Global Analysis from the European Perspective. Preparing for the world of tomorrow




We will not recognize the world of tomorrow

Recently we have been witnessing a number of events that have captured our attention. These are: the trade conflict between Saudi Arabia and Russia over the price of oil, the changes to the Russian constitution that are under way, the impact that the coronavirus has on the Western world and the resultant ban that the American president issued on European visitors to the United States. Let us have a closer look at them.

All of a sudden the Saudi authorities came up with the initiative to push down the price of oil worldwide. The OPEC countries were easy to deal with but to make oil cheaper globally, Riyadh needed the consent of one of the biggest oil producers outside OPEC: Russia. Moscow declined the proposal. The question arises: why does Riyadh want to have a smaller income generated by oil exports? After all oil makes up the lion’s share in the country’s finances.

The situation reminds one of the year 1985. In April of that year Mikhail Gorbachev came to power with his revolutionary ideas of reforming the Soviet system. A few months later Saudi Arabia announced its intention to bring down the price of oil and so it did. Now it is known that the move was done in league with Washington. At that time the Soviet Union – just as the Russian Federation today – had a large income from oil. Less money meant trouble for the Kremlin, especially at the time of the reforms that had been announced. The result was the collapse of the Soviet state within a couple of years.

Today’s developments resemble those of 1985. President Vladimir Putin announced internal political changes – a few amendments to the constitution that will allow him to stay in power in one form or another for many years to come – and as if in response to it Saudi Arabia made the same move as years before with the same goal of curtailing Russian oil-generated income. Has Riyadh done it again in cahoots with Washington? What do the two players hope to achieve?

Lower oil prices will also hit other oil-producing, mostly Arab, countries whose governments may have difficulties paying for the public sector. And yes, lower oil prices will make also the American shale industry unprofitable. Is it a calculated risk?

The amendments to the Russian constitution aim at enabling Vladimir Putin to either continue in his office as president or to take a position similar to that occupied at a time by Deng Xiaoping, who controlled China even though officially he ceased to be the head of state. The other proposed change is a ban on having dual citizenship and foreign bank accounts imposed on those who would be running for office. Yet another one is to make the Russian constitution the highest law in the country, which will legally enable Moscow not to obey the decisions of foreign – international – organizations, including the Hague Courts of Arbitration, Justice and Human Rights, which are known for ruling against Russia. These steps will be viewed by the West as a violation of human rights, as hamstringing democracy and the usual array of accusations that are raised on such occasions.

The spread of the coronavirus on the Old Continent caused the governments one after another to close the state borders as a part of a large number of precautionary measures that are being taken to fight the disease. This is no small event: all of a sudden it turned out that borders are useful after all and can be closed in the twinkling of an eye. Somehow their closure has not been possible for years when Europe desperately needed to stop the unending stream of the Third World immigrants. It was not so long ago when one of the most prominent Polish politicians said that immigrants ought to be stopped from entering the European countries because of – among others – the danger of spreading diseases – long absent from the Old Continent or alien to it anyway. He was ridiculed and vilified for his allegedly inhumane approach to the needy and the unfortunate. Today all European governments are protecting their states and no one seems to even as much as mention anything about human rights. Have the otherwise cowardly European governments grasped the opportunity to stop the influx of foreigners that began to move from Turkey?

Then the news broke that President Trump closed the American borders to visitors from Europe, from the Schengen Zone to be precise, so the United Kingdom and Ireland are exempted. Has the notorious virus stopped short of the English Channel? The Anglo-Saxon political camp within the Western world seems to be sticking together, virus or no virus.

Closed borders, reduced numbers of flights, little or no tourism, closed public facilities – all this means a significant dent in money circulation, in profit generation, in earnings. Still, there are fixed costs that businesses must sustain: rent, insurance, lease, instalments, credit, and many others. The governments are stepping in with their aid. What can they do? They can have central banks create more money and pump it into the economy. The American administration is considering benefiting each household with $1000 per adult and $500 per child. This money is not going to be covered by an increase in production and services: some facilities are closed and people are told to stay at home, anyway. This additional money – another form of quantitative easing one might say – can mean only one thing: inflation.

Whether the virus crisis is man-made or not, certainly various interest groups have seized the opportunity to gain something for themselves. Consider the idea of a cashless society. What a favourable moment to intensify appeals for the prohibition of banknotes and coins under the pretext that they are carriers of deadly viruses!

If the exceptional situation is protracted much longer, then all or some of the following phenomena may occur (indeed they are already in the offing). At first people forced to refrain from work – freelancers, small businesses – begin to run out of their savings to pay the fixed costs. The government intervenes doling out money. This will mitigate the problem but for a while. One can create as much money as one wishes, yet the number of goods will not rise in proportion with money supply. Former communist countries were beset with that phenomenon: people generally had financial resources but little or – in extreme cases – nothing to buy. Social unrest will be a factor to reckon with.

Today’s Western societies are home to large ethnic, Third World minorities. How will they conduct themselves under duress of that magnitude? We know from experience that Los Angeles, Paris, Marseilles, London and other cities witnessed riots, looting and arson attacks on a large scale on the flimsiest of pretexts, at times because of a sports event. If the said minorities fail to act in accordance with what is expected of them, in line with the seriousness of the circumstances, the dormant resentment on the part of the white majority may finally find its vent in retaliatory actions. Civil war might only be a step away. If clashes threaten to go out of control, shops stay empty and people’s saving vanish in smoke, the military might eventually step in and incapacitate the governments. The whole intricate and labouriously devised construction of the European Union, its financial and political system together with its supranational laws might topple down at the speed of light. Already now we can see that the member states follow the age-old principle: every man for himself and God for us all.

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