 as an acronym for the four countries like Brazil, Russia, India and China. South Africa joined in 2010 and this organization turned into BRICS. The prime goal of BRICS was to the formation of the diplomatic and economic assistance framework, and the challenges to western influence in the global economic order. The Western cordially welcomed BRICS with the earnestness. The BRICS, five major emerging economies, together represent about 26% of the world’s geographic area, inhabitant of 2.88 Billion people which is about 42% of the world’s population and accounted for a quarter of the global GDP. The enlargement of BRICS was talked on June, 2022 at the groups summit which took place in Beijing. The 2023 summit will take place in South Africa.
Russian Foreign Minister, Sergey Lavrov stated that Algeria, Argentina and Iran have already applied for joining in BRICS. In contrast, Saudi Arabia, Turkey , Egypt have declared their intense interest for becoming the member of BRICS and they are already engaged in the membership process. Now the question is what outcomes or impacts may be happened in the International world order and global economy in order to the expanding of BRICS?
Russia is the second largest producer of crude oil among OPEC+ members. Russia is a self-contained of its oil production. Because of Russia-Ukraine War, America and its European allies imposed sanctions on Russia and some European countries minimized their dependency on Russian oil. China imports its oil from Saudi Arabia, Russia, Iraq, Oman, Brazil and Kuwait. China increases at 21% its imports crude oil from Russia in 2022. The member of OPEC+ decided to reduced their oil production by 2Million barrels per day two month before and it will continue in the end of 2023. The U.S.A and other western countries aggravated.
Saudi Arabia is one of the world’s largest crude oil exporters, 11% of the world’s petroleum liquid production and has 15% of the world’s oil reserves. Recently it has declared that it will take initiatives to boost its oil production from 10 to 13 Million barrels per day. Egypt is a prominent petroleum producer and exporter. Egypt exports cotton and textiles, raw materials, chemical products and petroleum products. Egypt is a dialogue partner to the Shanghai Cooperation Organization. Iran is the world’s largest hydrocarbon Reserves in the world. Western world impose sanctions again and again. Iran is also the member of OPEC+ and Shanghai Cooperation Organization. Algeria, 10th largest natural gas reserver and 6th largest gas exporter. It is also a member of OPEC+. Turkey exports motor vehicles and their parts, gold and petroleum oil. It is the world’s 7th exporters of cotton. Argentina is a major exporter of wheat and corn.
If Saudi Arabia, Egypt, Iran, Argentina, Turkey become the member of BRICS, it will enormous impact on the World order and global economy.
1. The sphere of influence of the oil producer countries will be strengthen. The structure of oil market in the global economy will be changed.
2. Lula da Silva, President of Brazil suggested to make a common currency for the BRICS countries. If it takes place, a more stable currency will be created.
3. As China, Russia, Iran have a rivalry with the U.S.A, they will make more alliances to combat the U.S.A influence in the world.
4. As the U.S dollar is the world’s dominant currency in the global financial and monetary system, and it is the Centre of U.S.A global leadership, the monopolistic influence of Dollar will be undermined. If BRICS countries will reach an agreement to continue their trade through a common currency, De-dollarization will be accelerated.
5. As Turkey, Algeria, Iran, Egypt, Saudi Arabia and others have already shown their interest to join BRICS, it will accelerate to boost BRICS global influence. Russia, China will lead collectively in the world order.
6. Most of the countries reserve crisis will be resolved.
7. Saudi Arabia, Russia, Brazil will be able to export their oil collectively to China, India, Egypt and Turkey. China is Saudi Arabia’s biggest trading partner with more than $50 Billion.
8. The investment of China and Russia in African continent will be extended. China is the largest trading partner of South Africa. South Africa is more advanced than any other countries of Africa because of its natural wealth and location.
9. De-Dollarization will deteriorate the U.S.A capability to alter the behavior its opponents. If BRICS continuously expand, China will easily promote its agenda and grand strategy in the world.
10. According to World Bank, BRICS grew at an average of 6.26 percent in 2021. On the contrary, G7 grew at 5.15%. If BRICS continues to attract other countries to join, it will emerge as a powerful force of the global leadership. The GDP is hoped to double to 50% of global GDP by 2030.
Are we going into another economic recession? What history tells us
An economic recession or depression is a period of economic decline, typically characterized by a decline in the gross domestic product (GDP), high unemployment, a decline in manufacturing and industrial production, a stock market crash, and a decrease in consumer spending.
The Great Depression
The Great Depression was a severe economic downturn that lasted from 1929 to 1939. It was the longest and most severe depression of the 20th century. The Great Depression began in the United States and quickly spread to countries around the world. Many factors contributed to the Great Depression, including economic policies and structural weaknesses in the global economy. During the Great Depression, unemployment rates reached as high as 25% and GDP fell by as much as 30%. Many businesses and banks failed, and people lost their savings and homes. The depression had a profound effect on society, leading to widespread poverty and social unrest. Governments around the world implemented various economic policies in an attempt to combat the depression, including increased government spending, protectionist trade policies, and monetary policies such as the devaluation of currencies. The Great Depression had a lasting impact on the global economy and political landscape, leading to the rise of fascist and communist regimes in some countries and shaping the economic policies of governments for decades to come.
The Suez Crisis of 1956
The Suez Crisis of 1956 was a political and military conflict that arose after the Egyptian government nationalized the Suez Canal, a strategic waterway that connected the Mediterranean Sea to the Red Sea. The nationalization of the Suez Canal led to the withdrawal of foreign investments and a decline in international trade, which hurt the economies of Egypt, France, and the United Kingdom, the three main countries involved in the crisis. The crisis also led to a rise in oil prices, as the closure of the Suez Canal disrupted the flow of oil from the Middle East to Europe. This had an impact on the economies of oil-importing countries and also led to inflation in many developed economies.
The Sue Crisis also led to a decline in stock markets around the world and a fall in the value of the British pound and US dollar, as investors sought safe-haven assets in the wake of the crisis. The Suez Crisis also had a long-term impact on the global economy, as it led to a shift in the balance of power in the Middle East and contributed to a decline in the influence of the Western powers in the region. It also had a lasting impact on international relations, as well as on oil prices and the global economy. The crisis also contributed to the formation of the OPEC and the oil embargo in 1973 which had a significant effect on the world economy.
The International Debt Crisis of 1982
The International Debt Crisis of 1982 was a financial crisis that arose from the inability of several developing countries to repay their debt to international creditors. The crisis began in the early 1980s, when several Latin American countries, as well as some countries in Africa and Asia, found themselves unable to service their debt and were forced to seek assistance from the International Monetary Fund (IMF) and other international organizations. The crisis was caused by several factors, including a rise in interest rates, a fall in commodity prices, and a decline in economic growth in many developing countries. The crisis was also exacerbated by the fact that many developing countries had borrowed heavily in the 1970s, during a period of high commodity prices and strong economic growth, and were now facing a difficult economic environment.
The International Debt Crisis had a significant impact on the global economy. Developing countries affected by the crisis saw a decline in economic growth and an increase in poverty and unemployment. The crisis also led to a decline in foreign investment in many developing countries. The International Monetary Fund (IMF) and the World Bank responded to the crisis by providing financial assistance to affected countries, in exchange for economic reforms such as austerity measures, structural adjustments, and trade liberalization. These measures had a significant social and economic impact on the affected countries and were criticized for their negative effects on the poor and vulnerable populations.
The International Debt Crisis also had an impact on the global financial system, as many banks and other financial institutions that had lent money to developing countries were at risk of default. The crisis led to a decline in the value of the US dollar and a rise in the value of other currencies, as investors sought safe-haven assets in the wake of the crisis. The International Debt Crisis of 1982 was a major event in the history of the global economy, and its effects were felt for many years afterward. It also led to important changes in the way the international financial system operates and the role of the IMF in providing financial assistance to developing countries.
The East Asian Economic Crisis 1997-2001
The East Asian Economic Crisis, also known as the Asian Financial Crisis, was a period of financial and economic turmoil that affected several countries in East Asia, including Thailand, Indonesia, South Korea, and Malaysia, between 1997 and 2001. The crisis was characterized by a sharp devaluation of currencies, a decline in stock markets, and a rise in interest rates, and had a significant impact on the economies and people of the affected countries. The crisis was triggered by several factors, including a rapid increase in debt, a property market bubble, and a lack of transparency in the financial systems of the affected countries. Many of these countries had experienced rapid economic growth in the preceding years and had attracted large amounts of foreign investment, but their economies were not well-equipped to handle the sudden influx of capital.
The crisis led to a sharp devaluation of currencies in the affected countries, which made it difficult for businesses and individuals to repay their debt. This, in turn, led to a wave of bank failures and a decline in economic activity. The crisis also led to a decline in the value of stock markets and a sharp increase in interest rates, making it more difficult for businesses to access credit.
The International Monetary Fund (IMF) intervened to provide financial assistance to the affected countries, in exchange for economic reforms such as austerity measures, structural adjustments, and trade liberalization. These measures had a significant social and economic impact on the affected countries and were criticized for their negative effects on the poor and vulnerable populations. The East Asian Economic Crisis had a significant impact on the global economy, as the crisis led to a decline in economic growth and a fall in stock markets around the world. It also led to a decline in foreign investment in many developing countries, as investors became more cautious about investing in countries facing economic problems.
The East Asian Economic Crisis of 1997-2001 was a major event in the history of the global economy, and its effects were felt for many years afterward. It also led to important changes in the way the international financial system operates and the role of the IMF in providing financial assistance to developing countries.
The Russian Economic Crisis 1992-97
The Russian Economic Crisis of 1992-1997 was a period of economic turmoil and financial instability that affected the Russian Federation following the collapse of the Soviet Union. The crisis was characterized by hyperinflation, a sharp decline in industrial production, and a sharp fall in the value of the Russian ruble.
The crisis was caused by several factors, including the massive structural and political changes that occurred following the collapse of the Soviet Union, the rapid privatization of state-owned enterprises, and the lack of a clear economic plan or strategy. Additionally, the crisis was exacerbated by the failure of the government to implement necessary economic reforms, and the ongoing conflicts in the region. The Russian economic crisis had a significant impact on the lives of the Russian people, as living standards declined sharply and poverty and unemployment increased dramatically. The crisis also led to a decline in foreign investment and a fall in the value of the Russian ruble.
The government responded to the crisis by implementing several economic reforms, such as the introduction of a new currency, the Russian ruble, and the implementation of a tight monetary policy to combat hyperinflation. The government also implemented several structural reforms, including the privatization of state-owned enterprises, the liberalization of prices, and the opening up of the economy to foreign trade and investment. The Russian Economic Crisis of 1992-1997 had a significant impact on the global economy, as the crisis led to a decline in economic growth and a fall in stock markets around the world. The crisis also led to a decline in foreign investment in Russia and other countries of the former Soviet Union, as investors became more cautious about investing in countries facing economic problems.
The Russian Economic Crisis of 1992-1997 was a major event in the history of the Russian economy and had a lasting impact on the country’s economic and political landscape. It also had important lessons for other countries undergoing the transition from a planned to a market economy.
Latin American Debt Crisis in Mexico, Brazil, and Argentina 1994-2002
The Latin American Debt Crisis of 1994-2002 was a period of economic turmoil that affected several countries in Latin America, including Mexico, Brazil, and Argentina. The crisis was characterized by a sharp devaluation of currencies, a decline in economic growth, and a rise in interest rates. The crisis had a significant impact on the economies and people of the affected countries. The crisis was triggered by several factors, including a rapid increase in debt, a lack of transparency in the financial systems of the affected countries, and the failure of governments to implement necessary economic reforms. Many of these countries had experienced rapid economic growth in the preceding years and had attracted large amounts of foreign investment, but their economies were not well-equipped to handle the sudden influx of capital.
The crisis led to a sharp devaluation of currencies in the affected countries, which made it difficult for businesses and individuals to repay their debt. This, in turn, led to a wave of bank failures and a decline in economic activity. The crisis also led to a decline in the value of stock markets and a sharp increase in interest rates, making it more difficult for businesses to access credit. The International Monetary Fund (IMF) intervened to provide financial assistance to the affected countries, in exchange for economic reforms such as austerity measures, structural adjustments, and trade liberalization. These measures had a significant social and economic impact on the affected countries and were criticized for their negative effects on the poor and vulnerable populations.
The Latin American Debt Crisis of 1994-2002 had a significant impact on the global economy, as the crisis led to a decline in economic growth and a fall in stock markets around the world. It also led to a decline in foreign investment in many developing countries, as investors became more cautious about investing in countries facing economic problems. The Latin American Debt Crisis of 1994-2002 was a major event in the history of the global economy and its effects were felt for many years afterward. It also led to important changes in the way the international financial system operates and the role of the IMF in providing financial assistance to developing countries.
The Great Recession
The Great Recession was a period of economic decline that lasted from December 2007 to June 2009. It was considered the most severe recession since the Great Depression of the 1930s. The Great Recession began in the United States and quickly spread to other countries around the world. The primary cause of the Great Recession was the collapse of the housing market in the United States, triggered by the widespread use of risky subprime mortgages and lax lending standards. The housing market crash led to a decline in housing prices and a wave of foreclosures, which in turn led to a decline in consumer spending and a decrease in economic activity.
As the recession deepened, several large financial institutions, such as Lehman Brothers, failed, leading to a financial crisis and a credit crunch. This made it difficult for businesses and consumers to access credit, further exacerbating the economic decline.
Governments around the world implemented various policies to try to combat the recession, including monetary policy measures such as interest rate cuts, fiscal policy measures such as stimulus spending, and bank bailouts. Despite these efforts, the recession caused high levels of unemployment, a decline in GDP, and a fall in stock markets around the world. The Great Recession had a profound impact on the global economy, leading to widespread job losses, a decline in economic activity, and a loss of wealth for many people. It also led to significant changes in economic policy and regulations, particularly in the financial sector, to try to prevent a similar crisis from happening again in the future.
The current economic crisis is a downturn in the global economy that is caused by the COVID-19 pandemic, the Ukrainian war, devaluing currency, Economic sanctions on Russia and Iran, New Strategic alignment, and US-China competition. It has resulted in widespread economic disruptions around the world, leading to a decline in consumer spending, an increase in unemployment, and a fall in economic activity.
Similarities between the current economic crisis and previous economic recessions include a decline in the gross domestic product (GDP) and an increase in unemployment which stands at 6.4% from 5.4% in 2021. Businesses, particularly small and medium-sized enterprises (SMEs) are facing severe economic challenges, with many closing down or filing for bankruptcy. Consumer spending also took a hit as people become more cautious about spending money and saving for uncertain futures. The current crisis also has some similarities to the 2008 financial crisis, as it has led to a decline in stock markets and a fall in the value of many currencies. The crisis has also led to a decline in foreign investment and a rise in uncertainty in the global economy, populist leadership.
Governments around the world are taking measures to mitigate the economic impact of the crisis, including fiscal policies such as stimulus spending and monetary policies such as interest rate cuts. Central banks are also taking action to provide liquidity to the financial system and to support the economy. The current economic crisis is a reminder of the interconnectedness of the global economy and the importance of swift and coordinated action to mitigate the economic impact of such crises. The crisis has also highlighted the importance of economic diversification, and the need for countries to build resilient economies that can withstand future shocks.
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