Many questions arise amid the rapidly evolving events on the international arena, carrying heightened risks and leading to the worsening of the already volatile military, security, economic and living conditions. Are we aware of these risks? And are we ready to deal with them?
Let’s go back to the global economic crisis that unfolded in September 2008 and was considered the worst of its kind since the Great Depression in 1929. The crisis that wreaked havoc on the global economy, started in the United States and rippled through the world countries, shaking the largest global financial institutions. Nineteen banks collapsed in the United States alone in 2008, triggering a wave of panic similar to “Doomsday”, as I described it back then.
Three years ago, the Covid-19 pandemic swept the world with long-term serious effects. Life as we know it changed, airports, schools and institutions closed, the pandemic spread throughout the world, the number of deaths increased and unemployment reached alarming levels. The global financial losses were estimated at 14 trillion USD, not to mention the long-term losses due to the bankruptcy of several businesses.
The Covid-19 outbreak is not the only reason behind the economic deterioration and decline in living conditions. As soon as the world breathed a sigh of relief, a new war began – almost a world war in disguise – between Russia and Ukraine, which is approaching its first anniversary. The war’s repercussions were not just limited to human and military losses for both countries directly involved, but went far beyond with the onset of an economic war whose ripple effects are felt deeply in the west and all other countries.
No one knows when this war will end. Its heavy burden is undermining the European and global economy to the point that it may lead to collapse and total destruction if it lasts longer or expands further. It is really terrifying how the living conditions of the populations of some major countries, such as Britain, have deteriorated as a result of the war. Skyrocketing prices, poverty, unemployment and bankruptcy are not the whole story; the biggest threat is that things would go berserk due to the American and western confrontation with Russia on Ukrainian soil.
If we look closely and objectively into the recent global developments, the drums of a great world war can be heard loud and clear. International divisions and differences are re-emerging between forces aligned with the US policy and a pro-Russian international system represented by China and North Korea.
As we witness armed military and nuclear muscle-flexing, space spying operations, tests of the latest ballistic and hypersonic missiles, the emergence of the role of surveillance and war drones, and mutual threats between the conflicting parties, states should reconsider their approach and readiness at the levels of economic, food and social security in order to weather the storm and overcome any repercussions of these potential risks.
Accordingly, the utmost priority should be given to the strengthening of our economy, society and institutions, by dealing with things based on their degree of importance. I stress this not out of pessimism but out of optimism and concern to protect ourselves. In this highly explosive and dangerous global atmosphere, it is essential to sort out priorities and focus on the most important. In the recent past, the Covid-19 crisis took us by surprise. Are we going to stand by helplessly as everything collapses dramatically due to sudden and accelerated developments that obstruct the economic cycle?
Economy is the pillar of life, and institutional work is the economy’s cornerstone. Therefore, we must protect our economy by preventing the collapse of our public and private institutions as a result of the risks besetting our world today.
The economic cycle must keep moving forward, but in a cautious manner, and the institutional work should be restructured. In fact, an optimistic outlook protects businesses and communities and enlightens life. Since the continuation of the institutional work, in all circumstances, is a responsibility that rests with those who operate these institutions and are in charge of their management, and in order to prevent the collapse of states and institutions in these dire global circumstances, it is essential to set out priorities to protect everyone and ensure the continuity of work.
This should start with the freezing of all costly projects that can be put on hold for the time being, reducing external expenses, and focusing on the completion of vital projects only. The aim is to preserve cash flow and reduce expenses as much as possible to protect private and public institutions as well as investments from the impacts of a sudden economic shock or a mistake that would trigger a destructive nuclear world war, which is our worst fear today.
In short, it is a matter of pessimism or optimism at this stage. Optimism means that we should strive to develop a road map that would ensure the continuation of the institutional work and protect those who are in charge of it as well as the beneficiaries. The road map should also ensure the means to go forward under any stressful circumstances. In case of a worsening global situation and an expansion and escalation of war, the available cash flow would play a crucial role in ensuring self-protection, survival and continuity.
The losses from the Russian-Ukrainian war and the arms race will far exceed those brought about by the Covid-19 pandemic with a toll estimated at 14 trillion USD (noting that one third of these losses was incurred by the touristic sector). Have we not learned from the disastrous repercussions of the earthquake that recently struck Turkey and Syria, which resulted in tens of thousands of victims and huge material losses?
It is necessary to be always on the alert and aware of what is happening around us. Optimism entails to be ready to deal with the looming risks and take steps to avoid the worst. The time will come when liquidity and cash flow will have the final say and determine the ability to move forward or be left behind. It is high time we act accordingly.
By Khalaf Ahmad Al Habtoor
UAE businessman
