The world’s economy is undergoing the worst epoch since 1930, with one way out of the bottleneck: A war in the Middle East that would enhance energy and financial markets as well as global military industries at the expense of some Middle Eastern and emerging markets.
Some observers believe that the world is heading for a more severe global financial crisis compared to that of 2007-2008, pushing it into a dark tunnel of economic slump that began with an increase in countries’ public debt ratios since then. According to recent statistics, global public debts to Gross Domestic Products (GDP) amounted to $247 trillion by the end of October 2018.
Since 2003, global debt has augmented as a proportion of the world economy from 248 percent to 318 percent of the world’s GDP. In the first quarter of 2018, global debt hiked by $8 trillion. The figures entail the world’s most economically and politically influential countries and covers all types of debt: Consumer, business, financial and public.
Since 2007, global debt levels have grown by 50 percent in just a decade. The increase represents the debts of major international companies, which formed a bubble similar to that of 2007-2008, and is about to explode at any time soon, causing a total collapse of economies in some countries unless a bailout is taken into account.
A Middle East war could be the sole bailout
The way to get out of this global crisis instead of entering into a global war similar to World War I and World War II is to trigger a Middle Eastern conflict, which would involve several countries.
It is clear that the world is not heading to WWIII because the major powers do not want to be directly involved especially with all of the major powers celebrating the anniversary of the end of WWI. However, they don’t mind getting involved in proxy wars to export their domestic issues to other nations or regions.Shehab Al-Makahleh
This could lead the Middle East to retreat globally, financially and economically. The only way the superpowers might resort to in order to avoid a direct encounter is a multi-state war in the Middle East. Thus, wars and chaos scenarios could be prepared today in order to protect the interests of major powers and their international companies, which are currently suffering from a severe debt crisis.
Which countries would be involved?
Would this inevitable war be with the participation of some Middle East states and other world major powers conducive to more proxy wars? Would this avert direct involvement of the major powers such as China, Russia, the United States, the United Kingdom and France in the coming few months?
Debt is a double-edged weapon because it affects global growth, wages and economic plans. According to many experts, the new financial crisis would be inevitable only with a war that accelerates the economic growth of developed countries at the expense of the interests of emerging and developing nations. Therefore, some states in the whole region, including Israel, could be involved in a war to save the economies of some major powers against Iran and allies in the Middle East.
The impact of public debts on economies
The 2008 financial bubble has revealed that losses are accelerating and their effects are worldwide. Public debt has accounted to 43 percent a decade ago at a time mega companies have represented 41 percent of the over-all debts while personal debts have recorded 16 percent.
When the American public debt rate had reached less than 80 percent in 2003, the US launched a war on Iraq. Today, with American debt reaching more than 32 percent of world public debt, the US and other countries must export domestic crises to other countries in order to avoid complex economic and financial realities of capitalist states.
To add salt to injury, trade tension between Beijing and Washington will adversely affect the growth of the global economy, and will negatively affect major economic blocs and international axes and alliances. Thus, economic growth must be accelerated. This cannot be reached without war away from the borders of the major powers.
World financial markets two consecutive failures in 2018
World financial markets have recorded two major failures since 2008. The first was in February 2018. A violent tremor had shaken world financial markets, which fell sharply after Wall Street plunged to its lowest level since 2011. Large declines have ranged from five to seven percent in Asia and Europe, as well as emerging markets, causing huge losses for many firms.
Recently, February’s scenario was repeated as capital markets plummeted for six sessions in the so-called “dismal week”. Capital markets failed to make up for the huge losses since February, mainly in stocks and shares in technological firms, which lost nine percent in few weeks, a big drop for this sector.
The decline reasons are not obvious. Some believe that the impact of stock markets around the world came amid concerns about trade protectionism, rapid increases in US interest rates, and others led by lack of economic optimism. On the other hand, many believe it is caused by world political conflict mainly between China Russia, USA and the EU.
Where giants go to war?
It is said that when giants go to war, the war field is the Middle East. But where exactly? History provides ample evidence that trade glitches have amplified tensions among states. Such contests lead to economic calamities, and trigger political and social watersheds and, finally, instigate wars.
Fredric Bastiat, a French economist said in the 19th century: “When goods do not cross frontiers, armies will.” This shows where the world is heading at present. A full-scale trade conflict often features the mishmash of a tariff warfare and currency war. Since trade wars stoke nationalism and hatred among people and trigger wars similar to those of WWI and WWII, the major powers seek to avoid such wars through a third party which is the Middle East multi-state war.
It is clear that the world is not heading to WWIII because the major powers do not want to be directly involved especially with all of the major powers celebrating the anniversary of the end of WWI. However, they don’t mind getting involved in proxy wars to export their domestic issues to other nations or regions. This has been the case because of chief political adversaries and confrontational scenarios at multi-levels.
Will the next war be before the end of the world 2018 or in the next 2019?
Shehab Al-Makahleh is Director of Geostrategic Media Center, senior media and political analyst in the Middle East, adviser to many international consultancies. He can be reached at: @shehabmakahleh and @Geostrat_ME.