Israel’s warmania threatens to spark new economic challenges and fuel geopolitical tensions

By: Azhar Azam

An initial assessment of a UN-commissioned study has warned should Israel’s assault on Palestine completes its third month, it could wipe off $10 billion from Egyptian, Jordanian and Lebanese GDP, pushing another 230,000 people into poverty. If the war prolongs, economic losses would hit $18 billion, triggering risks such as oil price volatility, refugee influx and pressures on public debt and fiscal space.

More than 50 years ago, the 1973 Yom Kippur War prompted Arab states to place an oil embargo on Israeli supporters including the US. This led petrol prices to quadruple and ushered a decade of stagflation in industrial economies, wreaking havoc to consumers and economies of the industrial countries.

Dollar devaluation, spiking oil prices and an imminent recession precipitated a rift in the transatlantic alliance as Europe disassociated itself from US Middle East policy and stockpiled oil supplies, securing a short-term cushion. The embargo flushed Arab states with petrodollars, helping them to spend extravagantly on social and economic development; declining leverage of US and European oil corporations, "Seven Sisters," alongside other factors exacerbated the situation for foreign oil-dependent America.

Following Hamas deadliest Oct 7 attacks on Israel since Arab-Israeli war, economists have been sensing a déjà vu, fearing it could be a reiteration of 1970s; neither US is reliant on the Middle East for oil as it was in 1973 nor Mideast countries are interested in using oil as a weapon or taking harsh measures including freezing diplomatic and economic ties and blocking transfer of arms from US bases to Israel.

But because of Israel’s inhumane offensive, world economy, still recovering from the pandemic-wrought economic shock, has again reached an inflection point since after Bloomberg Economics’ projection – oil prices could soar to $150 and global growth drop to 1.7%, a recession that might take about $1 trillion of global output – World Bank has echoed similar concerns.

If the conflict were to escalate, said Bank’s chief economist Indermit Gill, the global economy would face a "dual energy shock for the first time in decades" from the wars in Ukraine and the Middle East with oil prices jumping to as high as $157/barrel, leading to skyrocketing inflation. Earlier banking giants at the Future Investment Forum, known as “Davos in the Desert”, in Saudi Arabia sounded alarm this conflict could dole out a heavy blow to the world economy and would mean "more insecurity".

Following the US withdrawal from Afghanistan, asset manager BlackRock rebutted it wasn't the 1970s; a period during which the Arab embargo along with the Iranian revolution and the Vietnam War jolted the world economy. Yet just months after this prediction, Russia's invasion of Ukraine drove Brookings into constructing some analogy between two eras. With the Ukraine conflict grinding on, Israel's diabolical strikes on Palestinians sharply raise the specter of the 1970s-like economic crisis, particularly if war spills over and engulfs the entire region.

The impact could be much stronger as far right-wing and ultranationalist Jews in Netanyahu government, months before the conflict, rejected the internationally-supported idea of a two-state solution and propagated Jews "have exclusive and indisputable rights" on Israel and Palestinian territories, pledging to expand settlements to occupied West Bank. Israel's unabated targeting of Palestinians in West Bank unclothes this obnoxious, condescending mindset.

Israel's stubborn approach to take control of Palestine's territories and unyielding aggression against Palestinians, especially children and women, is accelerating stoking geopolitics, which had gone dormant over US-brokered reconciliation between Arab states and Israel but never really vanished.

Even as Arab states seem divided on taking 1970s-like measures against Israel, their demand from the International Criminal Court to investigate Israeli war crimes and crimes against humanity mark a tectonic shift in regional geopolitics with economic ramifications the world over.

As the war prolongs, Saudi Arabia has put the normalization deal with Israel on hold and ramped up engagement with regional states and rivals such as Iran and Syria. Riyadh is also pushing back against the US in condemning Hamas; Egypt, despite its fraught relations with the armed faction and burgeoning economic relations with Israel, is hardening position on Israeli actions of forced displacements.

The conflagration of violence against civilians in Gaza and West Bank, Western double standards and US unconditional support for Israel are driving more Arab public antipathy toward Israel, which in turn could urge their leaders to lower the boom on Israel. As the US, despite consuming itself with arming Ukraine, has diverted arms from Kyiv and is quietly sending ammunition and missiles to protect its ally – other major powers could soon be sucked in for a geopolitical showdown.

By promising "hell" to Gazans, demanding Nakba, threatening to drop a nuclear bomb on Gaza Strip, saying "North Gaza (will be) more beautiful than ever" and keeping world focus on Gaza to advance their far-right "agendas" in West Bank – Israel's right-wingers are treading a path that could upend US-mediated peace deals and make Middle East a geopolitical flashpoint.

In the middle of the Ukraine war, the US Federal Reserve warned periods of elevated geopolitical risks historically brought about enormous negative impacts on the global economy with war destroying human and physical capital, shifting resources, disrupting supply chains, delaying investment and eroding consumer confidence.

The Syria conflict through 2020 had resulted in 11.3% GDP reduction across the Mashreq region (Iraq, Jordan and Lebanon). The UN assistant secretary general Abdullah Al Dardari, who led the recent study, drew parallels between mass displacement in Syria and Gaza wars, revealing the latter suffered the same level of destruction in just one month what the former endured in five years.

As Dardari warned war impacts could reverberate in the neighboring countries, economic implications of such a development coupled with Israel’s unbridled enmity for Palestinian children and women would intensify Arab public abhorrence toward Jewish state, forcing their leaders to cede their ambivalence and do something concrete to stop Israel from killing civilians.

While Arab leaders won’t respond with 1970s-like embargoes, even a symbolic action will suffice to spark new challenges to the world economy, fuel more divisions internationally and exacerbate geopolitical tensions. By succumbing to hawkish elements, sticking to warmania, rejecting ceasefire calls and continuing cascading attacks on civilians – Netanyahu government is abetting this crisis to pop up.

*My article (unedited) that first appeared at the Express Tribune.

Nato’s struggle for relevance risks peace

Azhar Azam

Just hours after Nato Secretary General Jens Stoltenberg urged member states to “stay on course” in supporting Ukraine, he in the ensuing alliance’s defense ministers meeting insisted allies reiterated their determination to support Kyiv enrollment into the organization and support the country through new financial pledges, a new training center for Ukrainian pilots and provision of more air defense and ammunition.

As Stoltenberg did a volte-face to cover up the cracks within Nato, rifts over arming Ukraine have plagued the transatlantic alliance. After US national security adviser Jake Sullivan and former British defense secretary Ben Wallace in July suggested Kyiv should express “gratitude” to the West for its military support, filing of a complaint by Ukraine at the World Trade Organization against three Nato members (Hungary, Poland and Slovakia) in response to their import bans on Ukrainian farm produce irked Polish Prime Minister Mateusz Morawiecki who in September dialed back from his commitment of bolstering Ukraine's defense, suspending weapon transfers to Kyiv.

The fissures in Nato are widening as US and European Union (EU) struggle to develop a consensus on providing additional military aid to Ukraine with Hamas-Israel war undermining diplomatic support for Ukraine in the South and key coalition members remain ambivalent hastening the process of Kyiv's enlistment to the elite panel. While an EU proposal of extending $21.4 billion military package to Kyiv over the next four years has been subject to internal schism since European countries are unwilling to pledge such large sums years in advance, it indicates Brussels is expecting war to last long that will take a further toll on the war-battered bloc's economy.

America's willingness to channel military assistance to Israel is additionally making Nato's fundamental objective of securing a lasting peace in Europe more distant as US President Joe Biden’s request is encountering steep challenges to get through the Congress where House and Senate are divided over providing $61.4 billion in military and other assistance to Kyiv.

Sensing an impasse in the Ukraine war and seeing enthusiasm fading away for Kyiv in American and European capitals, Stoltenberg's frustration has become more marked. Hoping the US would sustain its support for Ukraine despite divisions, he warned the EU about “dangerous” implications if Russia wins.

His apprehensions compounded after Slovakia's new Prime Minister Robert Fico in October announced to stop military aid to Ukraine, stating an immediate halt of military operations was the best solution for Ukraine and urging the EU “should change from an arms supplier to a peacemaker.” His warning not to vote for any sanctions on Russia that “will harm us, like most sanctions have” and intent to block Kyiv’s bid to join Nato, in addition to testing fragile EU-Nato unity, signals a cynicism on a military solution.

Since end of the cold war, Nato has been transforming itself to survive and keep its relevance in world affairs. The organization carried out military operations in Bosnia and Herzegovina (1995-2004) and Kosovo (1999); it participated actively in the US-led military campaign in Afghanistan. The alliance is currently engaged in non-combative advisory and capacity-building missions in Africa and Iraq and maritime security in the Mediterranean.

But while Stoltenberg's December 2019 promise, the organization would "no way" move into the regional waterways has been belied by actions, Nato's move to expand its scope to the Indo-Pacific by opening a liaison office in Japan and secretary general's insistence to work with partners – Australia, New Zealand, Japan and South Korea – in the recent summit is an effort that may help to preserve the organization's relevance and elevate its chances of survival but risks subverting regional peace and putting world powers at each other’s throats.

For the first time in June 2022, these countries attended Nato summit in Madrid. The coalition's push to strengthen ties and expansion into the Indo-Pacific partners was seen by former Australian Prime Minister Paul Keating and French President Emmanuel Macron as foolish and "a big mistake." Still, Nato continues to hold dialogue with the Indo-Pacific countries, which may shove the region into a new cold war.

With the Ukraine conflict grinding on, war fatigue is infiltrating the Ukrainians and West as symbolized by divisions within the US Congress to continue sending arms to Kyiv and European amnesia about Ukraine's EU and Nato membership. The Ukrainian President Volodymyr Zelenskyy's acknowledgment – “Yes. A lot of people, of course, in the world are tired” and that recruiting troops had become a serious challenge – as well as the fact – EU has delivered less than a third of the artillery shells it promised to Ukraine in one year through March 2024 – indicate the war, if not earlier, is entering a stalemate.

Heightened tensions in the Middle East have raised concerns the US may not be able to sustain the level of diplomatic and military support to Ukraine it has given so far; the Hamas-Israel conflict just highlights the underlying problem of war fatigue. The contraction of America’s deep pockets for Ukraine before the Mideast crisis was symptomatic of this looming phenomenon.

Stoltenberg is watching the new backsliding arthritically, fretting this could cost his job in July when Nato will likely name its new secretary general. Former Norwegian prime minister, whose term has been extended four times during the Ukraine war, is facing intense competition from rival candidates, campaigning to replace him as a “consensus builder” and with “clear vision” on Russia.

The secretary general is indeed trying to exploit tensions in the Western Balkans and Indo-Pacific to dilate the Nato purview, scoop up the organization's relevance and bolster its struggle for survival. While these efforts are shifting focus from ending the crisis on the European shores and fueling more divisions within the grouping, such attempts to spark confrontations could turn into a full-blown global conflagration, igniting war flames and engulfing other parts of the world that will be a disaster for the entire plant.

*My article (unedited) that first in the "Express Tribune"

Xi's Vietnam trip to chart a new course of growth and stability

By: Azhar Azam

Communist Party of Vietnam (CPV) General Secretary Nguyen Phu Trong, in a notable demonstration of Hanoi's special relationship with Beijing, last year became the first foreign leader to visit China after the 20th National Congress of the Communist Party of China. Now Chinese President Xi Jinping is repaying the favor and arrived in Vietnam for a two-day state visit on Tuesday.

Exchanges between the Chinese and Vietnamese can be traced back to over 1,000 years ago, during which they coexisted peacefully as neighbors. Since the establishment of their formal diplomatic relationship in 1950, Beijing and Hanoi have generally maintained a strong relationship. These strong ties endured a brief interruption, before ties were resumed in 1991.

From then onward, the partnership has been booming as Hanoi in 1998 adopted and adheres to a "Three Nos" defense policy: no military alliances, no siding with one country against another and no foreign military bases on its soil. Signing a land border treaty, demarcating the border and other cooperation agreements transformed the Chinese-Vietnamese border into a boundary of peace, stability and development, injecting a new impetus in the bilateral relationship. Both sides remain committed to maintaining peace and stability at sea.

China and Vietnam officially entered into a comprehensive cooperative strategic partnership in 2008; they have been informally tied in a high-level partnership since 1999 when top leaders of the two countries reached consensus that they should be "good neighbors, good friends, good comrades and good partners." Xi's visit follows a series of high-level visits by Chinese diplomats. In their interaction, all Vietnamese leaders were upbeat about their country's relationship with China, which was considered as "a strategic choice and a top priority" in the Southeast Asian country's foreign policy of independence.

In his visit to Vietnam, Chinese Foreign Minister Wang Yi proposed enhancing strategic connectivity between the Belt and Road Initiative countries. The BRI has been commended in Vietnam for its potential to deliver public goods within Vietnam's "Two Corridors, One Belt" framework. With him and Vietnamese Foreign Minister Bui Thanh Son lauding stable development in the strategic partnership, this historic relationship after Xi's trip will be on the cusp of bringing sound economic progress and delivering more stability to the region.

Beijing is Hanoi's largest trading partner. Bilateral trade, according to Vietnamese data, is on course to leapfrog its 2022 total of $175 billion and has already hit $140 billion in the first 10 months of 2023. This, as well as an estimated $26 billion of Chinese investment, preferential loans and non-refundable aid to Vietnam are contributing to socio-economic development and playing a key role in building infrastructure, reducing poverty, generating jobs and boosting the economy in the country.

During Vietnamese Prime Minister Pham Minh Chinh's visit to Beijing in June, the leaders agreed to continue implementing their joint statement about deepening the comprehensive strategic partnership, maintaining high-level exchanges, promoting party-to-party, government-to-government and parliamentary exchanges, limiting disagreements and fostering maritime cooperation.

The Communist Party of China (CPC) and CPV have been exchanging experiences on party building to fast-track their national development. Hanoi admires the CPC's achievements and seeks to adopt its governance and economic model to combat corruption and attract foreign direct investment (FDI) in the country.

A consensus between Xi and Trong in October 2022 on sharing party-building experiences to improve national governance and prevent and control corruption has the potential to boost the Vietnamese government's ability to administer the country in addition to delivering benefits to the people, accelerating economic growth and emerging as an important FDI destination.

Xi's visit comes just three months after U.S. President Joe Biden upgraded America's relationship with Vietnam to a comprehensive strategic partnership. Yet it's largely an effort to exploit Hanoi's position in Asia-Pacific to intensify his strategic competition with China.

While geopolitical consequences of this new development shouldn't be overstated, Vietnam will not pursue such alignment for its leaders often describe their relationship with China as one of "comrades and brothers," an enthusiasm often lacking in the U.S.-Vietnam relationship. A U.S.-Vietnam comprehensive strategic partnership is also a moot point due to the far-reaching implications it would have on the geopolitical landscape, economy and stability of Asia-Pacific, particularly Southeast Asia.

Before the recent Asia-Pacific Economic Cooperation (APEC) Leaders' Meeting, Hanoi sought to address existing economic and security challenges and strengthen dialogue and cooperation, reminding the APEC leaders that they 30 years ago had agreed on a joint vision of bringing peace, security and prosperity to the people of the Asia-Pacific.

This and Vietnamese President Vo Van Thuong's remarks at the forum – "the global economy is facing a new wave of protectionism and other challenges stemming from… geopolitical tensions" – indicate Hanoi is wary of making itself a theater of America's self-provoked strategic rivalry with China and doesn't want to trade peace and development for geopolitics.

With leaders of the two countries looking to build on shared historical similarities and showing determination to deepen collaboration on economy, governance and regional peace, Xi's visit marks a significant milestone in strengthening the longstanding strategic partnership to jointly counter the geopolitical threats and chart a new course for bilateral economic growth and regional stability.

*My artcile that first appeared at CGTN:

North is inundating South with plastic waste

By: Azhar Azam

Due to its cost-effectiveness, versatility, sterile material and convenience of use in various applications such as cloth, beauty and food packaging – plastic has transformed everyday life; it's turning into one of the greatest environmental challenges as the world, according to UN, annually produces more than 430Mt of plastic, two-thirds or 230Mt of which are short-lived products that quickly become waste, filling the ocean and often working its way into the human food chain.

If it were a country, environmentalists warned, the "Plastic Kingdom" would easily be the world’s fifth largest greenhouse gas emitter. According to Oceana, two garbage trucks' worth of plastic every minute enter the oceans; impacts of plastic pollution, per WWF, cost up to 1 million lives each year in low- and middle-income countries (LMICs), tipping the world off the level of mismanaged plastic waste may increase by almost 90% by 2040.

Addiction to plastic, what UN experts call an "environmental nightmare," is adversely affecting the aquatic ecosystem with 23Mt every year leaking into and polluting lakes, rivers and seas. The pandemic intensified the challenge given that 1% of single-use masks used weren't disposed of properly, up to 10 Mt of them could enter and pollute the ocean every month.

Plastic waste, which accounts for 85% of total marine litter, poses serious threats to marine life, human health through ingestion of plastic-contaminated seafood and livelihoods of coastal communities. A UNEP report in 2021 revealed the lopsided injustices being brought about by plastic to marine wealth, underscoring monetary value of losses of marine natural capital, up to $2,500 billion per year had far exceeded the global plastic market, $540 billion.

China is the world's largest producer and consumer of plastic. As it’s also one of the world’s most populous countries, this may be surprising. Beijing in 2021 accounted for 20% of worldwide plastic demand, its per capita plastic waste generation, per ADP, was just about 18kg compared to Australia’s 59 kg, US’ 53kg and Korea’s 44kg. The UN estimated China's plastic waste per capita in 2021 at 46.6kg; still, it was just a fraction of what every person in America (220.5kg), Canada (177.9kg) and EU (121.6kg) produced.

Beijing produces more than 60Mt of plastic waste every year; its recycling rate of 30% is higher than the global average of 9%. In comparison, the US, per Greenpeace, in 2021 recycled just less than 5% of total plastic waste generation. In the EU, each person in 2021 generated 35.9kg of packaging plastic waste. The bloc's recycling rate, 38% , was however better than both China and global average.

Up until 2017, China was considered among the world’s largest plastic waste importers for it had long absorbed about half of global plastic scrap including a significant share of the EU plastic waste exports. Once Beijing in 2018 imposed import bans on 24 types of recyclable waste, its plastic waste imports dropped by 95% within a year, thinning out developed world's options to get rid of its waste. Germany, Japan, US, UK and other European countries are top plastic waste exporters. China wasn't even in the top-10.

After China’s ban on import of plastic waste, the US redirected its exports to developing countries. An analysis of the US Census Bureau data in 2018 by Greenpeace’s Unearthed found that nearly half of the country’s plastic waste exports in the first six months of 2018 had gone to poor Asian countries. An IPEN study this March unveiled that the UN data didn’t account for 1.8 million metric tonnes of plastic waste, which was exported to developing countries by the EU, Japan, UK and US and had inundated them with much more plastic waste than previously thought.

The developed world shouldn't see LMICs as a dumping ground of its plastic waste. Plastic pollution is disproportionately harming these countries, needing at least $26 billion to develop their capacity and infrastructure to safely manage the plastic waste. This act of exploiting the vulnerabilities of the developing nations and exposing them to the worst effects of plastic pollution should be reversed immediately.

*My article that first appeared in the "Express Tribune."

Why is ‘authoritarian’ BRI gaining traction against hybrid initiatives?

By: Azhar Azam

Through the Belt and Road Initiative (BRI), China has smartly picked up key sectors where it could invest its resources and expertise in infrastructure development and power generation to meet the critical requirements of the host countries while expanding its influence across the Global South.

Russia, Per AidData, by far is the largest recipient of China's investments ($125bn); four-fifths of this has gone to 33 industry, mining and construction projects. With major global development spending in Venezuela ($91bn), Angola ($52bn), Brazil ($41bn), Kazakhstan ($42bn), Indonesia and Pakistan ($35bn each), Iran ($17bn) and Papua New Guinea ($6bn), China has fortified its footprint from Africa, Central, South and Southeast Asia, Middle East and Oceania to Latin America and the Caribbean.

By the time the US realized forging an alliance of democratic countries as a counterweight to BRI, more than 100 countries had signed cooperation agreements with China. In fact, since launching the project 2013 through commitment year 2017, AidData revealed, Beijing had outspent Washington and other powers by a scale of 2-1.

As the US and the European Union retracts from their values-driven Partnership for Global Infrastructure and Investment (PGII) and Global Gateway (GG) to create space for states they historically criticized over human rights violations in the India-Middle East-Europe Corridor (IMEC), it's perhaps too late to carve the South away from China given Beijing has made inroads into the problems of the developing world.

Compared to very few projects that have been materialized within the frameworks of the PGII and GG, characterized as "long on rhetoric but short on action," the Chinese mega global development plan has built a sprawling network of bridges, roads, rails, ports and other infrastructure such as and undertaken several energy and social infrastructure projects in the South.

A desire to overhaul their connectivity and power infrastructure as well as to create jobs and foster economic growth accompanied by construction of hundreds of special economic zones tempted developing countries into committing themselves to the BRI, which in turn allowed China to lock in relations with the Asian, African and Latin America and the Caribbean states both at public and government levels.

For instance, Beijing was projected to have commissioned 50GW of coal-fired power plants between 2013 and 2020 in those regions. For developing countries, struggling to attract investments in this critical sector, the Chinese investments provided them an opportunity to overwhelm their energy crisis and end years of blackouts. China's more than $25 billion of electricity projects, adding over 8,000MW to Pakistan's national grid, is one such example.

Of late, BRI has been instrumental in providing clean and green electricity to partner nations. China's 720MW Karot Hydropower Project in Pakistan, 750MW Kafue Gorge Lower Hydropower Station in Zambia, 600-MW Karuma Hydropower Project in Uganda, 1.7 billion kilowatt-hours of solar power projects in Kazakhstan and raft of deals with South Africa to overhaul its creaky energy sector underscore why the BRI is set to be "greenest" this year.

Beijing's approval of adding more than 50GW of new coal power in the first half of 2023 has drawn criticism. But China's power generation isn't entirely focused on fossil fuel energy generation as its renewable electricity production is increasing at a "staggering" pace too. This trend has been endorsed by researchers including BloombergNEF that expect China's clean power installations to hit 154GW of solar and more than 64GW of onshore and offshore wind in 2023, beating its target of doubling solar and wind power to 1,200GW by 2025.

The Chinese companies spearheading several mass projects across continents are also establishing or upgrading other basic infrastructure systems such as schools, hospitals, stadiums, water and sanitation facilities and solid waste management systems in Asia and Africa, allowing China to present itself as a reliable partner of the South at the grassroots level.

A widening digital divide between developing and developed world and severely lagging internet-use in least-developing countries is threatening to exclude world’s poorest from next industrial revolution and leave them in technological wake, warned the UN recently. Aligning their countries with Group of 77 and China, representatives of several dozens of countries expressed concern about the challenge and the need to urgently close the gap.

The “aspiring cyber superpower” through the BRI technological arm, Digital Silk Road, is building or upgrading one of the most critical infrastructures, submarine cable network, in the Middle East and North Africa. The Pakistan and East Africa Connecting Europe or the PEACE fiber-optic cable in 2022 connected the cities of Karachi in Pakistan to Marseille in France; China is believed to have put in service or is currently laying such networks in 76 countries.

As the US boasts of countering an ‘authoritarian’ initiative with a democratic one, China continues to roll out projects and rally support from the developing world for its BRI and invoke empathy of the South people. This was evidenced by the third Belt and Road Forum that attracted several heads of states, mostly from the South.

By spending just one-eight of what America spent in its wars on terror over the last 20 years, China has demonstrated its value to the South. With the West-led initiatives striving to establish their merit to the developing world and the BRI putting the North to test, the Chinese narrative of BRI as a centerpiece of global development seems to be winning.

*My article that first appeared in the "Express Tribune."