Abu Dhabi

Source: mufakiru Alemarat

Dr.. Ali Mohamed Al Khouri

World markets witnessed a state of anxiety and shock after Vladimir Putin, the Russian president, announced the partial mobilization of hundreds of thousands of reservists to fight in Ukraine, and confirmed that his country is ready to use all its defensive and combat means to protect itself and its territorial sovereignty, while waving the use of nuclear force, a severe threat that may indicate the transition of the fuse of the war between Russia and Ukraine to a new stage, and the outbreak of a terrifying World War.

World War by proxy

What supports this theory is what America and its Western camp are doing of information and military armament in Ukraine, and the mobilization of American and European fighters towards the territory of Russia and its borders through Poland and Sweden on the European continent; what really highlights the features of a global proxy war against Russia in Ukraine-albeit in its early stages – with the escalation of statements by the UN Security Council and the international community, which demands the Russian government to withdraw from Ukrainian territory and stop the war; and NATO promises to protect the NATO countries at all costs.

China-Taiwan conflict

Also, what increases the likelihood of a crisis in the situation and the transition of the war to the East is the entry of China into the line of war, and the readiness of the “dragon” to use military force to annex Taiwan and retrieve it from the American bosom at any historical stage, which may be now or after several years; however, what causes more concern is the pledges of the United States of America to protect Taiwan, then deploying military equipment near the island and the Chinese borders; which exacerbated the tensions of the situation in the region, which has become heavily armed with American and Taiwanese military units on the one hand, and Chinese military units on the other, amid a state of alert that does not exclude the entry of Japan and the two Koreas and Russia is in this conflict.

Recession and depression

All these events are undermining the global economy, entering it into the tunnel of slowdown, deflation and recession, after it was weakened by successive suffocating crises in the past years. We find that the time periods between global disasters with an economic impact in our modern time have become very close; indeed, they overlap, after they were-before – up to about ten years between one crisis and another sometimes; we also find today that the speed of such crises, and their complexity, double the degree of complexity of their elements, effects and burdens.

The impact of everything that is happening in the global arena will drive more fears in the world markets, which are witnessing imbalances in the labor markets due to the high prices of raw materials and energy, and the uncertainty surrounding the supply chains, which implies the likelihood that a number of business sectors will cease production, the continuing series of decline in the economic performance of countries, and the decline in the average per capita gross national income with inflation rates reaching historic record levels.

The pessimistic novel (The War continues)

Many analysts believe that the current war will be prolonged so that the “American Eagle” can reduce the strength of the “Russian bear” and weaken its ability to hold out no matter how long it takes. With the insistence of American policy on consolidating the principle of unipolar hegemony policy, this means using other “cards” to exclude the Chinese dragon from another side, which is what we can imagine with more reckless policies that originally highlight the hidden agendas of the”Wild Eagle”, which shows that it will not accept the entry of new competitors that may threaten its existing political, cultural, economic and social control, and this is enough to divide the world on itself, and create geopolitical alliances between different countries of the world, and economic and political repositioning.

Anxiety and volatility in the markets

It is expected that global markets will remain in a state of volatility, especially metals, currencies, oil and gas, which are vital sectors that drive the joints of national economies, in light of international statements that have become breath-holding for the world waiting for how serious things may turn out, especially in Ukraine, and the ability of the Russian economy to withstand increasing Western sanctions, a measure that will determine the reaction of the markets.

In the midst of all this, the path to global peace and security is still foggy and bumpy; indeed, the already deteriorating economic conditions in many countries of the world and the continuation of the series of international conflicts will cast a shadow over New spikes in energy and food prices, which may increase the likelihood of chaos in the international system and the outbreak of regional wars that will drag the whole world towards more lurches, slides and unknown fate.

Economic consequences of the crisis

Under these circumstances, the world has undoubtedly become on the thresholds of a historical stage, at a time when the impact of global events affects all components and social classes everywhere in the world without exception; inflation levels are at their peak, and inherently impose complex challenges that will not only leave scars; but may soon turn into more painful suffering. In addition, we observe the decline of capital, the conservatism of international investments, the diminishing economic opportunities, the high levels of interest, which means more strangulation of economic activities, the weakening of small and medium-sized enterprises, the decline in per capita income and living conditions, and the destruction of individual savings.

The question that arises is: what will be the harsh consequences of what may happen in the markets of developing and emerging economies, especially in the Arab region, more than half of whose countries are described as fragile And how well can its weak slats withstand these sliders What can be said for certain is that the continuation of the war or the expansion of these conflicts will, according to the most reasonable expectations, lead to the elimination of millions, starving or killed; the outcome may rise to the most ominous consequences if the global conflict intensifies and turns into a global war in which the world economy enters a vestibule from which it will not be easy to get out, but then the survival of the human race and its civilization will be at stake.

The optimistic novel (peace agreement)

The optimistic version of some observers indicates that Putin’s statements are nothing but a media Dodge in which he is trying to justify the military operation and calm the national Interior in light of the international strangulation of the Russian economy, expecting that this will be followed by a lull, and that the effects of the Russian escalation on the markets and the global economy will gradually become apparent within the next few weeks. The Russians, if they continue with their announced plans, will get four states rich in natural resources and bordering the Black Sea, and the Ukrainians may be content with liberating vast areas in the northeast of the Kharkiv region; this balance may encourage both sides to accept a cease-fire and conclude a peaceful agreement justifying the cessation of hostilities.

In the same context, the other possible scenario is the continuation of the war, hit-and – run battles, and partial field victories; but by prolonging the war, the “American Eagle” will have achieved its goals by weakening the power of the “Russian bear” and reducing it on the one hand, and tightening the noose on the “Chinese dragon” on the other, and between them the European, which will be exhausted by the repercussions of the war for a long time; while the American economy will maintain its dominance-even for some time-and the world economy will only have to adapt to the events; that is, the world may be facing a strong economic recovery in the next five years at the very least.

Safe exit scenario

We still believe that the wise people of the world should review the causes of that war, and that stubbornness, gradual and endlessly mutual escalation by the conflicting parties East and West, will never lead to good, and that expectations will be reduced to the worst according to each slide in which the conflicting parties fall. Here, it should also be expected that the voice of reasonable and logical people will be louder at this stage; to call for a fair solution for all parties that promotes the acceptance of the Russian and Ukrainian sides of calm, and satisfaction with partial victories and successes for each of them.

From this point of view, with the calm of the situation and the cessation of fighting, we can expect-after a reasonable test period for the stability of peace-to discover that high interest rates and shrinking markets have led to an important result-the accumulation of large wealth that is neither activated nor invested. And here – as the classics of modern economics say-the subsequent reduction of interest rates will entice the re-employment of funds saved in the markets directly in the form of large production projects; to absorb labor, reduce unemployment, and increase the volume of production; which creates competition leading to lower prices and further economic recovery, in exchange for what was from deflation and depression. Such a corrective scenario may take two to four years once hostilities cease, and calm and peace come.